Shipper FAQ

Below are some Frequently Asked Questions from potential lessees that are new to railcar leasing.

Q. What is a net lease?
A. A net lease is generally one in which the lessee assumes most or all responsibilities and costs relating to the railcar including, without limitation, maintenance, repairs, and ad valorem taxes. Under a net lease, the lessee is usually responsible for registering and maintaining the railcar mark in UMLER and The Official Railway Equipment Register. Of course, each net lease is subject to the specific terms of the applicable lease agreement.

Q. What is a full service lease?
A. A full service lease is one in which SMBC Rail Services would be responsible for most of the maintenance and administrative record keeping relating the railcar. A railcar subject to a full service lease usually displays the lessor’s car mark. Of course, each full service lease is subject to the specific terms of the applicable lease agreement.

Q. My car needs a repair. What do I do?
A. Call your customer service representative at 1-877-244-9349 to indicate the car(s) to be repaired and the location, the nature of the problem, the last commodity transported, and other relevant information. The representative will promptly arrange for the needed repairs.

Q. When can I expect my car to be released from shop?
A. Call your customer service representative at 1-877-244-9349 for repair progress reports and the anticipated delivery date. It's that easy.

Q. Explain rental abatement.
A. Under certain circumstances expressly stated in your lease, your obligation to pay rent for a car may be suspended during the time that car is out of service for repairs or maintenance for which SMBC Rail is responsible under the terms of the lease.

AAR Circular OT-5 K
The AAR has issued Circular OT-5 K, replacing OT-5 J, effective January 1, 2009.

The revised circular attempts to clarify certain language in the preceding document, and eliminate redundancies. More importantly, it now calls for OT-5 authorization by originating carrier for private tank cars. Attached below are copies of the subject AAR documents, for your reference.

It should be noted that there is a web-based procedure for requesting OT-5 authority, hosted by Railinc. We have also included a descriptive document regarding this system. As a grace period for those requesting authority for the first time for tank cars, using the Railinc system is voluntary for calendar year 2009, and becomes mandatory January 1, 2010. However, the Railinc system is mandatory for all other railcar types now.

If you are a lessee of railcars through SMBC Rail Services, LLC, it is your responsibility to apply for the appropriate authorization from your originating carrier(s).  Please click on the pdf links below to view the released documents.