STB Ends Antitrust Immunity for Trucking Rate Bureaus
By Dan Leone, Staff Reporter
This story appears in the May 14 print edition of Transport Topics. Click here to subscribe today.
The Surface Transportation Board has revoked the authority of motor carriers to engage in collective ratemaking and freight classification, a decision that could dramatically alter the way many motor carriers set freight rates, said transportation industry officials.
The board ruled that collective ratemaking results in an “inevitable . . . reduction in competition” and said the removal of antitrust immunity would “encourage fair competition and reasonable rates by motor carriers.”
The STB decision is effective Sept. 4.
“I think it’s a very significant ruling,” said Mike Regan, chief executive officer of TranzAct Technologies, an Elmhurst, Ill., company that handles freight payments for shippers.
“You’re dealing with the basis for how LTL moves have been priced for years. It really forces carriers into a mode where they have to think about how they will price their services,” Regan said.
A spokesman for SMC3, Atlanta, a bureau that publishes rates for more than a hundred less-than-truckload carriers, said the decision overturns a process that has been in place for half a century.
“We felt that we’d done things right for 50 years,” Danny Slaton, senior vice president of business development for SMC3, told Transport Topics. “We’d included shippers, carriers, [third-party logistics companies], the press. We were very open with what we did.”
Slaton said, while his organization was still formulating a plan “to fully address both the challenges and opportunities” presented by the STB decision, SMC3 would first seek an extension of the deadline for the elimination of the antitrust protection.
Paul Dugent, vice president of pricing and traffic for Estes Express Lines, a Richmond, Va.-based LTL carrier, said that without protection from antitrust laws, “carriers can no longer sit down in a collective environment,” and that will make it more difficult to use the National Motor Freight Classification or SMC3’s LTL pricing database, which is used by both shippers and carriers.
Representatives of transportation intermediaries and shippers, however, lauded the decision.
“Motor carrier collective rate-making is . . . inconsistent with the competitive goals of deregulation,” said John Cutler, general counsel for shipper group NASSTRAC, which has long supported the elimination of antitrust immunity for collective ratemaking and freight classification.
Bob Voltmann, president of the Transportation Intermediaries Association of Alexandria, Va., said the decision “ends the last vestige of economic regulation and protectionism” in trucking.
“I think it’s a great for shippers, great for carriers,” he told TT.
STB said, “Motor carriers no longer need protection from the antitrust laws” and that removing this shield was a “more direct approach” to helping shippers and carriers than trying to regulate the activities of rate bureaus and the National Classification Committee.
The NCC includes motor carrier representatives who place the most common commodities into 18 classes, based on four primary transportation characteristics: density, stowability, ease of handling and liability.
Once freight is classified, participating motor carriers apply freight rates to each class to determine the shipping charge.
Bill Pugh, NCC secretary and executive director of the National Motor Freight Traffic Association, an organization that provides research and support for the classification process, said the ruling will not mean the end of classification.
“Most definitely, the classification will continue,” he said. “Some modification of the existing process might be necessary.”
In its decision, STB said it decided to terminate antitrust immunity for freight classification, in part, because it was concerned that carriers could turn to the classification system as a way to pad revenue.
This story appears in the May 14 print edition of Transport Topics. Click here to subscribe today.
The Surface Transportation Board has revoked the authority of motor carriers to engage in collective ratemaking and freight classification, a decision that could dramatically alter the way many motor carriers set freight rates, said transportation industry officials.
The board ruled that collective ratemaking results in an “inevitable . . . reduction in competition” and said the removal of antitrust immunity would “encourage fair competition and reasonable rates by motor carriers.”
The STB decision is effective Sept. 4.
“I think it’s a very significant ruling,” said Mike Regan, chief executive officer of TranzAct Technologies, an Elmhurst, Ill., company that handles freight payments for shippers.
“You’re dealing with the basis for how LTL moves have been priced for years. It really forces carriers into a mode where they have to think about how they will price their services,” Regan said.
A spokesman for SMC3, Atlanta, a bureau that publishes rates for more than a hundred less-than-truckload carriers, said the decision overturns a process that has been in place for half a century.
“We felt that we’d done things right for 50 years,” Danny Slaton, senior vice president of business development for SMC3, told Transport Topics. “We’d included shippers, carriers, [third-party logistics companies], the press. We were very open with what we did.”
Slaton said, while his organization was still formulating a plan “to fully address both the challenges and opportunities” presented by the STB decision, SMC3 would first seek an extension of the deadline for the elimination of the antitrust protection.
Paul Dugent, vice president of pricing and traffic for Estes Express Lines, a Richmond, Va.-based LTL carrier, said that without protection from antitrust laws, “carriers can no longer sit down in a collective environment,” and that will make it more difficult to use the National Motor Freight Classification or SMC3’s LTL pricing database, which is used by both shippers and carriers.
Representatives of transportation intermediaries and shippers, however, lauded the decision.
“Motor carrier collective rate-making is . . . inconsistent with the competitive goals of deregulation,” said John Cutler, general counsel for shipper group NASSTRAC, which has long supported the elimination of antitrust immunity for collective ratemaking and freight classification.
Bob Voltmann, president of the Transportation Intermediaries Association of Alexandria, Va., said the decision “ends the last vestige of economic regulation and protectionism” in trucking.
“I think it’s a great for shippers, great for carriers,” he told TT.
STB said, “Motor carriers no longer need protection from the antitrust laws” and that removing this shield was a “more direct approach” to helping shippers and carriers than trying to regulate the activities of rate bureaus and the National Classification Committee.
The NCC includes motor carrier representatives who place the most common commodities into 18 classes, based on four primary transportation characteristics: density, stowability, ease of handling and liability.
Once freight is classified, participating motor carriers apply freight rates to each class to determine the shipping charge.
Bill Pugh, NCC secretary and executive director of the National Motor Freight Traffic Association, an organization that provides research and support for the classification process, said the ruling will not mean the end of classification.
“Most definitely, the classification will continue,” he said. “Some modification of the existing process might be necessary.”
In its decision, STB said it decided to terminate antitrust immunity for freight classification, in part, because it was concerned that carriers could turn to the classification system as a way to pad revenue.
