Re: Per Diem and Demurrage

Greg Martin


What I think I hear you asking is:

1.) Did the demurrage clock stop the per diem clock, the answer is NO. One comes into play (demurrage) as a penalty to the receiver for keeping a car too long. Per Diem is a method of car accounting to help recoup the cost of the car. Both are functions of car accounting department for car utilization.

2.) Was there a check written between railroads for per diem? The answer is? a bit more complicated. Yes, there were checks cut, but likely the larger railroads with larger fleets wrote less checks to smaller bridge lines i.e., PRR wouldn't likely send much to the New Haven, but I am sure the New Haven was cutting checks to the NYC, PRR, and the so forth... Yes, there was a dollar exchange, some paper exchange, and always more than 90 days in the rears, as it is at least that in todays world with the class 1 railroads.?This may help some understand why asset utilization?was and is so important. If you have plenty of business on your own railroad why would you want to turn your cars over to a long haul cross country move, when your share of the revenue stops at?your last junction? Ask Russ?he was in car management... Your best asset is your?cars, on your line.?A call to your local clerk or agent for a "Load Home Road"?was an easy call and you can't tell me that the clerks?or aganets couldn't get permission to load empty cars home... Regardless of the rules applicators made those calls... sans a huge harvest on the PFE roads of course... 3^)?

Greg Martin ??

riginal Message-----
From: Schuyler Larrabee <schuyler.larrabee@...>
To: STMFC@...
Sent: Wed, 26 Dec 2007 5:40 pm
Subject: RE: [STMFC] Per Diem and Demurrage

I appears to me you have it right, Peter, but I have a couple more questions:

1) once delivered, did per diem continue while the consignee had their three days to unload the car?

2) OK so there was a huge amount of employment for accountants to keep all this pretty straight.
But did the railroads actually exchange money on a daily basis, or even monthly? For most roads
wouldn't this pretty much all work out in the wash? (Yeah, I know, NP never got their own cars
back). Or was it something that actually did result in bank transfers every 30 or 90 days or what?


-----Original Message-----
From: STMFC@... [mailto:STMFC@...] On Behalf Of Peter Weiglin
Sent: Wednesday, December 26, 2007 6:49 AM
To: STMFC@...
Subject: [STMFC] Per Diem and Demurrage

So let's see if we have this straight, for the non-expert:

Per Diem is the fee that railroads pay to each other for the use of cars owned by the
payee railroad. In the STMFC days, that was $2.00 per day. The paperwork must have been
fascinating in the pre-computer age; calculating how much railroad A owed to Railroads B
through Z for the cars on Railroad A's property.

Demurrage is the fee that customers who receive shipments pay to the delivering railroad
if they keep a freight car for longer than the "grace period" for unloading.

Two different terms, often mistakenly used interchangeably.

Peter Weiglin
Amelia, OH

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