This installment of PARCEL Counsel is being written just after New Year’s — a traditional time for reflection. In 2005, my colleague and the first author of this column, William J. Augello, wrote an article entitled 2005: Happy or Unhappy Anniversary? In the article, he noted the anniversaries of significant events that revolutionized transportation regulation in the United States. Let’s revisit these anniversaries, such as:
- The 10th anniversary of the Interstate Commerce Commission’s (ICC) demise
- The 25th anniversary of deregulation in the railroad industry
- The 25th anniversary of partial deregulation in the motor carrier industry
- The 28th anniversary of deregulation in the air cargo industry
- The 50th anniversary of the first sailing of a containership developed by Malcolm McLean
Adding 14 years to each anniversary brings us to 2019. Mr. Augello went on to describe the effects of these changes as of 2005 and addressed the larger question as to whether they were of benefit to the nation. After each of his following observations, I have addressed the current status.
1. “As a result of the ICC’s dissolution on January 1, 1996, no government agency has a mandate to protect the shipping public. The few remaining legal regulatory protections were transferred to the Department of Transportation, with direction from Congress not to allocate scarce resources to resolve private disputes. As a result, shippers must turn to the courts to enforce whatever remedies remain in the law — not a practical or cost-effective way to resolve most transportation disputes.”
No change. With respect to loss and damage claims, in particular, many carriers rely on this to deny meritorious claims knowing that for claims less than a few thousand dollars, or even $50,000, the cost of litigation in a faraway state makes pursuit of the claims economically impractical.
2. “The Federal Motor Carrier Safety Administration has ignored Congress’ directive to eliminate the distinction between common and contract carriers.”
No change. Indeed, in 2007, Congress again directed the FMCSA to eliminate the distinction… which continues to be ignored by the FMCSA.
3. “Motor carriers have eroded the traditional liability limitations that prevailed under the Carmack Amendment, and have published limitations that the ICC formerly refused to permit.”
The erosion continues. A common limit of liability of $25.00 per pound in 2005 has now gone to $5.00, or even $1.00, for a spot rate quote and $0.10 per pound is now the prevailing limit for “other than new” cargo, which could apply, for example, to machinery worth hundreds of thousands of dollars.
4. “Mergers and bankruptcies within the motor carrier industry have led to fewer sources for nationwide LTL coverage. Fuel surcharges, driver shortages, and insurance costs have reduced the pool of equipment available to shippers.”
The trend continues. In addition to the factors noted by Mr. Augello, in 2019, we have the effect of electronic logging devices (ELDs) monitoring drivers’ hours of service.
Mr. Augello concluded by noting, “On the positive side, transportation and logistics costs have been substantially reduced since these major changes in transportation regulation. Motor carriers frequently offer shippers highly discounted rates, although small, unsophisticated shippers that lack transportation and logistics training are often still at the mercy of their carriers.”
As of January 2019, a robust economy has pushed the limits of the carriers’ capacity… meaning that even the largest shippers are pressed to negotiate favorable terms. On the positive side, increased operational efficiencies of the carriers, and the supply chain in general, has led to overnight delivery being the new standard for consumers.
All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found on the PARCEL website. Your questions are welcome at.
This article originally appeared in the January/February, 2019 issue of PARCEL.