From 1935 until passage of the Motor Carrier Act of 1980, the ICC exercised almost total control over trucking rates, routes and entry of new carriers. It was a huge bureaucracy with unique accounting requirements and it was impossible to accomplish anything without using specialized transportation lawyers. Now it is gone, opening up a new era for shippers.
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No more ICC is good news for retailers.
The government agency founded in 1887 to Protect captive shippers from discriminatory pricing by the railroads and extended to the trucking industry in 1935 was officially put out of business on December 31, 1995. The ICC Termination Act eliminated many regulatory responsibilities and transferred the remainder to the Department of Transportation.
From 1935 until passage of the Motor Carrier Act of 1980, the ICC exercised almost total control over trucking rates, routes and entry of new carriers. It was a huge bureaucracy with unique accounting requirements and it was impossible to accomplish anything without using specialized transportation lawyers. Under this regulatory environment where prices and entry were controlled, unions and companies would agree to wage increases and then the ICC would grant higher rates based on new costs.
Trucking rates increased much more rapidly than inflation while the main difference between service offerings was the size of Christmas gifts, lunches, golf outings and even bribes given to traffic managers.
Under ICC regulation, hauling rights were highly restricted. For instance, a trucker might have authority to haul a North Carolina manufacturer's furniture to Chicago but not be allowed to haul materials to make the furniture back to North Carolina. That all started to change after 1980. With reduced barriers to entry, truckers started to meet specific needs of shippers and pricing accordingly. The only downside, from the retailers' viewpoint have been the hassles over balance due bills from out of business truckers' collection agencies. These were addressed in 1993 and in 1994 when intrastate economic regulations were wiped out.
Passed with support from Democrats and Republicans, the new law will eliminate more than 200 jobs at the ICC and save $21 million annually.
MAJOR PROVISIONS: There are several major provisions of the Interstate Commerce Commission Termination Act of interest to retailers and shippers:
A Surface Transportation Board is established within the Department of Transportation to handle remaining ICC responsibilities, including resolution of undercharge claims.
Current safety and insurance requirements for entry into the trucking business are continued. Motor carrier operating authority is eliminated.
Cargo liability requirements specified by existing federal law are continued.
Tariff filings and all rate regulation, except for non-continuous domestic trade and individual household goods movements, are eliminated.
The DOT identification number system, the ICC licensing system and the single-state registration system for motor carrier insurance are to be replaced with a single, on-line federal motor carrier information system within two years.
State regulation of transportation intermediaries is eliminated.
Other sections relate primarily to motor carrier industry reporting requirements and antitrust immunity for classification, mileage guides and rate bureau participation.
Many details of the transition have to be worked out, which will take several months. A key short term focus will be dealing with the issue of driver fatigue, including driver hours of service, loading and unloading and onboard computers. Improved safety, not economic regulation, will be the goal.
THE MOST IMPORTANT THINGS TO DO
For anyone shipping or receiving freight, the most important things you should do are:
Gain an understanding of your freight charges before shipments are made.
Review all freight bills before they are paid.
The changes are definitely a step forward, but you still have personal responsibility for efficient management of your transportation functions, just as you do in purchasing merchandise sold in your showrooms.
Daniel Bolger, P.E. provides warehousing, transportation and logistics consulting to home furnishings retail clients throughout the USA. Questions or comments can be directed to FURNITURE WORLD at email@example.com.
Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at firstname.lastname@example.org or call him direct at 740-503-8875.
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