Transit privileges-five years later

By B. R. Garcia Transportation Consultant, B. R. Garcia Traffic Service

IVE years ago, we wrote an article for the July 1980 issue of The Merchsnt Magazine. The title of our article was "Transit PrivilegesPast, Present, and Future (?)." In it, we traced the history of lumber transit privileges from their origin by railroads to promote traffic on their lines to later years, when the carriers bec:rme more cost conscious, and became dissatisfied with transit privileges. In our 1980 article, we ventured some predictions, which we will quote:

Story at a Glance

Transit privileges eroded by de. regulataon...increased piggy. back service at competitive rates....some shippers suffer... joint through rates will be a future factor.

"In the future, we may anticipate further inroads into transit privileges. Most carriers would rather eliminate them entirely; however, they realize it is not practical to take drastic action which will irreparably harm shippers who depend on transit to maintain their operation. We will see more attempts to eliminate transit through attrition. When new rates are negotiated, they will, in many cases, be published with provisions that transit privileges will not apply."

A great deal has happened in the ensuing five years, and it is time for an update. While we are looking at rail shipments, it is necessary to relate this to all modes of surface transportation, rail, truck, and piggyback.

1980 was a landmark year in transportation. On July l, 1980, the Motor Carrier Act of 1980 was signed into law, soon to be followed by the Staggers Rail Act, which the President signed on October 4, 1980.

These two bills were loosely referred to as "deregulation," although the acts themselves contained a considerable amount of regulation. In the light of the Interstate Commerce Commission's interpretation of these laws, a better term might be "relaxation of regulation." While the Motor Carrier Act of 1980 served to increase competition, which had a downward effect on truck rates, the Staggers Rail Act was primarily intended to make the railroads more profitable.

The Staggers Rail Act contained a number of changes which directly affected shippers and receivers of lumber and lumber products.

First, it became easier for railroads to increase rates without interference from the Commission.

Second, contracts between railroads and shippers were encouraged, and guidelines were established. Complaints against agricultural contracts (which include forest products) may be based on discrimination and destructive competitive practice. However, the filing of such complaints has been very difficult, since the contracts are confidential, and usually not enough information is available for a shipper to know whether he is being adversely affected by a competitor's contract. Contracts may or may not allow transit privileges, and anything in a contract takes precedence over published tariff provisions.

One provision of the Staggers Rail Act which has affected lumber shippers is the section which permits the ICC to grant an exemption from regulation when the transportation is of

B. R. Garcia TrafJic kmice recently moved to 1926 B Tice Valley Blvd., Walnut Creek, Ca. 94595; (415) limited scope, or there is effective competition, or regulation is not necessary to protect shippers. The Commission has taken a very liberal view of this provision.

In 1984, the commission deregulated intermodal rail traffic (TOFC, or piggyback). The result was a phenomenal growth in TOFC service at competitive rates. Most railroads, while actively seeking TOFC business, do not feel they are making an adequate profit on it. The general practice has been for the railroads to supply the rail service (ramp to ramp), leaving the details of pickup and delivery to the shipper and consignee, or to the numerous shippers' agents which have come into being as a result of this unprecedented opportunity.

Effective January l, 1984, the Commission deregulated shipments moving in boxcar service. Most carriers adopted the rates which were in effect prior to boxcar deregulation; however, this was not the case for some single line rates. The Southern Pacific, for example, issued circulars naming rates and rules for boxcar shipments. These circulars specifically prohibited transit privileges, so there are no transit privileges for lumber moving in single line boxcar service on the Southern Pacific lines. However, when inbound shipments rated under these circulars are applied on transit billing where the outbound movement moves on joint rates with other railroads, transit privileges may be applied.

The status of boxcar deregulation is (Please turn to page 43)