Commentary: Rates and Ratings: A Leg to Stand On?

Q: I don’t believe I’ve seen this one asked before. I work for a post-audit company, and one of our clients ships stands as shown in National Motor Freight Classification Item 81740, either as sub 3, set up or sub 4, knocked down.

The carrier that has been used to move these has lately been “inspecting” the shipments and re-rating some of the items the client has listed “knocked down” as “set up.” These stands have adjustable legs, which in the lowest position are less than one-third of the highest position.

The carrier has called on the National Classification Committee to render a ruling on these, and it has complied by citing NMFC Item 110, Section 12, but only in part — specifically the discussion of a 33.33 percent reduction from an article’s normal shipping cubage. But after this, it stated, “Articles that are adjustable have always been considered at their normal setup cubage when in their lowest adjustable position.”

Is it correct about that? I have never heard that before. I had previously referred to the same rule item and the fact that it defines “knocked down” as “taken apart, folded or telescoped.” And the word “telescoped” is what’s pertinent. However, that would be irrelevant if the NCC is correct in what it states has always been considered in the industry as normal.

Please give your opinion on this, and if you have ever heard that about what is normal shipping cubage as related to adjustable items.

A: Is the NCC correct in its reading of what’s “always” been done? I have no idea, and no way of checking short of an extended perusal of the organization’s files, to which I doubt it would give me access even if I were game to make such a search.

I’m not, and I think it’s only marginally (if at all) relevant anyway. The NCC, as a private and unregulated entity, is free to make its determinations as it pleases without reliance on precedent. So long as it does so without discrimination, its “rulings” are immune from legal challenge.

Remember, rate bureaus — and the National Motor Freight Traffic Association, of which the NCC is an arm, is one such — were deregulated by the Surface Transportation Board several years ago. This stripped them of the limited antitrust immunity they had theretofore enjoyed; but at the same time it deprived the STB or any other government agency of the right to control their actions and decisions as long as no laws were violated.

Now, I agree with you that the discussion of rules Item 110, Section 12 of the NMFC seems a little ambiguous in this respect. The legs of an adjustable stand are pretty evidently “telescoped” when set at their lowest extension, which tends to support your position that the stands are “knocked down” in that configuration.

Simple logic, however, leans toward the NCC’s expressed view. I mean, somebody would have to explain to me the sense behind shipping these stands with legs fully or partially extended, which would make them structurally weaker and thus more vulnerable to in-transit damage. So the foreshortened legs alone don’t make the stands, by this measure, any less “set up.”

Ah, but rate bureau deregulation has one additional component: It renders the NCC’s opinions of only advisory, not mandatory, application. That means no carrier participant in the NMFC is under any obligation to abide by the committee’s views. It’s free to decide such questions independently, even if it thereby goes counter to NCC “expertise.”

The bottom line is that such matters are, like almost everything having to do with transportation rates, negotiable between carrier and shipper. If the carrier chooses in this instance to abide by the NCC interpretation, it’s still making that choice of its own volition, and perhaps your client can induce it to change its mind.

So, as a post-auditor, your only real option is to advise the client to approach the carrier in that vein. Maybe there are other carriers out there that won’t take such a rigorously constructionist view, choosing instead to recognize the considerable reduction in occupied cubic capacity when the stands’ legs are in their lowest position. That might give your client competitive leverage to make the carrier reconsider.

The point is that your quarrel is with the carrier, not the NCC. And that’s the only effective way to look at it in this day and age.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843- 559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.
 

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