Multiple Road Revenues

[Electroliner 1935]

MP173

Which trucking company in Cincinnati did your dad work for?

. 

Miami Truck Lines. They were anI don't know when they went out of business. They were a small LTL regional  carrier serving routes about 300 miles or less. Dad joined them in 1946 or47 I believe and left sometime in the 50's. When he became a traffic manager for a manufacuring company in Cincinnati.

[MP173]

Electroliner:

Which trucking company in Cincinnati did your dad work for?  I was in LTL trucking for 10 years during the 80s and handled tariff filings, rates, etc.

Interesting era as the deregulation was just getting traction.  

 

Ed

[Juniata Man]

Falcon48

 

 

Juniata Man

Rail contracts for manifest or loose car freight generally do not specify service frequency.  Contracts typically address minimum volumes and rates along with a liquidated damage clause for failure to meet the volume commitment.  Contracts will also incorporate by reference governing railroad rules tariffs involving such things as demurrage; private car rules (where applicable) and what have you.

Insofar as the proceeding involving the UP customer in Saugus; I think UP’s use of the contract exception is simply throwing an argument against the wall to see if it sticks.  

While it is true that the STB considers contract moves to be exempt from their oversight; this generally applies only insofar as the rates published in the contract.  In other words; the customer can’t file a rate case with the STB involving contract rates. I can’t recollect seeing any previous STB proceedings where the contract exemption was used to defend changes in the frequency of rail service.  And; assuming frequency is not addressed in the contract; it would then fall under the STB’s oversight.

Additionally; from the filings I have read; it does not appear the consignee in Saugus is a party to the UP rail contract; another reason I think the Board will have oversight in this matter.

 

 

 

 

I don’t want to get into a big legal discussion about STB jurisdiction, and I don’t think any of the other readers of this forum would be very interested in it.  Suffice it to say that neither the STB nor any other regulatory agency would be as cavalier about statutory restrictions on its authority as you apparently think they would.

In this case, STB’s governing statute is very clear and unambiguous.  49 USC 10709 (the statute covering rail transportation contracts) expressly states as follows:

“(b )  A party to a contract entered into under this section (ed., section 10709)) shall have no duty in connection with the services provided under such contract other than those duties specified by the terms of the contract.”

There is absolutely nothing in this language that limits this to the “rates”.  It broadly applies to all duties.  Had Congress meant to limit this to “rates”, it would have said so. 

 And, in case there is any doubt about this, Section 10709(c) goes on to provide:

(c) A contract that is authorized by this section, and transportation under such contract, shall not be subject to this part, and may not be challenged before the Board or in any court on the grounds that such contract violates a provision of this part.”

”This part” is part A of Title 49 USC, which contains all of STB’s substantive authority over railroad rates and practices.  So this provision unambiguously says that “transportation” under a contract isn’t subject to STB regulation. 

So what is “transportation”?  Well, it just happens to be a defined term in STB’s governing statute (49 USC 10102(9) which reads, in relevant part, as follows:

(9) ‘‘transportation’’ includes— (A) a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, by rail, regardless of ownership or an agreement concerning use; and (B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange of passengers and property.

 

Bottom line, STB has no authority to regulate the services provided under a 10709 contract. 

 

Finally, the fact that the contract in the Hasa case is apparently with the consignor rather than the consignee doesn't make a difference.  In most cases, transportation arrangements for commercial transactions are made by either the consignor or the consignee, but not both.  For example, a typical utility coal transportation contract is made between the railroad and the utility receiving the coal, not with the mine.  In the Hasa case, the contract was apparently between the railroad and the consignor.  I suspect that, given the hazardous commodity involved (chlorine), the consignee didn’t want to have any responsibility for the transportation arrangements.  In any event, the statutory restrictions on STB’s regulatory authority over contract transportation don’t depend on who is seeking STB regulatory intervention.           

 

Falcon; with you being a former Class 1 man and me being a former shipper; I reckon I will agree to disagree with your position on this and note both of us can wait to see what the Board does here.

[Electroliner 1935]

Thanks. That clarifies the situation. And makes me think my dad, if he was still alive would be amazed. He was a practitioner before the ICC and filled tariffs for truck lines. He had worked for the MOPAC until they were going to move him from Cincinnati. He had my brother and me in school and did not want to upset our schooling. He went to work for a trucking company. When they wanted some companies business, he would file the necessary tariffs. Had some disputes but I found it interesting.

