The Interstate Commerce Commission yesterday exempted from federal regulation "piggyback" rail and truck services provided when truck trailers and containers are placed on railroad flatcars, effective March 23.
Yesterday's ICC decision is the first taken under a provision of the Staggers Rail Act of 1980 which encouraged the agency to deregulate sectors of the rail industry when it finds regulation is no longer necessary to protect shippers from the abuse of market power by railroads.
The ICC said it believes that vigorous truck competition exists and that exempting piggyback services from regulation is likely to stimulate improvements in service without threatening any harm to individual shippers.
However, to make sure that the prospect for increased competition is not diminished, the ICC said it would not grant antitrust immunity for the collective setting of piggyback rates. "Independent pricing is needed to protect shippers and connecting carriers from potential abuses of market power.
The exemption will disperse this power and deliver the benefits of intermodal and intramodal competition to the public," the ICC said.
Although it said it could appreciate the concern expressed by the trucking industry that exemption of rail service could offer railroads a regulatory advantage in competing fot the piggyback traffic, the ICC said, "we believe that the proper regulatory response is to seek means of freeing motor carriers from regulatory restraints so that they may compete on equal terms rather than continue to constrain the railroads."
The exemption could prove very important to the rail industry. Although the ICC said yesterday that federal regulation has impeded the full development of piggyback and other services that involve more than one form of transport, the energy efficient piggyback mode is already a very important segment of the freight industry. By category of freight hauled by the railroads, piggyback already ranks second only to coal, accounting for 7.8 percent of total rail car loadings, according to Association of American Railroads statistics.
In addition, most of what moves in the containers or trucks on the flatbed cars is high-valued manufactured products which provides a substantial amount of revenue for the railroads.