STB will enforce "truth in rates" rules for motor carrier rate bureaus
By Ray Bohman -- Logistics Management, 6/1/2003
Shippers will be the primary beneficiaries this fall when motor carriers that participate in rate bureaus will have to comply with two new requirements mandated by the Surface Transportation Board (STB).
These requirements have been a long time coming. Back in 1997, the STB began a proceeding titled "EC-MAC Motor Carriers Service Association Inc., et. al." in response to provisions of the Interstate Commerce Commission Termination Act of 1995. The purpose of that proceeding was to consider whether and under which conditions the board should continue to approve existing rate bureau agreements.
Since then, the STB has focused much of its efforts on ensuring that the rate bureaus' collective rate-setting process does not skew pricing or mislead shippers as to the rates prevailing in the market. One of the board's primary concerns about the way motor carrier rate bureaus set "class" rates is that those rates are being set at artificially high levels in order to serve as the basis for rate discounting.
To address that concern, the STB on March 21, 2003, issued two new requirements that the 11 motor carrier rate bureaus will have to include in their Section 5a antitrust immunity agreements.
The first requirement is that rate bureau members publish a "truth in rates" notice that is designed to ensure that "occasional or uninitiated shippers" are not misled into thinking that class rates are the going rates for most motor carrier traffic.
Under that rule, a bureau member that publishes or quotes—either in writing or orally—a rate that is based on or references bureau-set class rates must give the potential shipper a "truth in rates" notice that prominently discloses the range of discounts provided to shippers by bureau members.
The second requirement sets conditions for member carriers' loss-of-discount provisions. The STB now will prohibit motor carriers from applying a loss-of-discount penalty for late payments that references or is linked in any way to a class rate that was collectively set by a rate bureau. The STB, furthermore, has set this requirement as a condition of rate bureau membership.
In its decision, the board said that although credit regulations adopted by the Interstate Commerce Commission and now administered by the Federal Motor Carrier Safety Administration (FMCSA) permit carriers to employ reasonable procedures to recover collection costs incurred in connection with overdue charges, they are not entitled to use those procedures for "unjust enrichment." "Bureau members are not precluded from imposing other permissible, reasonable late-payment charges under the FMCSA regulations," the new rule says. "They simply will not be allowed to peg such charges to the class rates that are the product of the collective ratemaking process."
It's still too early to tell if these new rules, particularly the "truth in rates" notice requirement, will be so distasteful as to prompt some rate bureau members to withdraw altogether from collectively setting rates.
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