The Southern Motor Carriers Rate Conference Inc. (SMC3)
As we reported last month, SMC3's petition has been met with some resistance from two prominent shipper organizations — the National Industrial Tranportation League (NITLeague) and the National Small Shipments Traffic Conference (NASSTRAC). We asked Jack Middleton to clarify SMC3's position, and to explain why taking its CzarLite pricing system for less-than-truckload (LTL) shipments national is a good thing for the industry.
LT: How do you respond to the concerns raised by NITLeague and NASSTRAC that the industry would not necessarily be better served by a single dominant rate bureau?
Middleton: My understanding is that NASSTRAC has not objected to SMC3 obtaining nationwide authority.
LT: That's true. Their objection is that they would prefer it not be an expedited process. They would rather see public comment on the matter.
Middleton: That's right. There's a misunderstanding that NASSTRAC totally objects to any form of nationwide authority being granted to SMC3. In fact, we plan to continue the collaborative relationship that we've enjoyed with NASSTRAC.
All three organizations — SMC3, NASSTRAC and NITLeague — enjoy a membership comprising many of the same companies. We've got over 800 shipper associate members at SMC3, and the majority of those are either members of NASSTRAC or NITLeague or both. These shippers use and endorse CzarLite, and claim it as their nationwide base rate.
I was disappointed with NITLeague's recent comments that collective rate-making already produces unreasonably high rates that would only worsen should the STB grant SMC3's request. We have done a study — and we have provided it to the STB — which illustrates that that statement is completely incorrect. We looked at 840 market comparisons involving 6,700 sets of class rates, and 86% of the time SMC3 bureau class rates were lower or among the three lowest levels.
LT: If the way is cleared for you to go national with CzarLite, would rates match up to what your studies indicated — would they actually be lower?
Middleton: I believe that class rates would not be imperiled by nationwide class rate authority. As a matter of fact it would give us the opportunity to hold transportation rates at reasonable increases and adjustments. That's the reason shippers use CzarLite rates and demand that their carriers use CzarLite rates as the base rate to move their freight.
It's not uncommon for an LTL motor carrier to have to keep up with anywhere between 200 and 300 tariffs out there in the marketplace. When shippers require their carriers to use CzarLite, they are all using a standard base rate which they can discount from, and when the shippers receive those bid results, they can compare and analyze those results from a common base rate and compare apples to apples.
[Research firm] Norbridge (www.norbridgeinc.com) observed in a study of motor carriers that the growing number of single user tariffs is raising administrative costs for carriers. Well, who do you think is going to pay that additional cost? The shippers. There is an unnecessary additional burden in costs of all these pricing structures that carriers have to maintain and would like to move away from.
LT: Why then would a shipper organization like NITLeague object to a scenario that would make life better and simpler for the companies?
Middleton: I believe that those objections generally tend to be institutional objections that have been filtering through some of those associations for years. I can tell you that no one from NITLeague — that I'm familiar with — has ever attended an SMC3 meeting, and has absolutely no understanding of exactly what we do.
LT: What do you think will happen next? Do you anticipate getting a favorable result?
Middleton: I am assured that the new chairman of the STB, Roger Nober, is going to study the merits of this case from a fair and open perspective, and if he does that, I think that SMC3 is destined to acquire the nationwide authority that we've been seeking on behalf of the industry for six years. LT