|
|
|
|
EYE ON TRUX Regulations (Jan 02)
Historic Overview: Congress began regulating transportation services in 1887 by passing the Interstate Commerce Act. The Interstate Commerce Commission (ICC) was then created to regulate all transportation of goods (including what was to become the trucking industry). The industry was strictly regulated by the ICC until the late 1970’s when it’s regulatory scope was gradually curtailed in an effort to encourage competition. Revolutionary changes began in 1980, culminating with the elimination of the ICC in 1995. Recent History: Early deregulatory actions spurred on fierce competition, and the practice of discounting “filed” rates began in 1980. Many carriers were unable to survive in the newly competitive environment. In the ensuing years, several thousand trucking companies went bankrupt. The trustees of many of these defunct carriers began billing former clients for past "undercharges". The undercharge claims were based on the trustee's contention that the discounts were not applicable since the carriers had not properly "filed" them with the ICC (as was required by law at the time). While the undercharge claims had only limited success in the courts, many businesses decided to pay or settle the claims to avoid litigation. The relative success in collecting revenues encouraged the trustees of other defunct carriers to follow suit. By 1993, the total amount of undercharge claims reached $3 Billion. Congress finally acted to address transportation issues with the "Negotiated Rates Act" (N.R.A) of 1993, the "Trucking Industry Regulatory Reform Act" (T.I.R.R.A.) of 1994, and the "Interstate Commerce Commission Termination Act" (I.C.C.T.A) effective Jan. 1 1996. . Today: It would be impossible to address all the changes resulting from the legislative actions of the mid 1990’s in just a few pages. It is important to recognize that Congress not only addressed the undercharge issue, but also reduced the remaining regulatory oversight of the industry. Most importantly, the ICC (and all of it’s consumer protection functions) was eliminated. In essence, Congress said to shippers: Let market forces prevail, but let the buyer beware! The following is a summary of some important changes, and their effect on the modern purchaser of transportation services. Public notice of rates, rules, and liability limitations are not required. Carriers are free to change tariffs unilaterally and without notice. In most cases shippers receive notice of tariff information only when they specifically request it. Carriers typically have one or several rate tariffs, another rules tariff, and another liability tariff. These tariffs generally refer to one another, the National Motor Freight Classification tariff (N.M.F.C.), and the tariffs of other carriers with which it may interline. Any or all of these tariffs may be applicable to any given shipment. Note: I.C.C.T.A. Public Law 104-88, section 13710(a)(1) requires a motor carrier to furnish all information relating to pricing, rules, and practices upon request. The “uniform bill of lading” is still a contract of carriage; however, the only “uniform” aspect of the B.O.L. is the fact that it binds all parties involved to the very un-uniform tariffs. Carriers rules tariffs generally state that regardless of what type of B.O.L. is used, the “Uniform” B.O.L. (as outlined in the N.M.F.C.) will govern all shipments tendered. The purchaser of transportation services may wish to spend some time reading fine print on the back of a uniform B.O.L. Then spend a few weeks gathering and reading all of the referenced publications. It is not surprising that most of today’s “multi-tasking” managers do not have the time to read several hundred pages of lawyer-speak. It is also not surprising; therefore, that the US domestic trucking industry remains fraught with misunderstandings, and litigation. Note: When a consumer requests a copy of the rules tariff, it is most common they will receive an abbreviated version with references to the much larger, and more complex, governing publications. A properly drafted contract drawn by an experienced logistics professional, or transportation attorney should address any concerns regarding transportation services. However a consumer’s ability to acquire favorable contracts is limited by market forces. Large shippers, such as General Electric, Dow Chemicals, or the Federal Government, benefit greatly from transportation contracts, while most small to midsize shippers do business under the terms in the carrier’s tariff (as referenced in the Bill of Lading Contract). Worth noting is that a transportation “agreement” supplied by the carrier, that includes a reference to tariffs, or other publications is simply an agreement to do business under the carrier’s tariff rules, perhaps with a few exceptions. Note: This paper is intended to address the “less than truckload” segment of the US trucking industry. It refers to the historical definition of “common carriers”. Relatively simple transportation contracts are still commonplace in the full truckload segment of the industry. The smaller “Truckload” carriers do not typically maintain independent tariffs. Shippers should not simply assume the amount stated on a cargo insurance policy is applicable to a shipment tendered to a carrier. The I.C.C.T.A section 14706(a)(1) states that liability is for the actual loss or injury to property caused by the carrier. However, section 14706(c)(1) provides for a “shipper waiver” which allows for a limitation of liability by written agreement between the shipper and carrier. Carriers interpret the Bill of Lading (in which the parties agree to the “classification, tariffs, and rules in effect at the time of shipment”) as a written agreement. Since this “written agreement” contains a reference to the rules tariff, the shipper has agreed to the liability limitation specified in the rules tariff. Under current regulations (or lack thereof) carriers are free to create, and amend liability limitations unilaterally and without notice. It should be of no surprise that, as carriers struggle to maintain rising costs, they have been increasing the limitations on liability specified in their tariffs. Note: Many carriers now sell cargo insurance. Purchasing additional cargo insurance does not guarantee payment for damaged shipments. It would be wise to consult with an insurance provider when shipping high value items. Legislation closed many doors to the collection agents of bankrupt carriers seeking to collect “undercharges”. The “filed rate doctrine” was repealed, and replaced by “individually determined rates, classifications, rules, and practices”. Most collection agencies will no longer attempt to collect “undercharges” based on rate tariffs. They will however, be inclined to bill shippers based on the timeliness of bill payments. All carriers have penalties in their rules tariff for payments received after a specified period of time (generally between 15-30 days). The form of penalty is usually either a loss of the otherwise applicable discount, a fixed percentage of outstanding freight bills, or both. Some of these penalties have been found by the courts to be excessive, and recent decisions indicate questionable enforceability. Carriers only selectively enforce the most extreme provisions when they no longer wish to do business with a slow paying client. Trustees of bankrupt carriers are not concerned about future business. They can and do review payment histories, and apply the applicable penalties. Both overcharge, and undercharge claims must be filed within 180 days; however, this rule does not over-ride bankruptcy law. An attorney should be consulted with regard to bankruptcy applications. Off bill discounts are not allowed for shipments paid by government agencies; however, this law does not provide the same level of protection for the private sector. The person directly responsible for payment must be advised if any reductions or allowances were paid to another party. The payer need not be informed of the exact amount of payment, just that a payment had, or will occur. In other words if you receive freight collect and you see a notations on the freight bill of “allowances”, another party has received some type of payment or credit. |