[Falcon48]

Juniata Man

Rail contracts for manifest or loose car freight generally do not specify service frequency.  Contracts typically address minimum volumes and rates along with a liquidated damage clause for failure to meet the volume commitment.  Contracts will also incorporate by reference governing railroad rules tariffs involving such things as demurrage; private car rules (where applicable) and what have you.

Insofar as the proceeding involving the UP customer in Saugus; I think UP’s use of the contract exception is simply throwing an argument against the wall to see if it sticks.  

While it is true that the STB considers contract moves to be exempt from their oversight; this generally applies only insofar as the rates published in the contract.  In other words; the customer can’t file a rate case with the STB involving contract rates. I can’t recollect seeing any previous STB proceedings where the contract exemption was used to defend changes in the frequency of rail service.  And; assuming frequency is not addressed in the contract; it would then fall under the STB’s oversight.

Additionally; from the filings I have read; it does not appear the consignee in Saugus is a party to the UP rail contract; another reason I think the Board will have oversight in this matter.

 

I don’t want to get into a big legal discussion about STB jurisdiction, and I don’t think any of the other readers of this forum would be very interested in it.  Suffice it to say that neither the STB nor any other regulatory agency would be as cavalier about statutory restrictions on its authority as you apparently think they would.

In this case, STB’s governing statute is very clear and unambiguous.  49 USC 10709 (the statute covering rail transportation contracts) expressly states as follows:

“(b )  A party to a contract entered into under this section (ed., section 10709)) shall have no duty in connection with the services provided under such contract other than those duties specified by the terms of the contract.”

There is absolutely nothing in this language that limits this to the “rates”.  It broadly applies to all duties.  Had Congress meant to limit this to “rates”, it would have said so. 

 And, in case there is any doubt about this, Section 10709(c) goes on to provide:

(c) A contract that is authorized by this section, and transportation under such contract, shall not be subject to this part, and may not be challenged before the Board or in any court on the grounds that such contract violates a provision of this part.”

”This part” is part A of Title 49 USC, which contains all of STB’s substantive authority over railroad rates and practices.  So this provision unambiguously says that “transportation” under a contract isn’t subject to STB regulation. 

So what is “transportation”?  Well, it just happens to be a defined term in STB’s governing statute (49 USC 10102(9) which reads, in relevant part, as follows:

(9) ‘‘transportation’’ includes— (A) a locomotive, car, vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, by rail, regardless of ownership or an agreement concerning use; and (B) services related to that movement, including receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, and interchange of passengers and property.

 

Bottom line, STB has no authority to regulate the services provided under a 10709 contract. 

 

Finally, the fact that the contract in the Hasa case is apparently with the consignor rather than the consignee doesn't make a difference.  In most cases, transportation arrangements for commercial transactions are made by either the consignor or the consignee, but not both.  For example, a typical utility coal transportation contract is made between the railroad and the utility receiving the coal, not with the mine.  In the Hasa case, the contract was apparently between the railroad and the consignor.  I suspect that, given the hazardous commodity involved (chlorine), the consignee didn’t want to have any responsibility for the transportation arrangements.  In any event, the statutory restrictions on STB’s regulatory authority over contract transportation don’t depend on who is seeking STB regulatory intervention.           

[Juniata Man]

Rail contracts for manifest or loose car freight generally do not specify service frequency.  Contracts typically address minimum volumes and rates along with a liquidated damage clause for failure to meet the volume commitment.  Contracts will also incorporate by reference governing railroad rules tariffs involving such things as demurrage; private car rules (where applicable) and what have you.

Insofar as the proceeding involving the UP customer in Saugus; I think UP’s use of the contract exception is simply throwing an argument against the wall to see if it sticks.  

While it is true that the STB considers contract moves to be exempt from their oversight; this generally applies only insofar as the rates published in the contract.  In other words; the customer can’t file a rate case with the STB involving contract rates. I can’t recollect seeing any previous STB proceedings where the contract exemption was used to defend changes in the frequency of rail service.  And; assuming frequency is not addressed in the contract; it would then fall under the STB’s oversight.

Additionally; from the filings I have read; it does not appear the consignee in Saugus is a party to the UP rail contract; another reason I think the Board will have oversight in this matter.

[BaltACD]

Falcon48

I don't know this as a fact, but I rather suspect that the contract in question doesn't impose any specific obligations as to the frequency of destination switching.  

