Part of the Commodity Classification Standards Board’s mission is to re-examine classifications when the characteristics of goods may have changed, triggering changes in the transportation profile.
Footwear has had an LTL class 100 rating since 1936, and although feet may not have changed much since then, the rating was set long before the era of Air Jordans and Manolo Blahniks.
The new debate over the reclassification of shoes began in late 2007 with an investigation into the transportation characteristics of plastic footwear, which the CCSB labeled Research Project 1069. That project was expanded to incorporate all types of boots, shoes and slippers, regardless of material.
That 100 rating presupposes a minimum density of nine pounds per cubic foot. In its research, the CCSB made more than 25,000 density observations, finding an average density of 6.31 pcf. “Approximately 92 percent of the figures are less than the 9 pcf minimum average density generally associated” with class 100, the CCSB said in a report, shifting shoes to class 150.
That’s where the shoe shippers say they were wrong-footed. “It is impossible to determine how many pairs of shoes or even what kind of shoes were included in the sample,” several manufacturers, the American Apparel and Footwear Association and Footwear Distributors and Retailers of America said in letters to the CCSB.
They noted the board eliminated a separate classification for plastic footwear, “and then combined these shoes, which clearly have a very low density, into the classification covering virtually all other footwear.” The CCSB said its observations included dress and athletic shoes, sandals and boots with and without steel toes.
The shipper groups also claimed to have no record they were notified of the investigation or proposed change in classification. The CCSB said 247 entities, including associations, were contacted in four separate mailings from Oct. 6, 2008, through Sept. 3, 2009, before the October meeting where the change was approved.
The shipper claims of price fixing hinge on the CCSB’s relationship with the trucking industry. The board is an autonomous part of the National Motor Freight Traffic Association, an American Trucking Associations affiliate with hundreds of motor carrier members. However, the CCSB was organized after the Surface Transportation Board stripped the NMFTA of its antitrust immunity in 2007, and no carrier representatives sit on the board.
The board members, led by Chairman Joel Ringer, are employees of the NMFTA who specialize in classification research. A separate group of carrier representatives can provide advice but not vote on classification matters. This structure was vetted by antitrust lawyers and the Justice Department following the NMFTA’s reorganization.
The American Apparel and Footwear Association wants to put it to the test again. In its letter to New York State Attorney General Andrew Cuomo, the association questions “whether the antitrust laws allow this type of collective activity under any set of procedures.”