Nostalgia & History > Per diem question

On the thread about shortest scheduled train it discusses getting cars off line by midnight to avoid per diem. I have read about this many times how some railroads hustled to get trains to their connections before midnight so they would save those charges. My question is exactly how did that work, a RR wanted to get trains off their lines to avoid paying per diem, but if the receiving line gets stuck paying the per diem why would would the connecting RR accept a train close to midnight? As an easterner, I'll use my local fallen flags as an example.

The WM was known for hustling to get trains off by midnight, so if they were giving a train to the B&O, why wouldn't the B&O hold it off til after midnight before accepting it? I realize lines like the PRR had so many trains and cars on line it didn't really make a difference to them, but for smaller lines it may have. I just haven't been able to understand the whole per diem thing.

Per Diem on a rail car does not start until it has been on the property for a set number of hours, depending on the agreement between carriers. For the railroad that I worked for that was 120 hours. Car hire which is charged to the customer started after 24 hours on spot. So getting them off the property would stop the clock on one railroad and start it on the next. One thing to remember is that privately owned rail cars, those that end with X do not have per diem. Private cars are paid on a mileage basis.

Cole42 Wrote:
-------------------------------------------------------
> On the thread about shortest scheduled train it
> discusses getting cars off line by midnight to
> avoid per diem. I have read about this many times
> how some railroads hustled to get trains to their
> connections before midnight so they would save
> those charges. My question is exactly how did
> that work, a RR wanted to get trains off their
> lines to avoid paying per diem, but if the
> receiving line gets stuck paying the per diem why
> would would the connecting RR accept a train close
> to midnight? As an easterner, I'll use my local
> fallen flags as an example.
>
> The WM was known for hustling to get trains off by
> midnight, so if they were giving a train to the
> B&O, why wouldn't the B&O hold it off til after
> midnight before accepting it? I realize lines
> like the PRR had so many trains and cars on line
> it didn't really make a difference to them, but
> for smaller lines it may have. I just haven't
> been able to understand the whole per diem thing.

Interchange refused - per diem on the railroad that refused delivery starts then. The delivering railroad was under no obligation to hustle back and deliver again, so the clock might keep turnin' for while, while and a half, or more.

TAW

1ST_OUT Wrote:
-------------------------------------------------------
> Per Diem on a rail car does not start until it has
> been on the property for a set number of hours,
> depending on the agreement between carriers. For
> the railroad that I worked for that was 120 hours.

Dim memory tells me that before Staggers, midnight was midnight, hence the fleet of per diem trains all over Chicago.

TAW

While it is a memory from long ago and did not happen very often on the U.P. in Los Angeles, we had a standard procedure in the yard office for writing a report when an interchange cut (of cars) was refused by another railroad before midnight.

That transferred the per diem to the other railroad.

Eugene Crowner

TAW Wrote:
-------------------------------------------------------
>
> Interchange refused - per diem on the railroad
> that refused delivery starts then. The delivering
> railroad was under no obligation to hustle back
> and deliver again, so the clock might keep turnin'
> for while, while and a half, or more.
>
> TAW

So how was "refused" determined? If you're in Chicago and waiting for railroad due to lots of traffic, understandable delay. How close to midnight did the handing off RR have to be at the receiving RR to be considered on time. Like if the train arrives at 2355 and the receiving RR can't take it for 30 mins due to traffic, who gets charged the per diem?

There is some confusion in this series of posts between per diem and demurrage. Per Diem is the price a railroad pays for using a car owned by another railroad. There was also a mileage segment in per diem. For example, way back in the late 70's and early 80's, I owned a few boxcars that I leased to a short line in Michigan. The short line got the cars free from me- but if they loaded a car and gave it to another railroad, then the "foreign" railroads would report the receipt and movement of the car to the AAR who them prepared statements for each railroad to collect or pay other carriers. Usually, payments were handled thru a clearing house. For about 6 years, I made good money by owning these cars, even after paying the maintainence expenses.
A 50-foot boxcar with a "depreciated value" of about $20,000 earned, as I recall, 54 cents per hour and about 6 cents per mile.

Demurrage is the charge that a railroad can assess against a customer if the customer doesn't promptly load or unload cars. Before deregulation, free time for loading or unloading was 48 hours after placement on the customers track. since deregulation, free time for loading or unloading can be negotiated.

