Freight Carriers Association / North American Transportation Council

March 1998

TL SPOT QUOTES FOR WINDOWS

OUR NEW NAME & NEW LOGO

NATC RESTRUCTURES TARIFF 505 (U.S. - ATLANTIC PROVINCES)

NATC EXPANDS RATE APPLICATION IN TARIFF 525 (U.S. - WESTERN CANADA)

POSTAL CODE DIRECTORY

GENERAL RATE INCREASES

PARTICIPATE IN THESE NEW SURVEYS

LIABILITY LIMITATIONS CANADA/US AND US DOMESTIC FREIGHT

    The Interstate Commerce Commission Termination Act of 1995 (ICCTA) required the US Department of Transportation to undertake a study and make a recommendation whether any changes should be made to the provisions of the Carmack Amendment. The Carmack Amendment makes carriers and freight forwarders liable for the full value of lost or damaged shipments unless an agreement to limit liability exists between carriers and their customers in advance of the shipment, or if the carrier maintains a schedule of rules and rates which is provided to the shipper upon request.

    In June, the DOT issued a Draft Report and requested comments from interested parties. While the report did not contain any binding recommendations (the DOT indicated they were waiting until after comments were received), it does provide insight into their thinking on the issue.

    In brief, the study focused on three areas.

    1.      Establishing a fixed liability value:

      The DOT appears to be leaning towards establishing a fixed-value liability. The study argued that fairly allocating the risk to both the carrier and shipper would improve the safety of carriage and free carriers to concentrate on price and service. It further argued that a fixed liability value would benefit infrequent or small shippers who are in a poor position to avoid using the carriers who have low liability levels contained in their standard contract.

    2.      Requiring the value of the cargo to be included on the bill of lading:

      Shippers have expressed concern that including the value on every bill of lading will encourage theft. Carriers argue that in order to properly price the shipment and determine how much care is required in handling, value information is essential.

    3.      The method by which a carrier can limit liability.

      Under the old ICC Act, carriers could limit their liability by including terms or conditions in their filed tariffs. Acceptance by a shipper of a bill of lading containing reference to the tariff indicated agreement to the limitation. No specific agreement between the carrier and shipper was required. With the elimination of most tariff filing in late 1994, this method of limiting liability disappeared.

      In 1995 Congress provided that carriers could continue to limit their liability by publishing the limitation in a rule or rate that must be provided to the shipper upon request. However there remains no obligation on the carrier to inform the shipper of the reduced liability rule unless asked. Liability can also be limited by written agreement between the carrier and shipper or by written declaration of the shipper.

    A review of the comments of representative carrier and shipper groups is instructive in understanding the difficulty of setting an overall liability limit.

    American Trucking Association (ATA)

    The ATA is the largest US carrier organization. Between the ATA and its related Conferences, all types of carriers are represented. In a member survey of claims and the amount of the claim, the ATA found its members in support of a liability limit of $2.50 per pound. The study found that slightly less that 50% of shipments have a value of less than $2.50 per pound and that almost 75% are valued at $5.00 or less.

    National Small Shipments Traffic Conference (NASSTRAC)

    As the name infers, this is an association of frequent shippers of small packages. NASSTRAC maintains that full liability coverage should be retained and that reducing liability should be permitted only by mutual consent between both parties.

    A study of NASSTRAC members on the average shipment value indicated that 78 percent of their members would not recover the full value of their shipments at ATA’s proposed cap of $2.50 per pound and that a $50 per pound cap would be needed to cover 89 percent of the members’ shipments. A large number of NASSTRAC members are pharmaceutical products shippers which typically have higher than average value per pound.

REVENUE CANADA CUSTOMS NOTICE RAISES CONCERNS

    On August 29, 1997 Revenue released the following notice:

    1. This notice is to remind carriers of the handling and control requirements regarding cargo arriving by highway for furtherance inland. Any freight that is not released at the first point of arrival must be manifested inland on a highway cargo control document. The manifest will indicate frontier customs office under “Manifest from” and the inland customs office as “to”. This freight is to be delivered to the highway sufferance warehouse at the customs office of destination. Release of these shipments will be carried out at the inland customs office. Post-audit carriers may proceed to their own terminals (breakbulk) before delivering the freight to the local sufferance warehouse for purposes of re-positioning in-bond freight and freight that was cleared at the frontier. Freight may not be held at these locations pending customs clearance.

    2. Where agreements are in place between customs frontier operations and post-audit carriers, allowing them to hold highway cargo at their own locally owned and operated terminals pending clearance at a frontier office, these agreements will not be affected by this notice. Carriers under these agreements provide customs at the frontier with a port on port manifest and transfer the freight to their own local terminals. These terminals must be under the operational control of the frontier port. Once release notification is received for these shipments, they can be delivered to the importer.

