Late Tariff Changes Cause Rate Filing Delay

Note: This article is part of a series on changes to the 2012 400NG and International Tender. (To view the entire series of articles, click here.) Please note that these articles are not intended to cover every change made, so TSPs still need to read the tariffs prior to filing rates. Also, these posts are based on our own interpretation of the tariffs, and we cannot guarantee that our interpretation will always be shared by SDDC, the PPSOs, or GSA.

Last Friday, SDDC announced they were delaying the end of the first round of rate filing, in order to give TSPs a chance to modify their rates based on some recent tariff changes. SDDC has made a number of changes to the upcoming 2012 tariff that should be viewed positively from the TSP perspective. The 70 percent rule was eliminated for the calendar year 2012, SDDC increased some baseline linehaul rates in the international tariff, and they made it easier to pass along the cost of random customs inspections. All of these changes should in theory, allow TSPs to move shipments more efficiently and at a lower filed rate than had the changes not been made.

However, the timing of these changes would have made it difficult for TSPs to incorporate them into their rates. The changes to the 70 percent rule and customs changes were made in a version of the tariffs released on February 8th, 3 days after the start of the first round of rate filing. The 70 percent rule changes were publicized by SDDC via email and newsletters to TSPs much earlier, but there was no such advance notice on the customs changes.

The increase to the International baseline rates were posted to the SDDC website on February 1st, 4 days before the start of rate filing. However, it did not appear that there were any other notifications of the update, so it is very likely that many TSPs did not notice them. There has been many new items posted to the SDDC “What’s New” section in the past couple of weeks, so it would be easy to overlook the baseline rates posting, or assume it is a reposting of the same document, which does seem to occur on the SDDC website.

Further exacerbating the problem is that the two changes with the least notice, customs and the increased baseline rates, affect International TSPs, which have a much more complicated and challenging rate filing process due to the number of channels that are filed. Many International TSPs use rate filing services, and many of those services require the TSP to have their rates to them well ahead of the opening of the rate filing. We have heard of one service that set February 1 as the deadline, which is the same date the updated linehaul tables were released, and a full week before the customs information was published.

While it was primarily the government who stood to lose if there was not enough time for TSPs to reflect lower costs in their rates, there was a chance of a competitive imbalance between TSPs depending on when they learned of the changes. If one TSP catches the changes in time to adjust their rates lower, they stood to have a significant advantage over a TSP who was not aware of the changes until it is too late to change their rates.

We will close with a reminder of the issue raised at the end of December, when we discussed the problem with SDDC using the 45 day notice as the deadline to publish only the schedule for rate filing. We said at the time:

However, there is an inherent problem with this requirement as written. It is essentially a meaningless notice if it just applies to the rate filing schedule, not the solicitations or other supporting documents. In theory, SDDC could publish the schedule 45 days out, and not release the solicitations until the day before rate filing begins and still be in compliance.

While we know that SDDC would have preferred to have the information out much earlier, the fact that they were releasing changes after the start of rate filing led them to annouce this delay. Hopefully, they will make changes to the 45 day notice for future years to ensure all TSPs have ample time to have a fair, competitive rate filing process

Do you think the late release of the tariff changes could have caused an unfair situation for TSPs? Are you glad that SDDC delayed the closing of the rate filing round to allow all TSPs to adjust their rates if desired? Use the comments below to share your opinions:

Related Posts

1. Rate Filing Delay - November 2nd, 2006
2. Rate Filing Schedule Posted - February 13th, 2007
3. SDDC and the 45 Day Rate Filing Notice Requirement - January 5th, 2012