Topics

Per Diem and Demurrage


Peter Weiglin
 

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


Schuyler Larrabee
 

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?

SGL

-----Original Message-----
From: STMFC@yahoogroups.com [mailto:STMFC@yahoogroups.com] On Behalf Of Peter Weiglin
Sent: Wednesday, December 26, 2007 6:49 AM
To: STMFC@yahoogroups.com
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


Larry Jackman <Ljack70117@...>
 

Per Diem has NOTHING to do with the Consignee. Per Diem is Paid by RR A to RR B for each day RR B's car is on RR A. It has NOTHING to do with if the car is loaded, Mty, being loaded or being unloaded.
Thank you
Larry Jackman
ljack70117@comcast.net
Boca Raton FL 33434
I was born with nothing and
I have most of it left.

On Dec 26, 2007, at 8:40 PM, Schuyler Larrabee wrote:

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?

SGL

-----Original Message-----
From: STMFC@yahoogroups.com [mailto:STMFC@yahoogroups.com] On Behalf Of Peter Weiglin
Sent: Wednesday, December 26, 2007 6:49 AM
To: STMFC@yahoogroups.com
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



Yahoo! Groups Links



Jack Burgess
 

Schuyler asked:

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
I have a copy of the form that the YV used for this purpose...pretty simple.
The form is subtitled "Agent's Report of Cars Received, Forwarded and on
hand for twenty-four hours, ending at midnight". Columns are to be filled in
for Received and Forwarded cars with individual columns for Initial, Number,
Kind, From, and Loaded With. Each station agent had to complete this form on
a daily basis. Obviously, it would be a big task for a large yard but for
small railroads, each station agent tracked the cars under his/her control
and reported them daily. From that, the home office could determine the per
diem owed or due. Remember that this same information was tracked for cars
in the yard in order to fulfill requests for empties, etc.

Jack Burgess
www.yosemitevalleyrr.com


earlyrail
 



1a.


Per Diem and Demurrage
<http://groups.yahoo.com/group/STMFC/message/68769;_ylc=X3oDMTJyaHNpczhwBF9TAzk3MzU5NzE1BGdycElkAzI1NTQ3NTMEZ3Jwc3BJZAMxNzA1MTY5NzI1BG1zZ0lkAzY4NzY5BHNlYwNkbXNnBHNsawN2bXNnBHN0aW1lAzExOTg3NTI1MzU->



Posted by: "Peter Weiglin" railstuf@fuse.net
<mailto:railstuf@fuse.net?Subject=%20Re%3APer%20Diem%20and%20Demurrage>
pcweiglin <http://profiles.yahoo.com/pcweiglin>


Wed Dec 26, 2007 3:48 am (PST)

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
For the period of this groupd (1900-1960) OPer Diem ran from none (all cars were on a milage bases) to starting at $.20 on July 1, 1902 with various increases over the years. In late 1948 it was $1.75.

If someone has firm dates and rates for changes after Nov 1920, I could use them to add to my clinic.

Howard Garner


Malcolm Laughlin <mlaughlinnyc@...>
 

There have been a few items in this discussion on which I hope I can shed some light. Before addressing specific comments, I’d like to note that we should be careful to distinguish between accounting documents and operating documents. Only the formal accounting documents caused money to change hands. Most notable are the wheel report, interchange report and waybill.

Schuyler asked:
2) OK so there was a huge amount of employment for accountants to
keep all this pretty straight.
No accountants were actually involved but there was a huge army of clerks. It was pretty straightforward clerical work. This may seem like a nitpick, but just wanted to make it clear that railroad carand revenue accounting didn’t really require professional accountants. It was a matter of following known agreed procedures, and no professional accounting judgements were involved.

> But did the railroads actually exchange money on a daily basis,
or even monthly? For most roads
There was a monthly inter-railroad settlement. It was done on a net basis with a check going in the direction of the larger amount owed. That fell apart however in the case of bankruptcy. The bankrupt carrier didn’t have to forward its share, but the other carrier had to pay the amount due. This was also true of revenue accounting. This fact was one of the primary cuase of the other railroad bankruptcy filings that came immediately after Penn Central filed.

