Getting On Board with a New Tariff

Nov 06, 2007

tariff-header
On May 7 of this year, the Surface Transportation Board terminated its approval of the agreements of motor carrier bureaus to engage in rate-related collective activities.The STB described its action as the final step in a process that began more than a quarter century ago of making the motor carrier industry fully competitive.

Promoting Industry Efficiency

The STB's May 7 decision stemmed from a regular review of collective ratemaking the board conducts every five years. In explaining the rationale behind the action, the STB cited its intent to serve the public interest. It contends the dissolution of collective ratemaking will, among other things:

  • Encourage fair competition, with reasonable rates for transportation by motor carriers of property.
  • Provide efficiency in the motor carrier transportation system.
  • Allow a variety of quality and price options to meet changing market demands and the diverse requirements of the shipping and traveling public.
  • Improve and maintain a sound, safe and competitive privately owned motor carrier system.
atvl1000

The STB's pronouncement mandated that motor carriers introduce their own tariffs by September 4. That deadline was subsequently extended to allow the thousands of affected carriers ample time for adequate review, analysis and revision to prepare a smooth transition. The date for introduction is January 1, 2008.

Atlas Answers the Letter and Spirit of the Law

Soon after the STB's decision, a team of Atlas executive management convened to determine the best course of action for the van line and its customers. "Essentially, we had two choices," says Atlas Vice Chairman and CEO Jim Stamm. "We could develop a new tariff from the ground up, or we could modify an existing tariff and publish it as our own."

The team recommended the latter course of action and the Atlas board concurred. As a result, Atlas set about modifying the most recent common bureau tariff (STB HGB 400N) to create an Atlas Tariff, ATVL1000.

"Because our capacity and operating infrastructure is largely dedicated to corporate relocation in North America, we weighed our options carefully in formulating our objectives," says Atlas Sr. Vice President and Chief Marketing Officer Greg Hoover. "We believed it important to preserve the integrity of the current 400N pricing structure, which is the basis for most existing transportation agreements. Given such a short time frame, we felt it was critical for our customers, our agents and our internal and external information systems that we maintain continuity and consistency with what they already understand and use."

Similarly, Atlas wished to assure trust and ease in auditing for customers. So, the new tariff mirrors 400N, with baseline pricing components unchanged.

"There is no risk to our clients that terms and conditions will result in increased spending," says Greg, "or that they will need to spend additional time and resources in training or in understanding a significantly different pricing model."

Simply Easier to Use

The Atlas Tariff not only mirrors the 400N, it vastly simplifies it, eliminating redundancies and making it easier to read. "We have edited the document down from 109 to 59 pages-primarily through the elimination of multiple passages referring to the same issues," says Atlas Van Lines President and COO Glen Dunkerson. "Bridges and ferries, as an example, were noted with the same verbiage in multiple places in 400N. We've reduced that to one. And we've eliminated various other items that pertained only to a multiple carrier tariff."

Greg says it all boils down to a customer-friendly tariff that makes doing business with Atlas easier. "Most important, the new tariff reflects what drives our organization: listening to our corporate clients and eliminating the potential for confusion."

"In creating our tariff, we remain focused on preserving pricing integrity and finding ways to operate more efficiently," says Glen.

"Simply stated, it is our intent to not only comply with the letter and spirit of the law, but to make the transition as easy as possible for our clients," says Jim. We've designed the new Atlas Tariff to be consistent with our core values of integrity, quality, and solutions, and we believe it will provide an efficient tool for us and those we serve."

In October, Atlas notified its agents and national accounts of the plans to introduce a new and simpler ATVL1000 Tariff on January 1, 2008. On November 7, a brochure summarizing the changes went out to national accounts. Atlas is now preparing the official tariff document for publication, as well as communication aids to ease the transition from 400N. These will be made available online during the 4th quarter. Visit www.atlasvanlines.com/tariff for updates.

History of Collective Ratemaking Among Interstate carriers

A brief historical review of the industry's collective ratemaking puts the STB decision in context.

As part of President Franklin Roosevelt's New Deal, Congress passed the National Industrial Recovery Act (NIRA) of 1933, designed to stimulate the economy through "codes of fair competition." The code governing the motor carrier industry, developed by new motor carrier rate bureaus, required that each carrier file a schedule of minimum rates and tariffs.

After the Supreme Court struck down NIRA, Congress passed the Motor Carrier Act of 1935 (1935 Act) to protect the fledgling industry. The act required motor carriers to file tariffs with the ICC (Interstate Commerce Commission) 30 days in advance; it allowed protest from other common carriers of a proposed tariff; and it required that carriers' rates be reasonable "as to both minimum and maximum."

Congress Authorizes Collective Ratemaking

In 1948, the Reed-Bullwinkle Act allowed rate bureaus operating under ICC-approved agreements to set rates collectively for carriers and immunized their activities from antitrust laws. The bureaus calculated and published increases or decreases to rates to take into account changes in the carriers' labor and fuel costs. All rates were subject to regulatory challenge.

With the 1980 Motor Carrier Act, Congress essentially repealed interstate motor carrier regulation in order to promote competition. The act curtailed the permissible activities of rate bureaus seeking continued regulatory approval. Then, in 1994, Congress removed the requirement that motor carriers of general freight file tariffs.

1995: Deregulation Continues

With the ICC Termination Act of 1995 (ICCTA), Congress eliminated regulation of motor carrier rates altogether, except for: rates for household goods movements; rates for joint motor-water movements in noncontiguous domestic trade; and rates set collectively by motor carrier bureaus. It also mandated a periodic review of motor carrier bureau agreements under a "public interest" standard.

In 1999, Congress rejected a proposed amendment that would have made the STB's review discretionary and upheld a requirement for it to be conducted every five years.

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