I suspect many contracts, negotiated before PSR, don't specify the frequency of service at either origin or destination as a 'normal' level of 5 or 6 day service was assumed by ALL parties in the negotiations - both RR and Customer.  PSR has placed those assumptions in the garbage dump. 

[Falcon48]

Electroliner 1935

The UP's "brief" about the California complaint about switching stated that since the shipments were made under "CONTRACT" and not under TARIFF rates, there was NO grounds for dispute. Which raises my question, What percent of RR trafic is still under the old tariff system and what is by contract?

 

I don't have that figure, but I'll bet the STB does.  It's definitely very substantial.

The reason the "contract" issue arose in the California case is because the traffic involved appears to be moving under a 10709 contract between the railroad and the shipper (not the complaining receiver).  The Interstate Comerce Act (as amended by the 1980 Staggers Act) is quite explicit about this. When traffic is moving under a contract, a railroad has no duties beyond what the contract requires. The statute (49 USC 10709(b)) provides as follows:

"(b) A party to a contract entered into under this section [ed. 49 USC 10709] shall have no duty in connection with services provided under such contract other than those duties specified by the terms of the contract."

I don't know this as a fact, but I rather suspect that the contract in question doesn't impose any specific obligations as to the frequency of destination switching.  

 

[BaltACD]

Electroliner 1935

The UP's "brief" about the California complaint about switching stated that since the shipments were made under "CONTRACT" and not under TARIFF rates, there was NO grounds for dispute. Which raises my question, What percent of RR trafic is still under the old tariff system and what is by contract?

I don't have any exact figures.

I suspect most of the recurring traffic is handled under some form of contracts.  Contracts will routinely specify the amounts of product to be shipped to obtain the contracted rate; the contracts may contain provisions for penalty payments by the railroads for failure to haul the product within the parameters specified in the contract.

One time and irregular frequency movements most likely are traveling on some form of a tariff rate.  I suspect the tariffs being accessed bare little resemblence to the tariffs that were in effect duing the ICC and pre-Staggers eras of railroading.

[Electroliner 1935]

The UP's "brief" about the California complaint about switching stated that since the shipments were made under "CONTRACT" and not under TARIFF rates, there was NO grounds for dispute. Which raises my question, What percent of RR trafic is still under the old tariff system and what is by contract?

[zardoz]

Falcon48

Probably more than you didn't want to know.

Actually, that was quite interesting.

[Falcon48]

It can actually be a little more complicated than this.  For one thing, it depends on how the traffic is rated.   If the underlying rate is a single factor "joint-through rate" - either a public price (what used to be called a "tariff rate") or a contract - the customer pays a single bill to one of the carriers in the route, and the revenues are then divided between the carriers in the route on the basis of whatever "divisions" they've negotiated.  The divisions may be more or less mileage related, but they don't have to be - they are whatever the carriers in the route have negotiated.

But the underlying rate may not a single factor "joint through rate".  Many interline rates these days are so-called "Rule 11" rates, which are established individually by each carrier for its portion of the route.  These rates are billed and collected separately by each carrier - there is no "division" of revenue.  The "share" of total revenue represented by these rates is whatever rate each carrier individually decides to establish, not necessarily mileage.  For example, a carrier which solely serves the destination may establish a "higher" rate on a per mile basis than an intermediate carrier that's competing against other carriers for its portion of the route.

Probably more than you didn't want to know.

 

 

BaltACD

Revenue is nominally shared on a mileage basis - with allowances to account for the costs of originating and terminating the load. 

 

 

Thanks

 

[/quote]

   

[JPS1]

BaltACD

Revenue is nominally shared on a mileage basis - with allowances to account for the costs of originating and terminating the load. 

Thanks

[BaltACD]

JPS1

If a Norfolk Southern auto carrier, as an example, that is loaded with cars in Monterrey, Mexico, and runs via Kansas City Southern de Mexico, BNSF, and Norfolk Southern to Pittsburgh, how are the revenues allocated?

Revenue is nominally shared on a mileage basis - with allowances to account for the costs of originating and terminating the load.

[JPS1]

If a Norfolk Southern auto carrier, as an example, that is loaded with cars in Monterrey, Mexico, and runs via Kansas City Southern de Mexico, BNSF, and Norfolk Southern to Pittsburgh, how are the revenues allocated?