Posted by: "Jack Burgess"
I have a copy of the form that the YV used for this purpose...pretty simple.
The form is subtitled "Agent's Report of Cars Received, Forwarded and on

An "Agent's Report of Cars ….”, as mentioned by Jack, was a common document found under various names on different railroads. But it was an operating department document, not an accounting document. Per diem was handled by a car Accounting Department which used as its source documents the wheel report and interchange report. The interchange report was the sole authority determining which railroad a car was on at midnight. The wheel report was the important document for mileage cars. It was the official documentation of car movement from one station to another. Tariff mileages were applied to those movements to calculate the mileage to be paid.
Confirming what others have said, per diem was strictly based on the location of the car and totally unrelated to whether it was loaded, in the shop, etc., etc.
There was also a phenomenon called per diem reclaim, which set forth circumstances in which the railroad in possession of a car could reclaim per diem from the owner. Cars delivered in switching service were an example. The line haul road, not the switching road, ultimately was responsible for the per diem. Thee was also reclaim of per diem for pool cars at their point of assignment. There was a code of per diem reclaim rules that IIRC was longer than the code of per diem rules.



Malcolm Laughlin, Editor 617-489-4383
New England Rail Shipper Directories
19 Holden Road, Belmont, MA 02478

[Non-text portions of this message have been removed]


Greg Martin
 

Schuyler,



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@verizon.net>
To: STMFC@yahoogroups.com
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?

SGL

-----Original Message-----
From: STMFC@yahoogroups.com [mailto:STMFC@yahoogroups.com] On Behalf Of Peter Weiglin
Sent: Wednesday, December 26, 2007 6:49 AM
To: STMFC@yahoogroups.com
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




________________________________________________________________________
More new features than ever. Check out the new AOL Mail ! - http://webmail.aol.com


Malcolm Laughlin <mlaughlinnyc@...>
 

Posted by: "tgregmrtn@aol.com" > One comes into play (demurrage) as a penalty to the receiver for keeping a car too long.

It applied equally to the shipper.

> 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.

Demurrage was not part of car accounting. It was part of the station accounting process. Demurrage bills were cut by the same clerks in the agencies who handled revenue billing.

None of this had much to do with what we called "car utilization" in that era. That was the management process of finding ways to get better turnaround on the cars. The only relationship between that and accounting was that net per diem was part of the scorecard for car utilization.

I should mantion that my knowledge of this comes from having been associated with car management at various times between 1960 and 1967 and having worked with accounting functions both as a railroad employee and as a consultant.

. 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?
In most cases the shippers loaded to many destinations on and off line, and the railroad had little control. They weren't going to tell a shipper that sentout several cars a day that he had to have his shipments to the west, for example, in western mark cars and so on. In theory the railroads could have cars loaded towards their home roads, but in practice they had little control.

In selecting cars to load, there was a big conflict of interest between what was good for an individual railroad and what was good for the system. If you loaded your own cars and sent foreigns home empty, you reduced your own net per diem. But to minimize railroad system empty car miles and days, it was much better to load foreigns in the direction that they were going to move empty. One of the projects in the AAR/FRA car management program in the 70's was working towards getting railroads to load the cars in a manner that reduced total system empty mileage.

> 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...

On most railroads they didn't have to get specific permission to laod any general service car. They might get bawled out for making the wrong call too often, but that wasn't easy to detect. What they would be zapped for was not spotting an available car for loading and losing the load.


Malcolm Laughlin, Editor 617-489-4383
New England Rail Shipper Directories
19 Holden Road, Belmont, MA 02478


Schuyler Larrabee
 

Thanks, Greg, you got the questions dead on, and between you and Malcolm Laughlin's answers (and
some discussion last night at our model railroad club) I've "got it, by Jove, I think he's got it!"

SGL

Yeh, yeh, yeh, I know, it's a "she" in that original line.

-----Original Message-----
From: STMFC@yahoogroups.com [mailto:STMFC@yahoogroups.com] On Behalf Of tgregmrtn@aol.com
Sent: Thursday, December 27, 2007 3:44 PM
To: STMFC@yahoogroups.com
Subject: Re: [STMFC] Per Diem and Demurrage


Schuyler,

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@verizon.net <mailto:schuyler.larrabee%40verizon.net> >
To: STMFC@yahoogroups.com <mailto:STMFC%40yahoogroups.com>
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?

SGL

-----Original Message-----
From: STMFC@yahoogroups.com <mailto:STMFC%40yahoogroups.com> [mailto:STMFC@yahoogroups.com
<mailto:STMFC%40yahoogroups.com> ] On Behalf Of Peter Weiglin
Sent: Wednesday, December 26, 2007 6:49 AM
To: STMFC@yahoogroups.com <mailto:STMFC%40yahoogroups.com>
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
__________________________________________________________
More new features than ever. Check out the new AOL Mail ! - http://webmail.aol.com
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