The Interstate Commerce Commission yesterday set in motion a series of actions that would alter significantly the way railroads set rates for carrying freight.
As a result of the ICC's proposed changes in policy, the railroads would be forced to focus their attention on setting differing rates depending on individual circumstances rather than relying for increased revenues on general, uniform rate increases, as they have in the past.
Although no formal votes were taken yesterday, members of the agency were polled at a public meeting by Chairman Darius W. Gaskins Jr. on the proposed changes, and a majority showed a clear preference for moving away from the traditional collective rate-setting the railroads have engaged in with ICC approval.
In one action, the commission instructed the staff to prepare a formal decision prohibiting the railroads from collectively discussing in rate bureaus any proposals for general increases for single-line rates, rates for freight that is moved between two points by a single railroad without connecting with another.
"Single-line rates is an area where there is scant justification for carriers who compete to discuss setting rates," ICC member Marcus Alexis said. "It is contrary to the whole spirit of reform in the rail area. I think we should have independent action."
In order to allow railroads to recoup increasing costs without resorting to collective action, the staff was instructed to draw up a proposal that would create a "zone of reasonableness" within which railroads could rais rates independently up to a certain level without ICC interference.
Such a mechanism would also allow the rails the flexibility to respond to competitive conditions by lowering rates without seeking ICC approval.
"If you have confidence in greed," Chairman Gaskins said, the elimination of antitrust immunity for collective rate-setting could result in "quite a bit of independent action" by railraods seeking business from their competitors. On the other hand, simultaneous filings by 25 carriers would be "a highly suspicious event" that could be attacked through the antitrust laws, he noted.
The ICC also began yesterday to tackle the complicated issue of "joint rates," the rates set for freight that must move by two or more railroads.
Members of the commission decided to begin an extensive rule-making proceeding to consider the options available for replacing the current collective rate-making system for joint rates with one that will force the rails to behave in a more competitive fashion.
For the most part, the ICC members seemed to approve of a staff proposal that would limit negotiations on joint rates to the two carriers who actually participate in moving freight between two points, for instance. Now, all railroads moving goods between two points on various alternate routings can all get together and set the rates.
Although ICCmember George Stafford spoke up for waiting until Congress had enacted legislation before moving ahead on any proposal, a majority of the agency's members agreed that the status quo was unacceptable and that a proceeding to explore possible changes ought to be begun.
The ICC hearing room was packed with representatives of the nation's railroads, who would generally like to keep their collective rate-making ability intact.