The back-story...The Motor Carrier Act of 1935 gave the Interstate Commerce Commission (ICC), a federal government agency, the authority to regulate interstate trucking companies (the "motor carriers"). The ICC's new powers with respect to motor carriers were similar to those it had over railroads, which it had regulated since 1887. The ICC could decide which companies could become motor carriers, what services they could offer, and what rates they could charge. The constitutionality of the act rests on Congress's authority to regulate interstate commerce under Article I, section 8 of the U.S. Constitution.
The Act itself...divided motor carriers into two categories: common carriers, which held out their service to the public generally, and contract carriers, which had agreements with a limited number of customers. Applications by new or existing trucking companies to expand their operations could be granted only if, in the words of the statute, the proposed service was "required by the present or future public convenience and necessity." The ICC had to decide precisely what this very general requirement meant:
In an early case, it defined the public convenience and necessity by reference to three factors: whether a proposed operation would "serve a useful public purpose, responsive to a public demand or need," whether such purpose "could be served as well by existing firms or carriers," and whether the applicant could operate the service "without endangering or impairing the operations of existing [companies]."
These requirements restricted the ability of new companies to enter the motor carrier business and existing companies to expand to new areas. It also inhibited competition between motor carriers and railroads and between common and contract carriers.
The act also stated that rates charged by motor carriers had to be "just and reasonable" and could not discriminate between customers of similar circumstances. The act required motor carriers to file rates thirty days before they were to become effective and allowed existing companies to protest. In 1948 Congress passed the Reed-Bulwinkle Act, (over a veto by President Truman) which permitted rates to be set by "rate bureaus" representing groups of motor carriers. These bureaus could agree on uniform rates applicable to all its members. Such rates, when approved by the ICC, were immune from antitrust laws.
In the 1980s Congress decided that less regulation would "promote competitive and efficient transportation services" and "allow a variety of quality and price options to meet changing market demands." The Motor Carrier Act of 1980:
- Significantly reduced the level of ICC regulation of the trucking industry, though it did not eliminate regulation entirely.
- Congress modified the public convenience and necessity standard so the ICC could no longer consider new entries undesirable simply because they might divert traffic or revenues away from existing companies.
- Modified the distinction between common and contract carriers to foster competition between the two groups.
- Congress also gave individual motor carriers greater freedom to set rates in response to customer demand with less ICC involvement and banned rate bureaus from discussing rates applicable solely to individual companies.
As a result, between 1980 and 1990, the number of trucking companies doubled.
The antitrust immunity was cancelled by the STB on January 1, 2008.
Fast Forward to Today...Rep. James L. Oberstar, Minnesota Democrat, The House on May 21 2009 passed legislation that contains an almost hidden provision -- a mere 230 words -- that would hobble FedEx Express. It would do so by completely changing the labor laws under which the company operates. Unless the Senate removes the language from the underlying bill reauthorizing the Federal Aviation Administration, a mere dozen or so worker in just one city could hamstring much of the nation's overnight delivery service.
We should understand "Card Check" and other laws that will change the way transportation is conducted by these mere 230 hidden words. You should ask your Parcel carriers what they are trying to accomplish. Are they tied to the RLA or the NLRB ? How does your Senator plan to vote on this bill?
Know this...whatever happens the shipper and consumer will pay the price, we just don't know how much yet.
As a founding member of The Visibility Group, Hank has led the development of a patent-pending •cube-based' pricing paradigm that will one day make the current NFMC •class-rates' and FAX FAK pricing in the LTL world obsolete. The new system, when broadly adopted, will allow for paperless pre-rated, autopay transactions between shipper and carrier utilizing standard calculations and meaningful rate discount programs that support greater efficiency in load optimization, labor, and fuel usage. Hank has authored a series of whitepapers outlining the many benefits of Cube-Based pricing which are available upon request.
A core principle of our business is the ethical obligation to create lasting value and savings that benefit both the shipper and their carriers. We believe with the right level of expertise, care and attention, significant savings can be driven out of most contracts by fine-tuning carrier lane assignments, streamlining processes, enhancing terms while maintaining all service level commitments—savings strategies need not be driven by discount percentages alone.
