SMC bids to take CzarLite national... again

Along with the demise of the Interstate Commerce Commission (ICC) in the mid-1990s went its national responsibility for overseeing tariff filings. In the ICC’s wake, all that remained were regional rate bureaus.

Last November, the Southern Motor Carriers Rate Conference Inc. (SMC) (www.smc3.com) asked the Surface Transportation Board (STB) (www.stb.dot.gov) — which inherited some of the ICC’s former functions — to be allowed to extend its ratemaking authority to the entire country. Many shippers use SMC’s CzarLite software as the source of base rates for less-than-truckload (LTL) pricing.

The National Industrial Transportation League (www.nitl.org) opposes SMC’s request, and asserts that “expanding rate bureau antitrust immunity is the wrong public policy and that the free market should govern motor carrier pricing; that granting the bureau’s application would create serious competitive concerns, as it would likely lead to the establishment of a single, dominant rate bureau with expanded market power; and, that SMC has failed to demonstrate a compelling need for the expanded authority that justifies a broadening of rate bureau antitrust immunity.”

Somewhat less vehemently, the National Small Shipments Traffic Conference (www.nasstrac.org) is opposed to expedited processing of SMC’s petition, and urges the STB to permit public comment on the matter. Two other regional rate bureaus — EC-MAC Motor Carrier Services Association and Rocky Mountain Tariff Bureau Inc. (RMB) — have also raised objections based on competitive issues.

The arguments — for and against — tend to revolve around similar poles:

We’ve been down this road before
Pro: SMC previously applied for nationwide coverage but was unsuccessful in its attempt when, in 1999, Congress took away the STB’s authority to grant it. Since that power was restored to the Board in February 2003, SMC contends its application should now be considered without further delay. Con: SMC’s December 1996 application is many years old and contains data of questionable reliability which is no longer available to the public on the STB website. A new proceeding to investigate SMC’s application should be instituted.

Trust and antitrust
Pro: Antitrust immunity is necessary and enjoyed by regional rate bureaus in order to be able to discuss joint line traffic under procedures set forth by the STB. SMC is asking the STB to expand that authority on a nationwide basis.

Con: There’s no basis for treating motor carriers differently from other industries, and no evidence that collective rate setting offers better service to transportation consumers. Expanded antitrust immunity isn’t necessary for SMC to continue to compile class rates on a national basis.

Monopolizing the market
Pro: CzarLite is not intended to be and is not a monopoly of base rates. The reality is that, by far, it is the preferred base rate today in the industry. The only change that granting nationwide authority would enact is enabling SMC carriers and shippers to come together to review considerations on a nationwide — rather than just a regional — basis.

Con: Other regional bureaus may not be able to satisfy competitive rate needs if SMC gains nationwide authority and CzarLite becomes the de facto nationwide class rate tariff. The regional system allows smaller carriers that make up the bulk of rate bureau membership a more active role in the process than might be the case if the small number of national carriers comes to dominate the process. There are three results possible: the STB turn down SMC’s request; it grants the request; or it grants the petition with conditions. So, there is a middle ground.

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