MARKET SETS TRUCK RATES

A CADRE OF FREE MARKET ENTHUSIASTS meets in Washington today to launch what has become an annual campaign - the drive to complete trucking deregulation. This latest attempt to finish a reform program begun seven years ago comes at an unsettled time for the trucking industry. Many carriers have been engaging in a rate skirmish for the last several months. In part, this is a response to shipper demands for lower rates, a reaction to strong reported profits by many carriers for much of 1986. Rate cutting by Roadway Express, one of the industry's largest and most powerful carriers, has added to the pressure.

Truckers also are awaiting reaction to reaffirmation by an American Trucking Associations blue ribbon task force of the need for a government role in a naturally competitive industry. The task force, which included 37 of trucking's top executives, outlined a series of well-considered but flawed arguments in defense of economic regulation.While the task force was debating the arcane qualities of rate regulation and collective price setting, Roadway and its competitors were responding to the marketplace in true competitive fashion. The Akron, Ohio, carrier, faced with declining market share, reacted with strong fourth quarter rate cuts.

As Roadway fought to regain business, an important decision loomed. Most of the industry's rate bureaus - carrier associations with antitrust immunity to set freight charges - were preparing to file their annual general rate increases with the Interstate Commerce Commission. Those price hikes, which reflect average cost increases in a geographical region, figured to average about 5 percent.

Roadway, serious about its campaign to recapture business, urged its bureau to approve a modest 2.9 percent increase, enough to cover higher labor costs only. But the carrier's proposal was voted down in favor of a 5 percent increase. When the company said it would file independently for the smaller hike, many rate bureaus responded to Roadway's competitive challenge and reconsidered. The majority of bureau increases now figure to be closer to 3 percent than 5 percent.

Roadway stressed that its independent filing was not a retreat from its support for collective rate making. Clearly, however, its action struck a blow for individual cost accountability over catchall collective averages.

And what of American Trucking Associations' task force report? In one way, the study was right when it said the marketplace, even with regulation, sets interstate freight rates. Roadway proved that.

But why were rate bureaus needed in the first place? Roadway, admittedly an industry leader, was able to calculate its costs and suggest appropriate rates. ATA's task force says smaller carriers cannot establish their own prices. We disagree. In an era of sophisticated and responsive computers, it is hard to imagine a fleet that cannot figure its costs and charge a rate that covers them, with a fair profit.

The task force further defended rate regulation and collective rate making by insisting they foster a common language that promotes efficiency. Perhaps, but government regulation and exemptions from the antitrust laws are not needed to set a framework for efficient transportation. The Justice Department reinforced that notion this month when it approved a shippers agents' proposal for a uniform transportation code for storage and detention charges incurred with intermodal shipments.

Support for rate regulation may ultimately hinge, as the report suggests, on the protection it affords carriers from treble-damage antitrust lawsuits. Under a law recently upheld by the Supreme Court, a freight rate filed with the ICC is considered legal if it is not challenged there.

If rate regulation affords this special protection, the report never explains why. Other industries function well enough under the antitrust laws, even with the threat of treble-damage lawsuits. No doubt truckers would do just as well.

The task force report fails to show why trucking needs the government's guiding hand. If collective price setting is good for carriers and shippers, as ATA alleges, then why the increase in independent rate actions, freight rate discounting and confidential contract rates?

With a distracted Congress focusing on budget deficits, trade legislation and a host of other concerns, trucking deregulation seems a long shot in 1987. Nevertheless, the trucking reform coalition meeting this week undoubtedly will press ahead. Marketplace forces are also pushing the industry toward further deregulation, whether it realizes it or not.

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