Freight Carriers Association / North American Transportation Council
September 1996
The 1994 Federal Provincial Agreement on Internal Trade committed Saskatchewan, Manitoba and British Columbia to deregulate intra-provincial trucking by January 1998. The other Canadian provinces have already deregulated.
In Manitoba the maximum tariff rates were discontinued in January of this year along with all route restrictions. No new licenses will be issued before January 1, 1998 when all restrictions on entry will cease.
Similarly, Saskatchewan is removing geographic restrictions from existing licenses, allowing carriers to serve the entire Province. Also this month (September) the Saskatchewan Highway Transport Board will suspend regulation of most general merchandise rates.
However, in British Columbia it is not expected for legislation to be in place until just prior to the deadline. The Province will take the next several months for “formal consultation” with stakeholders and preparation of an impact assessment.
The consequences of this next round of deregulation remains to be seen but a shakeout among carriers, similar to that seen in the US, would not be a surprise. Interprovincial carriers could benefit from the ability to move more freely in provincial markets just as interstate carriers have benefited from intrastate deregulation In the US.
US - CANADA TRADE FLOW DATABASE
FCA/NFTB has obtained a massive database from the Bureau of Transportation Statistics. This database includes the following items:
We have the ability to generate customized reports for a nominal fee. For further information, please contact Dave Sirgey @ FCA/NFTB ((905) 994-0560 ext.214).
STB ADDRESSES BILLING DISPUTES
July 7, 1996 is the effective date of a Surface Transportation Board (STB) declaratory order on motor carrier billing disputes. The STB was petitioned for a declaratory order to interpret the billing dispute notification requirements under the Interstate Commerce Act.
Specifically, the law provides:
“A carrier must issue any bill for charges in addition to those originally billed within 180 days of the receipt of the original bill in order to have the right to collect such charges.
“A shipper must contest the original bill or subsequent bill within 180 days of the receipt of the bill in order to have the right to contest such charges.” 49 U.S.C. §13710.
Two basic questions were presented for the Surface Transportation Board. First, can a motor carrier legally deny an overcharge claim presented 180 days after receipt of the bill. Second, is it permissible for a motor carrier to pay an untimely overcharge claim submitted beyond 180 days. The Board answered both questions in the affirmative.
The Surface Transportation Board summarized its decision by saying, “a carrier loses any right to collect additional charges if it fails to meet the 180 day time limit of section 13710(a)(3)(A) for rebilling. Likewise, a shipper loses any right to contest charges (whether before the Board, in court, or both) if it does not notify the carrier of its disagreement within 180 days of receiving the disputed bill, as required by section 13710(a)(3)(B).
“Thus, where a party has forfeited the right to assert a claim, for failure to satisfy the 180 day notification requirement, the other party is not required to pay that claim.
This does not mean, however, that it is prohibited from paying the claim. There may well be instances, particularly where there is an ongoing business relationship between the carrier and shipper, where a carrier or shipper may wish to pay a claim that was not asserted within the 180 day time period.”
The Board stated that there is no legal prohibition against correcting a billing error, or settling a claim, that was not timely raised. The argument that such agreements would constitute illegal discrimination, if valid under the old law, can have no validity following enactment of the ICCTA, which repealed the anti-discrimination provisions applicable to motor carriage.
With the demise of the old regulatory environment in transportation, the Bill of Lading has become a much more important document. In the regulatory day bills of lading were basically receipts that drivers signed; filed tariffs governed transactions. Today the bill of lading is often a contract.
The SHIPPER PERSPECTIVE: The push for shipper created bills of lading was spearheaded by the Transportation Consumer Protection Council (formerly Transportation Claims & Prevention Council). Their viewpoint is that when carriers’ bills of lading refer to rules and liability limitations published in separate tariffs, problems arise. Tariffs are no longer filed but are kept by the carrier who is required to supply copies to shippers only when requested. According to TCPC this can lead to costly disputes when shippers are hit with “hidden” charges. TCPC views its bill of lading as an opportunity for shippers to have actual knowledge, rather than constructive knowledge of carriers’ rates, rules and liability limitations.
The CARRIER PERSPECTIVE: The Interstate Commerce Commission Termination Act of 1995 continues the motor carriers’ obligation to issue the bill of lading as well as maintain the Terms and Conditions of the transportation transaction. Whether a Shipper drafted bill of lading is to govern the movement of freight is in the hands of the Carrier. TCPC’s own bill of lading recognizes this concept by requiring the shipper to obtain the written consent of the carrier’s duly authorized representative. As long as a carrier consistently issues its own bill of lading, an authorized shipper bill of lading, signed by the carrier’s driver, has no effect other than being a receipt. Terms and Conditions of transport would be as found on the carrier’s bill of lading and incorporated rates and rules. However, carriers should take steps to preserve the integrity of their bills of lading and rules tariffs. These could include: · Informing drivers to advise of any shippers using “different” bills of lading. · Rules tariffs should state that all rates, terms and conditions of transportation are governed by the carrier’s rules unless a written agreement, separate from the bill of lading is signed by an authorized representative of the carrier and shipper. The position(s) of the carrier’s authorized representative(s) should also be stated. · Notify customers that a driver’s signature on a shipper bill of lading is only a receipt for goods. If practical, drivers could affix stickers to shipper bills of lading indicating that the driver only acknowledges receipt of the goods.
As in all such areas of potential dispute, good business practices can resolve the situation. Communicate with customers who are using different bills of lading to address potential problems before a claim arises.
INCREASING THE DISCOUNT BY 5% IS NOT A 5% RATE REDUCTION
During a visit with one of our member carriers this summer, the conversation turned to the topic of discounts and how the average discounts keep on getting higher and higher. It seems the “magic” number when giving rate reductions is to increase the discount by 5%. This carrier pointed out that many carriers and their customers don’t seem to realize that increasing the discount by 5% can sometimes mean a rate reduction of 15% or more. The table below attempts to illustrate this.
|
Present Rate |
Increase Discount By 5 Percentage Points |
Actual Reduction In Revenue |
Increase Needed to Return to Present Revenue |
| Full Tariff |
5% |
5.0 |
5.3 |
| 5% Discount |
10% |
5.3 |
5.6 |
| 10% Discount |
15% |
5.6 |
5.9 |
| 15% Discount |
20% |
5.9 |
6.3 |
| 20% Discount |
25% |
6.3 |
6.7 |
| 25% Discount |
30% |
6.7 |
7.1 |
| 30% Discount |
35% |
7.1 |
7.7 |
| 35% Discount |
40% |
7.7 |
8.3 |
| 40% Discount |
45% |
8.3 |
9.1 |
| 45% Discount |
50% |
9.1 |
10.0 |
| 50% Discount |
55% |
10.0 |
11.1 |
| 55% Discount |
60% |
11.1 |
12.5 |
| 60% Discount |
65% |
12.5 |
14.3 |
| 65% Discount |
70% |
14.3 |
16.7 |
| 70% Discount |
75% |
16.7 |
20.0 |
| 75% Discount |
80% |
20.0 |
25.0 |
If a carrier increases the discount from 60 to 65%, the customer has actually received a 12.5% rate reduction and not 5%. Put another way, the carrier would have to increase his rate by 14.3% in order to return to the prior rate level. It is important to think along those lines so we remember that while it is easy to give an additional 5% discount, it is quite difficult to restore the revenue to its former level.