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New directions for Canadian railway demurrage Kemp, Sidney William


This study reviews Canadian railway demurrage rules, questions its effectiveness and concludes with recommendations for change. The demurrage rules, their genesis and current interpretation are described in detail. The Canadian rules are placed in perspective by reviewing demurrage in other transportation modes as well as U.S. rail demurrage. Current effectiveness of the Canadian railway demurrage rules is assessed by analyzing C.N. Rail car release data. Canadian performance is then contrasted to U.S. performance and conclusions are drawn on the performance of the Canadian system, The study then identifies current issues with demurrage rates and arrangements. Through questionnaires and interviews a number of contentious issues are isolated. The study recommends that three major changes in Canadian demurrage rules be made. First, greater flexibility in negotiating exceptions should be provided for. Second, an incentive plan should be developed. Finally, a system of demurrage charges varying with the type of rail car detained should be incorporated into the demurrage tariff. Using C.N. Rail data, the impact of these recommendations on rail car utilization in Canada is simulated. Considerable reduction in car days and resulting rail car investment is observed.

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