Impact of STB''s Antitrust Decision

Copyright 2007, Traffic World, Inc.

Q:

What impact do you see from the Surface Transportation Board''s decision to withdraw antitrust immunity from all motor carrier rate bureaus, including the National Classification Committee, the Household Goods Carriers Bureau Committee of the American Movers Conference, the National Bus Traffic Association and the regional rate bureaus?

A:

Well, the spirit of Harry Truman is probably pretty happy. Then-President Truman vetoed the Reed-Bulwinkle Act, which first conferred the immunity, only to be overridden by Congress.

I expect there are some antitrust lawyers who are also pretty gleeful. Some eager beaver in the Justice Department''s Antitrust Division is sure to sooner or later initiate suit against what I''m certain will be continuing activities of the NCC and the rate bureaus, and antitrust cases can generate really big bucks for lawyers.

Quite a lot of shippers are likely satisfied, too. The major shipper groups - perhaps mindful of former Interstate Commerce Commission Chairman Darius Gaskins'' long-ago comment that "a shipper who supports rate bureaus is like a turkey that supports Thanksgiving" - opposed renewal of antitrust immunity for the bureaus.

So at least one ghost and a bunch of other living folks will have some warm fuzzies. A few others, mainly lower-echelon employees of some of the bureaus, will find their job security isn''t all they''d hoped.

And that''s about the sum total of what I see. Otherwise I expect business in the trucking industry to go on with scarcely a ripple.

To be sure, there was once a day when the bureaus pretty much ruled the highways. They set rates with unabashed monopolistic control and exerted heavy pressure on any carrier rash enough to defy their domination.

Over the past three decades of deregulation, though, their influence has been steadily dwindling, to the point that their activities - certainly any activities that require antitrust immunity - are largely irrelevant to the industry.

In truckload service the irrelevance is almost total. The National Motor Freight Classification and the bureau-set class rates simply aren''t used. Truckload carriers do use mileage guides and the NCC-established uniform bill of lading, but antitrust immunity isn''t needed for them.

The NMFC and collectively established class rates such as the CzarLite scale are commonly used by less-than-truckload carriers. But there''s already heavy-duty competition in this sector through discounting, and plenty of alternatives. For instance, the big LTL carriers already encourage smaller competitors to make use of their own rate structures, an invitation that''s often accepted.

Besides, as William F. Pugh, executive director of the National Motor Freight Traffic Association (it runs NCC), said after the STB decision, "classification will be continued," although with perhaps some changes in the rating methodology. Daniel Slaton, a top official at SMC3, which publishes CzarLite, promised that, too, will live on with, again, a revised development approach.

Ramifications may be a bit more far-reaching among household goods movers. But a lot of van lines already don''t use the HHGCB scale for line-haul service. HHGCB-set accessorial charges, such as storage and the like, are more commonly used, but I see nothing stopping the bureau from continuing to publish "guidelines" for carriers to apply if they choose, so long as it''s careful how they''re set.

I''m not knowledgeable enough about passenger transportation to evaluate how (or even if) the action will affect the bus industry. NBTA officials fear it will adversely impact smaller, local lines, and perhaps it will do that to a few that have competitive operations. I doubt, though, that the effects will be widespread.

STB made a really big deal about doing away with collectively established general rate increases. Rubbish. Me-too pricing, which the courts say isn''t an antitrust violation, is going to handle this just fine - which is pretty much how things have been working the past few years anyway. You''ll see little by way of substantive change.

Indeed, the board''s enthusiastic predictions of a more competitive industry strike me as so much political bombast. It bemoaned the plight of the small or occasional shipper, the shipper who doesn''t "shop around" for rates, etc. Well, they''ll still pay the same top dollar they''ve been paying; even if the bureaus vanished tomorrow it wouldn''t make them any bigger, any less occasional or any smarter.

And will the action give shippers a greater voice in such things as classification decisions, as some shipper officials eagerly anticipate? I''d think less voice, if anything; it''s been STB oversight that has required increased shipper participation in NCC actions, and the board has just ruled itself out of the picture. More shipper involvement would aggravate, not diminish, the risks of antitrust violation.

Antitrust immunity for motor rate bureaus has been mostly a relic of a bygone era of the industry. And as with most relics, its formal termination is little more than a belated recognition of what the real world has already determined is largely inconsequential to contemporary practices. Sic transit gloria nil.



-- Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at P.O. Box 76, Morganton, Ga. 30560; phone, (706) 374-7201; fax, (706) 374-7202; e-mail, BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.





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