About 1980, per diem was changed from the magic hour of midnight to the actual nearest hour of delivery. That put a halt to the many attempts to refuse and deliver cars around midnight.

TIOGA PASS

Norman Orfall
Helendale, CA
TIOGA PASS, a private railcar

Just to clarify one thing that may be missed - a railroad does not pay per diem on its own cars. So if WM had a track full of B&O cars, they would want to get them to the B&O before they got charged for another day. B&O would have no reason to refuse them, unless they just didn't have room.

halfmoonharold Wrote: So
> if WM had a track full of B&O cars, they would
> want to get them to the B&O before they got
> charged for another day. B&O would have no reason
> to refuse them, unless they just didn't have room.

That isn't quite right, because if the B&O cars stayed on the WM for another part of a day thru no fault of the B&O, the B&O would get paid another day's per diem on their cars sitting on the WM.

The SP interchanged their cars to and from the LA Junction on the afternoon shift, and as they did the hauling both ways, this prevented any discussion of what cars the LAJ owed per diem on to who.
G

Cole42 Wrote:
-------------------------------------------------------
> TAW Wrote:
> --------------------------------------------------
> -----
> >
> > Interchange refused - per diem on the railroad
> > that refused delivery starts then. The
> delivering
> > railroad was under no obligation to hustle back
> > and deliver again, so the clock might keep
> turnin'
> > for while, while and a half, or more.
> >
> > TAW
>
> So how was "refused" determined? If you're in
> Chicago and waiting for railroad due to lots of
> traffic, understandable delay. How close to
> midnight did the handing off RR have to be at the
> receiving RR to be considered on time. Like if
> the train arrives at 2355 and the receiving RR
> can't take it for 30 mins due to traffic, who gets
> charged the per diem?

In urban settings, the yardmaster of one railroad would call the yardmaster of another railroad and tell him there was transfer ready to send to the that other railroad. If the yardmaster of the other railroad refused (because of lack of space in his yard), that would be notated and per diem would start accruing to the other railroad at midnight with the justification that the yardmaster of the connecting road refused to accept a transfer run before midnight.

Yes, per diem was figured based on who had the cars (or who refused to accept the cars) as of midnight.

On the UP, the Iowa Lines would endeavor to deliver to UP all their UP traffic before midnight in order to beat per diem. UP would haul that traffic out to North Platte during the wee hours and send it over the westbound hump during the am hours. This would set a fleet of trains to the West Coast leaving North Platte in the afternoon.

Best regards,

Rob L.

> ... exactly how did that work?

> ... I just haven't been able to understand the whole per diem thing.

Howdy,

Per diem and the interchange process are complex topics. Rather than type up a bunch of stuff, I thought it best to just scan some pages that will help explain things, as issued by the Rock Island in the early 70s. There are quite a few pages here but reviewing these will give you a good overall picture of how things worked and how a typical RR thought about the whole business of per diem & interchange.

First, 2 silly pages from their Freight Agency Manual:



Edited 1 time(s). Last edit at 12/13/17 21:29 by mamfahr.

---

---

Next, 6 pages, also from RI's Freight Agency Manual:

---

---

---

> more from RI's Freight Agency Manual:

---

---

---

Last but not least, a couple of pages to show how the CNW & RI dealt with interchange in the real world; from Des Moines, Iowa 1974. Note the comment on the second page about RI's filing of a reclaim for cars CNW pulled after midnight (but set onto the track by RI prior to midnight). Interchange reports & reclaims were just some of the many things clerks handled behind the scenes, doing their part to keep the RR running...

Hope that's of interest.

Take care,

Mark

---

---

Cole42 Wrote:
-------------------------------------------------------
> TAW Wrote:
> --------------------------------------------------
> -----
> >
> > Interchange refused - per diem on the railroad
> > that refused delivery starts then. The
> delivering
> > railroad was under no obligation to hustle back
> > and deliver again, so the clock might keep
> turnin'
> > for while, while and a half, or more.
> >
> > TAW
>
> So how was "refused" determined? If you're in
> Chicago and waiting for railroad due to lots of
> traffic, understandable delay. How close to
> midnight did the handing off RR have to be at the
> receiving RR to be considered on time. Like if
> the train arrives at 2355 and the receiving RR
> can't take it for 30 mins due to traffic, who gets
> charged the per diem?


The question was why would a railroad accept cars so close to midnight. Refused means not accept.