Contact Hank at 770-241-6630 or hmullen@thevisibilitygroup.com
The Act itself...divided motor carriers into two categories: common carriers, which held out their service to the public generally, and contract carriers, which had agreements with a limited number of customers. Applications by new or existing trucking companies to expand their operations could be granted only if, in the words of the statute, the proposed service was "required by the present or future public convenience and necessity." The ICC had to decide precisely what this very general requirement meant:
In an early case, it defined the public convenience and necessity by reference to three factors: whether a proposed operation would "serve a useful public purpose, responsive to a public demand or need," whether such purpose "could be served as well by existing firms or carriers," and whether the applicant could operate the service "without endangering or impairing the operations of existing [companies]."
These requirements restricted the ability of new companies to enter the motor carrier business and existing companies to expand to new areas. It also inhibited competition between motor carriers and railroads and between common and contract carriers.
The act also stated that rates charged by motor carriers had to be "just and reasonable" and could not discriminate between customers of similar circumstances. The act required motor carriers to file rates thirty days before they were to become effective and allowed existing companies to protest. In 1948 Congress passed the Reed-Bulwinkle Act, (over a veto by President Truman) which permitted rates to be set by "rate bureaus" representing groups of motor carriers. These bureaus could agree on uniform rates applicable to all its members. Such rates, when approved by the ICC, were immune from antitrust laws.
In the 1980s Congress decided that less regulation would "promote competitive and efficient transportation services" and "allow a variety of quality and price options to meet changing market demands." The Motor Carrier Act of 1980:
- Significantly reduced the level of ICC regulation of the trucking industry, though it did not eliminate regulation entirely.
- Congress modified the public convenience and necessity standard so the ICC could no longer consider new entries undesirable simply because they might divert traffic or revenues away from existing companies.
- Modified the distinction between common and contract carriers to foster competition between the two groups.
- Congress also gave individual motor carriers greater freedom to set rates in response to customer demand with less ICC involvement and banned rate bureaus from discussing rates applicable solely to individual companies.
As a result, between 1980 and 1990, the number of trucking companies doubled.
The antitrust immunity was cancelled by the STB on January 1, 2008.
Fast Forward to Today...Rep. James L. Oberstar, Minnesota Democrat, The House on May 21 2009 passed legislation that contains an almost hidden provision -- a mere 230 words -- that would hobble FedEx Express. It would do so by completely changing the labor laws under which the company operates. Unless the Senate removes the language from the underlying bill reauthorizing the Federal Aviation Administration, a mere dozen or so worker in just one city could hamstring much of the nation's overnight delivery service.
We should understand "Card Check" and other laws that will change the way transportation is conducted by these mere 230 hidden words. You should ask your Parcel carriers what they are trying to accomplish. Are they tied to the RLA or the NLRB ? How does your Senator plan to vote on this bill?
Know this...whatever happens the shipper and consumer will pay the price, we just don't know how much yet.
As a founding member of The Visibility Group, Hank has led the development of a patent-pending •cube-based' pricing paradigm that will one day make the current NFMC •class-rates' and FAX FAK pricing in the LTL world obsolete. The new system, when broadly adopted, will allow for paperless pre-rated, autopay transactions between shipper and carrier utilizing standard calculations and meaningful rate discount programs that support greater efficiency in load optimization, labor, and fuel usage. Hank has authored a series of whitepapers outlining the many benefits of Cube-Based pricing which are available upon request.
A core principle of our business is the ethical obligation to create lasting value and savings that benefit both the shipper and their carriers. We believe with the right level of expertise, care and attention, significant savings can be driven out of most contracts by fine-tuning carrier lane assignments, streamlining processes, enhancing terms while maintaining all service level commitments—savings strategies need not be driven by discount percentages alone.
Contact Hank at 770-241-6630 or hmullen@thevisibilitygroup.com
