Shipper group urges changes in classification system
By Staff -- Logistics Management, 5/1/2000
Only a few weeks after the Surface Transportation Board (STB) urged the trucking industry to involve shippers more closely in the motor carrier freight-classification process, the largest shipper organization in the country has asked for major changes in that system. In comments filed with the board, the National Industrial Transportation League asked the STB to require the National Classification Committee (NCC), a trucking industry group that oversees motor carrier freight classification, to assure that shippers have a voice in the process. The league also suggested requiring the NCC to notify shippers of proposals to change commodity classifications and other decisions.
In separate comments, the league urged the STB to:
Eliminate motor carrier rate bureaus' antitrust immunity or else require automatic discounts of at least 50 percent from their collectively set rates;
Prohibit rate bureau members from imposing loss-of-discount penalties on shippers that are late in making their payments; and
Ensure that general rate increases reflect real, objectively verifiable cost increases and do not cause discounted rates to exceed actual market levels.
The classification and ratemaking processes have long been sore spots for shippers. In the classification process, the NCC sorts virtually every kind of freight based on its density, handling characteristics, and a number of other factors. Freight rates are often closely linked to those classifications, so shippers believe they should have a greater voice in classification decisions. The rate bureaus, meanwhile, collectively set rates for their motor carrier members-rates that shippers say rarely reflect true market pricing.
In separate decisions announced earlier this year, the STB extended the antitrust immunity of motor carrier rate bureaus and the NCC but said it intended to require that the rate bureaus adjust class rates to market-based levels and require that the NCC permit greater shipper participation in the freight-classification process. The board will conduct concurrent proceedings to discuss how to implement both of those decisions. NITL's filings were in response to the board's requests for comments prior to the actual hearings.
In its statement, the league argued in favor of notifying shippers in advance of any changes in classifications, saying that shippers usually were not even aware of proposals to add or amend classifications until they were close to a vote. In addition, the league said, shippers did not have access to the studies the NCC used to support classification changes. The group therefore wants the board to require the NCC to publish notice of any proposals to change commodity classifications and to make any studies available to the public on the NCC's Web site. NITL also suggested that the NCC establish a database of shippers and their commodities so it could provide direct notice of proposed changes to shippers whose commodities would be affected.
The league also called for direct participation by shippers in the NCC's proceedings and suggested that the group reserve one-third of the votes for shippers' representatives.
The process for appealing the NCC's decisions also came under scrutiny. "The appeals process rarely leads to reversals and is perceived by shippers to be rigged, so many shippers simply don't bother to appeal," the league charged. NITL suggested that the STB instead allow shippers to appeal decisions to a neutral board of arbitrators.
The next round of comments on freight classifications is due to the STB early next month. The comment period on rate bureaus has been closed.
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