If the designated interchange track is full when the delivery shows up, the receiving railroad refused interchange. If the delivery is made in any of the tracks in a given yard and the yardmaster holds the train out, delivery time is when the train called to enter the yard. The yardmaster might say there's no room for some number of hours causing the delivering railroad to call the train back home (I've seen that done), interchange was refused at whatever time the train called enter the yard. The delivering railroad will make the actual delivery as convenient - with the receiving road paying for the cars.

A lot of Chicago interchange was not in yards when I worked there. IHB-CGW Bellwood, IHB-IC Broadview, IHB-CBQ La Grange, IHB-CIW McCook, IHB-GM&O Argo, IHB-WAB Chicago Ridge were all interchange tracks outside of (major) yards.Santa Fe had an operator and a clerk, The Chicago Ridge towerman was also the WAB agent. The rest - well, there was nobody there to see.

At McCook or Chicago Ridge, it there was traffic blocking the delivery, it was the receiving road's traffic, so delivery time was the time at which they tried to deliver and couldn't.

TAW

mamfahr Wrote:
-------------------------------------------------------
> > ... exactly how did that work?
>
> > ... I just haven't been able to understand the
> whole per diem thing.
>
> Howdy,
>
> Per diem and the interchange process are complex
> topics.

I got in soooo much trouble over both...not that I cared.

I never completely understood it (except that there was money to be made and I wasn't making it), but the MILW agent at Bellingham had some deals going with shippers and apparently with BN. On the night operator job, interchange and demurrage were my job. I made it a point to show up at the interchange track when BN was delivering - blowing the crossings was a good clue. I listed up the interchange as they shoved and put down the time. He wasn't happy about that.

An even bigger offense was demurrage. The guy who had the job before me was six months behind on interchange reports and demurrage. Maybe it was associated with the activity he pursued while at work that led him to be hit by the Limestone rock train on a crossing at Sumas...when he was supposed to at Bellingham working. Anyway, I inherited the demurrage 6 months behind.

The per diem day started at midnight. The demurrage day started at 7am. Every station was required to produce an exact list of every car in its domain, where it was, and the status (spot, off spot, constructive placed, railroad convenience, etc.) as of 7am. Per Diem was charged from that yard check. Things on the 7am checks started not making sense, so I got the switch lists. It was worse. They didn't make sense at all. The switch lists didn't match the yard check - not even close. According to the switch lists, the industries owed MILW a lot of money in those six months. According to the official yard check, they owed MILW nothing. I got out the car orders and bills of lading. The 7am check was made by the agent. The switch lists were made by the night operator and the clerk on days. Another clerk handled the bills of lading and the car orders. They didn't match the 7am checks or the lists. I was expected to catch all of this up immediately. Months later, working after I got rid of my train until I couldn't stay awake, I had nothing. I started showing up late if the switch engine hadn't called me about being derailed.

I was supposed to start at 7p. The agent went home at 5p. Usually, the switch engine was calling me at home by 530p on the ground, lists wrong, or some other calamity. Then I'd be there until 7 or 8 am, putting in bogus timeslips to look legal. This night, noting happened. I walked down to the railroad at 10p. Instead of going to the office, I walked two blocks farther to the roundhouse to check the power for the train to Tacoma. (remember - I'm just an operator) The trainmaster intercepted me on the street and laid right into me. I was fired. He didn't need an investigation. It was 10p and I was walking the street when I should have been in the office working on that way overdue demurrage since 7p. After he expended his screaming energy (of which he had plenty), I told him to knock himself out. I had copies of the bogus 7am checks and copies of timeslips showing my REAL hours on duty. He could fire me if he wanted. All I would do would be call ICC and FRA and have a discussion about how his railroad was running. The subject was dropped and never came up again. When I quit, the demurrage was still not done. I was not about to get into whatever racket was going on.

