In another in a string of major deregulatory decisions, the Interstate Commerce Commission ruled yesterday that truckers under contract to shippers no longer need tell the federal government or anyone else how much they are charging.
"This makes it a buyer's market if you're a shipper," said Nelson Cooney, general counsel of the American Trucking Associations. "This hides pricing strategies from any kind of public scrutiny," a senior ICC official said. Contract truckers will be able to change rates instantly, without recourse to the ICC, and bidding wars for contracts are expected to drive down freight rates.
The decision is almost certain to be appealed in court by truckers who operate with "common carrier" authority, which means they must haul anything between points they serve for a price that they have published with the ICC.
Contract carriers have been taking more and more business from common carriers by negotiating lower rates with shippers. Until July 1, when yesterday's ruling takes effect, they have to file each contract they negotiate with the ICC, which means the common carriers could see what the competition was doing.
Contract carriers haul an estimated 10 percent to 15 percent of freight in the United States, and the percentage has increased steadily in recent months as various ICC rulings have encouraged contracts in shipping--in rail as well as by highway.
Further, the Motor Carrier Act of 1980 has made it much simpler for truckers to seek contract authority. Many major trucking companies, including Yellow Freight System Inc. and Consolidated Freight Lines Inc., already have authority as both common and contract carriers.
Thomas Callahan, managing director and general counsel of the Contract Carrier Conference, hailed the ICC decision, which came on a petition from his conference as well as from the Federal Trade Commission, among others.
He said that the ruling "places contract motor carriers in roughly the same shoes as most of the rest of the American economy: Business arrives at rates and does not file them with the government."
Callahan invited common carriers "to not sue, to embrace this decision and to get contract authority."
The decision comes at a time when Congress is debating additional deregulation of transportation. Among the items high on the list--if the ICC does not get there first--is the elimination of all federal requirements that rates or fares be filed with the ICC.
Last year, for example, there were more than 907,000 separate rate filings with the ICC from truckers, interstate buses and the railroads. A total of 66,446 rate schedules were filed by contract carriers, in duplicate, with a covering letter. So at a minimum, the commission will see 66,000 fewer filings as a result of this ruling alone.
In a similar ruling released Thursday, the commission announced that railroad shipper contracts will become effective the date they are filed instead of 30 days later. They must still be filed, however.