    Adherence to this notice as written would require significant changes to many carriers’ terminal infrastructure and would undoubtedly cause tremendous congestion at the border. Various post-audit carriers are working towards a change in Revenue Canada’s policy that would better reflect the operational evolution that has occurred over the past few years regarding border and inland clearance.

    We will follow this closely and keep you updated.

PROFITABILITY BY WEIGHT GROUP

    Is your Canadian domestic freight equally profitable for all weight groups? If you haven’t restructured your rates in the last 5 - 10 years, the answer is probably no. Historically within Canada the rates for different weight groups have not reflected the difference in handling cost per hundredweight. This causes the lower weight groups to be unprofitable and the higher weight groups to be profitable. The following table illustrates the difference between the historical Canadian domestic rate level and a cost based rate level with a 55 % discount.

    Type of
    Rate Level

    Example Weights
    675 lbs. 1,299 lbs. 2,567 lbs.

    Operating Ratios
    Historical

    118

    103

    92
    FCA Cost Based Rates

    88

    88

    92

    The goal of any base level should be to provide consistent profitability regardless of weight, density or distance.

NEW UNIFORM BILL OF LADING APPROVED

    The National Motor Freight Traffic Association, Inc. (NMFTA) announces the publication of a completely revised Uniform Straight Bill of Lading. Working under the auspices of the NMFTA and under the umbrella of the National Classification Committee’s antitrust immunity, a Shipper/Carrier Ad Hoc Committee consisted of six shipper members of the National Small Shipments Traffic Conference (NASSTRAC) and six carrier members of NMFTA.

    The Uniform Straight Bill of Lading, as published in the National Motor Freight Classification, has long been the motor carrier industry standard. The shipper/carrier group simplified this document, modernizing and streamlining its provisions and removing apparent conflicts with recent federal legislation.

    The revised preamble on the face of the bill of lading makes the shipment subject to a written agreement between the parties, if one is applicable, but otherwise to the rates, classifications and rules that have been established by the carrier and are available to the shipper, on request. Another change provides that shipments are prepaid unless they are specifically marked collect. Also, the shipper is advised, in bold type, that “Liability Limitation for loss or damage on this shipment may be applicable. See 49 U.S.C. §14706(c)(1)(A) & (B)”. Space is provided for commonly requested identifiers such as: “Carrier’s Pro No.”, “Shippers Bill of Lading No.”, “Consignee’s Reference/PO No.” And “Carrier’s Code (SCAC)”. There are blanks for additional shipping information including: the identity of persons to notify if problems arise enroute or at delivery, and for necessary shipper and carrier certifications.

    On the reverse side side, the “Terms and Conditions” have been updated, reorganized and shortened, without substantive change, making them more legible and enabling the proposed new Uniform Bill of Lading to be printed on a single sheet.

    The new form has been endorsed by NASSTRAC and other shipper interests and approved by the National Classification Committee. It was published in Supplement 3 to the National Motor Freight Classification NMF 100-X, with an effective on December 20, 1997. Inasmuch as the new form was established under a collective process, federal law requires that carriers using or signing it must participate in the National Motor Freight Classification.

    For additional information, please contact Ken Leising at (905) 994-0560 ext. 203.

    Representing the views of its members, the NATC filed comments in support of the National Motor Freight Traffic Association’s filing to retain antitrust immunity for the classification process. Under the Interstate Commerce Commission Termination Act, the immunity currently enjoyed by the NMFTA will expire on December 31, 1998 unless extended by the Surface Transportation Board (STB).

NATC SUPPORTS NMFTA FILING

    In order to demonstrate to the STB the reasons why immunity for the classification process should be continued, the NMFTA filed comments. The comments of support filed by the NATC focused on two points:

    - Carrier participation in the National Motor Freight Classification is optional. Carriers are not required to use the classification system and are free to work independently to establish their own classifications or use no classification at all. Nothing prevents either shippers or carriers from establishing classifications and/or rates through whatever means they may desire.

    - While the argument has been made that some activities of the NMFTA do not require antitrust immunity to continue, there are potential problems in attempting to develop a list of activities which do or do not require immunity. Activities which may not require immunity are often intertwined with activities that do. This uncertainty will result in few shippers and carriers willing to risk continued participation in classification making activities and would doom the entire classification process.

    Additional information about this proceeding, as well as the proceedings affecting the individual rate bureaus is available by contacting Micheline Tansey @ (905) 994-0560 ext. 210.

NATIONAL MOTOR FREIGHT CLASSIFICATION WORKSHOPS

    The NMFTA is holding 32 workshops on How To Use and Understand the National Motor Freight Classification. The workshops are open to anyone that uses the Classification, including carriers, shippers and third parties.

    The only Canadian date is April 21, 1998 in Toronto, ON.

    For further information contact Bill Mascaro @ (703) 838-1834 or George Beck @ (703) 838-1813.

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