MOTOR CARRIER PRICING

Reproduced with the Permission of Miles L. Kavaller

"Managing Transportation Without Tariffs" was the theme of the National Transportation Week kid-off dinner at the Quiet Cannon Restaurant in Montebello, California on May 15, 1995. I moderated a program which featured Dave Taggart, President of G.I. Trucking, Joel Greenberg, Director of West Bound Pricing, American President Cos. and Doug Ely, Manager, Corp. Traffic/Logistics for Mattel Toys. The comments of Taggart focused on domestic motor carrier pricing in this post regulation environment. Greenberg spoke favorably of the continued FMC regulation of international ocean traffic which is under attack from deregulation advocates. Strategic partnerships between carriers and shippers was the subject of Ely's talk. I would like to address motor carrier pricing in this article.

Taggart's remarks were significant because they demonstrated that motor carrier pricing is still accomplished by the continued use of tariffs even though motor carrier rates (except those of household goods carriers) are no longer filed with federal or state regulatory agencies under the Trucking Industry Regulatory Reform Act ("TIRRA") and federal preemption of state regulation of motor carrier rates, routes and services. The term tariff now assumes a new meaning--it is no longer tied to the filed rate doctrine, the legal concept which holds that motor common carrier charges on file with federal (ICC) and state (CPUC for example) regulatory agencies must be charged and collected. This will take some getting used to.

Carriers who continue to maintain and publish tariffs are, in essence, advertising their prices and terms to the shipping public. When the shipper obtains service the rate charged and terms and conditions of service in the publication are accepted and a binding and enforceable contract is formed. But, unlike the carrier-shipper relationship formerly governed by the filed rate doctrine, problems which arise during the contractual relationship will be subject to equitable contract law principles. This change is likely to occur primarily in the area of rates--often in the form of discounts from the tariff/pricing guide which many carriers use. Rate quotations or agreements, whether oral or written may be legally enforceable regardless of the charges published in the carrier's tariff/pricing guide and despite the current statement in the uniform motor carrier bill of lading which refers to and incorporates the carrier's filed tariff rates and rules. In other words there will be no freight undercharges which result from requiring the payment of the carrier's tariff rate because it is no longer the filed rate. And whether the carrier or shipper prevails in a lawsuit will depend on evidence of the intention of the parties. Little, if any, litigation over rates is likely because these disputes will be settled by carriers and shippers operating in the reality of the commercial marketplace. Carrier bankruptcies will no longer involve massive litigation where shippers are sued for undercharges.

After the panel presentation the audience posed several interesting questions. One such question was whether carriers should continue to publish tariffs--what is their utility if filed rates are no longer required? A tariff in this post-regulation era continues to serve the same function that it had previously: It is a pricing guide which informs the shipping public of the carrier's pricing schedule and terms and conditions for the services it provides. Many carriers use it as a sales tool from which discounts are given to customers based on promised volumes of traffic deemed desirable and compatible with other traffic in the carrier's system.

What are the alternatives? Even rate quotations for single shipment customers given by a clerk in the traffic department have to be based on some pricing scheme. Pricing is not arbitrary in a well managed business. Continued use of a published tariff/pricing guide is clearly the best alternative for this kind of traffic in the post-regulation environment.

The other option is a formal written contract containing customized rates and provisions similar to the tariff/pricing guide. While this approach is advisable for carriers and shippers who require the transportation of multiple shipments, it is not practical for use with or by the occasional shipper.