Kohl Seeks Antritrust Probe of LTL Pricing, Classification

Kohl Seeks Antritrust Probe of LTL Pricing, Classification

An increase in the cost of shipping shoes has Sen. Herb Kohl kicking about the classification system used to help price less-than-truckload freight.

The Wisconsin Democrat wants the Justice Department to launch an antitrust investigation into the commodity classification process.

Kohl argues shoe shippers got wrong-footed by a change in the classification of boots and shoes that took effect in January, effectively raising their costs.

While acknowledging its members may negotiate rates with carriers, the American Apparel and Footwear Association said the change would raise shoe shipping costs.

The Commodity Classification Standards Board raised the National Motor Freight Classification for footwear from class 100 to class 150.

Kohl sent a letter to U.S. Assistant Attorney General Christine Varney Aug. 5 requesting an antitrust investigation into how truck shipping rates are set.

"The cost to ship shoes has increased substantially," Kohl said. "This increase in shipping rates has begun to hurt businesses throughout Wisconsin and nationwide."

The classification system does not set prices, but it is used as a benchmark by LTL carriers for determining base transportation rates for all types of commodities.

Goods are assigned a class by the CCSB based on four characteristics: their density, handling characteristics, stowability and potential for liability.

LTL trucking companies assign rates by class when writing price lists or tariffs, so when a classification changes, carrier prices may change as well.

Prior to 2008, classifications were set and maintained under limited antitrust immunity by motor carriers on the National Classification Committee.

The CCSB was formed after the Surface Transportation Board revoked that immunity, following federal guidelines and the advice of antitrust attorneys.

The CCSB is comprised of full-time employees of the National Motor Freight Traffic Association, which has administered the classification system since 1956.

Although no trucking company representatives sit on the classification board, they do advise its members through a Classification Resource Committee.

The NMFTA itself is an affiliate of the American Trucking Associations.

Shippers also have input into classification decisions. They may submit proposals to the CCSB and challenge decisions at the board's scheduled public meetings.

In the case of footwear, a two-year investigation found the density of shoe shipments on average was less than the 9 per cubic foot minimum for class 100.

Almost 25,000 checks found footwear shipments had an average density of 6.31 pcf, the CCSB said. It changed the footwear classification to class 150 in January.

The American Apparel and Footwear Association and Footwear Distributors and Retailers Association challenged the move with a counter-proposal.

Their request to restore the original classification was turned down in June.

-- Contact William B. Cassidy at wcassidy@joc.com.