Tariff & Pricing Background

ATVL 1000: Introducing the New Atlas TariffIndustry Background: Then and NowATVL 1000 Access: View Tariff and Pricing Online

Click here for the complete text of the Surface Transportation Board (STB) decision from May 7, 2007.

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Industry Background

Evolution of Tariffs in the Motor Carrier Industry

  • Pricing mechanisms traditionally used by motor carriers grew out of the nation's need to protect and encourage a fledgling industry.
  • Today the growth and maturation of the motor carrier industry have created an environment where collective ratemaking no longer serves the public interest.
  • The Surface Transportation Board (STB) has ruled that motor carriers may no longer engage in collective ratemaking; each will be responsible for publishing their own tariff individually.
  • The ruling takes effect January 1, 2008.

Historical Overview of Tariff Pricing

As part of President Franklin Roosevelt's New Deal, in 1933 Congress passed the National Industrial Recovery Act (NIRA). The law replaced free market competition with cooperative action subject to regulatory oversight. NIRA was designed to stimulate the economy through "codes of fair competition" and the standardization of certain business practices. The code governing the motor carrier industry, developed by new motor carrier rate bureaus, required each carrier to file a schedule of minimum rates and tariffs.

Supreme Court Strikes Down NIRA

The Supreme Court struck down NIRA in May 1935. In August of that year, Congress passed the Motor Carrier Act of 1935 (renamed Part II of the Interstate Commerce Act). The law was designed to protect the fledgling industry from cutthroat competition. It started a system under which the Interstate Commerce Commission (ICC) restricted entry into the trucking business and approved specific routes. It also: required motor carriers to file tariffs with the ICC 30 days in advance; allowed protest from other common carriers of a proposed tariff; and required that carriers' rates be reasonable "as to both minimum and maximum."

Congress Authorizes Collective Ratemaking

In 1948, Congress passed the Reed-Bullwinkle Act. This allowed rate bureaus operating under ICC-approved agreements to set rates collectively, and it immunized their activities from antitrust laws. In the environment of pervasive regulation, almost all carriers belonged to a rate bureau. The bureaus calculated and published, for their member carriers, the amounts of any across-the-board increases or decreases to rates to take into account changes in the carriers' labor and fuel costs. All rates were subject to regulatory challenge.

The regulatory environment changed substantially in the ensuing decades. With the advent of the Interstate Highway System, trucks, rather than rails, came to dominate the transportation of manufactured goods. The motor carrier industry achieved financial stability and the original rationale for restrictive regulation disappeared.

The 1980 Motor Carrier Act was a turning point, essentially repealing interstate motor carrier regulation to promote competition. The act curtailed permissible activities of rate bureaus seeking continued regulatory approval. In 1994, Congress removed the requirement that motor carriers of general freight file tariffs.

Congress Passes ICC Termination Act 1995: Deregulation Continues

With the ICC Termination Act of 1995 (ICCTA), Congress removed most of the remaining framework of pervasive regulation in favor of more robust competition. It 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. The law established the STB as a regulatory agency and mandated its review of motor carrier bureau agreements under a "public interest" standard every five years.

In 1999, Congress rejected a proposed amendment that would have returned the review process to what it was prior to ICCTA. Instead, the legislature retained a mandatory periodic review, requiring the STB to take a fresh look every five years at all collective ratemaking agreements in the industry.

Market Rates Effective Jan. 1, 2008

Ratemaking in the Industry Today

Following the regular review of industry pricing agreements in 2007, the STB announced on May 7, 2007, its decision to end joint ratemaking. Essentially, the board found that rate bureaus are not needed in, nor consistent with, the industry's deregulated environment. Moreover, the STB determined such bureaus are anti-competitive and no longer serve the public interest.

With specific reference to household goods, the STB held that customers would best be served by letting the market set rates. The decision mandates that motor carriers will each be responsible for publishing their own tariffs individually. The ruling takes effect January 1, 2008.