STB issues ruling on collective ratemaking processes

Staff -- Logistics Management, 5/10/2007

WASHINGTON and ORLANDO, Fla.—Earlier this week, Surface Transportation Board (STB) chairman Charles Nottingham told attendees at the annual National Shippers Strategic Transportation Council’s (NASSTRAC) annual logistics conference and expo that the STB has officially terminated the antitrust immunity of the National Classification Committee (NCC) and other rate bureaus.

This decision, according to NASSTRAC, means that the era of motor carrier collective ratemaking has come to an end. And NASSTRAC said in a press release that this decision portends that future general rate cases will be made by carriers acting individually rather than collectively.

NASSTRAC added that the National Motor Freight Classification (NMFC) may still be used for rating shipments if shippers and carriers agree, but changes for class ratings will be up for negotiation, rather than being imposed through carriers acting with immunity rather than antitrust immunity.

“Motor carrier collective ratemaking is a holdover from the cartel era of trucking industry pricing and is inconsistent with the competitive goals of deregulation,” said NASSTRAC general counsel John Cutler in a statement. “Reforms the STB adopted in the last round of proceedings did not solve the problem, so NASSTRAC welcomes the new decision by the Surface Transportation Board. This is an issue we’ve been working on for more than 10 years.”

While NASSTRAC was very supportive of the STB’s decision, the National Motor Freight Traffic Association (NNFTA), a nonprofit membership association representing 100 less-than-truckload (LTL) carriers in North America, had a decidedly different outlook.

NMFTA said on Thursday that it plans to respond to the ruling. And Bill Pugh, secretary of the NCC and executive director of the NMFTA, said in a statement that the STB’s ruling will not end the need for an industry-wide classification standard.

“Most definitely the Classification will continue,” said Pugh. “Some modification of the existing process might be necessary, but the NMFC’s importance to both shippers and carriers demands that it be preserved.”

The NMFTA statement added that the STB’s decision also would not, and does not, alter the statutory requirement that carriers who use or refer to provisions of the NMFC must participate in the NMFC.