Then I went to BN, also in Bellingham. The Ferndale agency had been consolidated into the Bellingham agency. There was too much work for that, so there were two agents, but the Bellingham agent was the exempt super agent. The Ferndale agent was a scheduled (union) position. The 2d and 3d trick operators at Ferndale were cut, however. It turned out that the Ferndale business was too much for the Ferndale agent. I was assigned as assistant agent. Then there was so much business that they needed a night operator at Bellingham, so they put on a job and I was the operator and the night Ferndale agent. After a week or so, I was still catching up on things that had not been done. Among them, I noticed a whole bunch of bulkhead flats assigned CSD 145 (an arrangement in which a shipper has a fleet of railroad-owned assigned cars to ensure supply) and a big bunch of hoppers assigned CSD 145 to Arco. They were all just in yard status - sitting for railroad convenience. Nope - they were assigned. On arrival, the shipper had to be notified and the cars spotted or constructively placed (effectively spotted for demurrage purposes even though they were not on the customer's track). I dutifully looked up the arrival date of each, added the free time, and placed the whole bunch into constructively placed status - starting the demurrage clock. The agent was not happy - quite vocally so. He had some sort of an arrangement with Intalco and Arco - they would not have to pay for the assigned cars on hand. He tried to explain to me that they ere on hand railroad convenience and should not be on demurrage. I wanted no part of that, so I told him that it was quitting time. He had the day clerk change all the records. Soon thereafter, I was off that job and didn't have to worry about it any more.

TAW

As told to me by an ex-CNW trainmaster at Proviso Yard in Chicago, I assume which took place in the 1970s: IHB crossed over CNW's main and Proviso Yard on a bridge, with a connecting track called Harbor Hill. IHB would call Proviso right before midnight saying they had a train with hundreds of cars ready to come down Harbor Hill into the yard. IHB knew Proviso couldn't take the cars, they just wanted the CNW's refusal so they could stop paying per diem on them. So IHB often didn't bother actually having a train there - might have been on its way, but nowhere close to Proviso.

One night when the new CNW trainmaster was on the job and saw what was going on, he took the call from IHB, got out his binoculars and saw no headlight on the IHB main, and then told IHB to go ahead and bring the train in. Silence from IHB in response, then some backpedalling. Apparently the practice ended after this.

Thank you all for your replies - very interesting information and stories!

RRTom Wrote:
-------------------------------------------------------
> As told to me by an ex-CNW trainmaster at Proviso
> Yard in Chicago, I assume which took place in the
> 1970s: IHB crossed over CNW's main and Proviso
> Yard on a bridge, with a connecting track called
> Harbor Hill. IHB would call Proviso right before
> midnight saying they had a train with hundreds of
> cars ready to come down Harbor Hill into the yard.
> IHB knew Proviso couldn't take the cars, they
> just wanted the CNW's refusal so they could stop
> paying per diem on them. So IHB often didn't
> bother actually having a train there - might have
> been on its way, but nowhere close to Proviso.
>
> One night when the new CNW trainmaster was on the
> job and saw what was going on, he took the call
> from IHB, got out his binoculars and saw no
> headlight on the IHB main, and then told IHB to go
> ahead and bring the train in. Silence from IHB in
> response, then some backpedalling. Apparently the
> practice ended after this.

I was gone by then but I've heard the story from a few sources. Before CTC and radio, the head man hit the phone at Harbor Hill. Calling on the phone made it obvious that the train was there. Technological advancement sometimes provides with ways to cheat.

TAW

The old car hire rules call for the delivering road record to be used in case of discrepancy of interchange records. Basically, all those paper records TAW and others mention would be send into the car hire department who would create the car hire records. Car hire is paid on a 'user calculates' basis, so the car owners don't send an invoice, becuase the roads (car users) are the ones who actually have the records.

In the paper world, the car accounting department uses those daily reports to determine what is owed to each car owner by mark. This was put on a paper statement called Appendix H that would say what day of the month the paying road got the car, from whom, where, etc. and then what day they delivered it off, to whom, etc. When it went to hourly, they recorded the hour of the month. So, if it was received on the 3rd at 10:00 it was hour 58, for example. If it was online at the end of the month then you'd say it was online through hour 720, 744, or whateever Feb. is.

For exceptions to this, they had reclaims where an amount would be put into the Appendix H as a line item deduction. For example, cars handled in switching service were allowed 120 hours reclaimed under Rule 5. Cars "bunched" at origin were allowed time reclaimed under Rule 22. For cars where interchange had been refused the deliverering road could reclaim that time under Rule 15. For this there were a form which had to be signed by both roads.

If the car owner doesn't agree with the records, they issue a claim against the carrier and can asses a penalty if the carrier doesn't pay in a timely way.

This process is now all electronic, but still works where the carrier calculates what they owe the owner. Record discrepancies are reconciled through a process called the Liability Continuity System (LCS) which generally eliminates most of the basic disputes over records.