Chapter 4 Transportation rules and regulations

4.1 introduction
The chapter begins with a discussion of how transportation laws are created. This chapter also
presents the regulations in the railroad, airline, and motor carrier industries, an overview of some
international transportation regulations, and a brief presentation of the HAZMAT regulations.
4.2 Creating transportation laws
There are two types of laws in the United States: common law (case devel-oped law) and
statutory law.
Common Law: This is the body of law made by state and federal courts. An example of
common law is the definition of a “common carrier” as stated in 13 CJS Carriers S 3: “A
common carrier of goods is one who, as a regular business, undertakes to transport goods from
place, offering its services to such as may choose to employ him and pay its charges.”
Statutory Law: Congress enacts statutory laws after hearings by the appropriate committees
with jurisdiction over the subject matter. A key figure in enacting any law in the United States is
the chairperson of the committee. The chairperson controls hearing schedules, subject/cs for
discussions, invitations to testify, and decides which bills will be considered by the committee.
4.3 Federal transportation laws
The transportation of goods was the first form of interstate commerce subjected to federal
regulation. Other forms of interstate commerce also subject to federal regulation, to a greater
degree, are communications (telephone, telegraph, radio, television, etc.).
Congress enacts federal statues, which are published in the US Code (U.S.C.). Congress
delegates to federal agencies the power to formulate regulations necessary to implement and
enforce the law, which are found in the Code of Federal Regulations (CFR). Proposed
rulemakings are published in the Federal Register. The first regulatory agencies created to
implement the laws governing transportation were named the interstate Commerce Commission
(ICC), having jurisdiction over surface transportation, the Civil Aeronautics Board (CAB),
having jurisdiction over domestic airlines and air freight, and Federal Maritime Commission
(FMC) having jurisdiction over water carriers and ocean freight forwarders.
4.4 Railroad industry regulations
The enactment of the Act to Regulate Commerce by Congress in 1887 was a result of financial
manipulations of the owners of railroads, discriminatory pricing by their operators, and
disaffection by users, mainly farmers trying to transport their goods to the markets.
Congress responded by enacting the Transportation Act of 1920 and its provision marked the
pinnacle of the pervasive regulation to which the railroads were to remain subject for
approximately the next 60 years. The Act of 1920 carried forward the provisions of the Act to
Regulate Commerce of 1887, augmented in the meantime by the authority of the ICC to
prescribe the rates to be assessed by the railroads on specified commodities or in designated
traffic lanes and to award reparations to shippers for railroad rates found to have been assessed
unlawfully. The 1920 Act provided that railroads could neither construct, discontinue service on,
or abandon railroad lines without the advance approval of the ICC, upon its determination that
the public convenience and necessity required the proposed action. The ICC was charged with
the task of devising a plan for the consolidation of railroads into a limited number of regional
systems, and further merge railroads into the ICC plan.
Essentially, there is no regulation of railroads rates. As already noted,much of railroad
transportation has been declared exempt. Railroad rates on those exempt commodities and
services may be set by the railroads at their discretion, without even the pretense of rate
supervision by the STB. In theory, an aggrieved shipper may petition the STB to vacate
exemption to entertain a complaint that the rate assessed on the exempt commodity exceeds a
reasonable level. However, such relief is more illusory than real. Some level of protection was
sought to be afforded shippers of agricultural products, including grain. Summaries of such
contracts must be filed with STB, and a railroad can enter into contracts for the transportation of
agricultural products utilizing not more than 40% of its cars.
One of the most important and most frequently litigated statutes is the one governing railroad
liability for loss, damage, and delay to goods in their possession, called the “Cormack
Amendment.” The version currently applicable to rail carriers is in 49 U.S.C. S. 11706.
4.5 Motor carrier regulation
The term “motor carrier” is defined in the ICCTA as a “person providing motor vehicle
transportation for compensation” (49 U.S.C. S13102). The more recent Act does not separately
define motor common carrier or motor contract carrier, the repercussions of which are debatable.
In addition, a motor carrier shall “provide safe and adequate service, equipment, and facilities”
(49 U.S.C.S14101).
There are requirements for those who wish to gain motor carrier status and have authority to
operate as such from the federal government. They include:
1. File an application with the FMCSA
2. File evidence of the proper insurance
3. Designate an agent for the service of legal process and
4. Comply with the FMCSA’s safety regulations
It is also pertinent to mention that certain commodities, geographic zones, and equipment fall
outside the scope of the federal regulation, commonly referred to as “exemptions.” The
exemptions include:
1. Transportation by motor vehicle between Alaska and another state
through Canada, 49 U.S.C. S. 13502
2. Transportation by rail, truck or water carriers within terminal areas incidental to interstate or
foreign commerce, 49 U.S.C. S. 13503
3. Intrastate motor carrier operations within Hawaii (except for household goods), 49 U.S.C S
13504
4. Motor vehicle transportation by a person in furtherance of its primary business, including
subsidiaries in which the parent owns a 100 percent interest, commonly known as “private
carriage” 49 U.S.C. S. 13505.
4.6 Regulations in the airline industry
Federal regulations of the airline industry began in 1938 when Congress enacted the Civil
Aeronautics Act, which led to the establishment of the Civil Aeronautics Board (hereinafter
“CAB”). The Federal Aviation Act of 1958 vested all regulatory authority over safety in the
newly created Federal Aviation Administration (FAA). In 1977, strict liability was ordered as the
standard of liability for domestic air carriers. During its initial stages, the CAB did not intervene
in carrier loss and damage liability matters.
However, in 1969 it was forced to launch an investigation into liability, in response to complaints
from shippers of flowers, seafood, and other goods that the airline industry deemed unreasonable
in terms of tariff limitations of liability for loss, damage or delay. Also, the deregulation of the
airline industry began in 1977 with deregulation of air cargo traffic. As a result of deregulation,
air cargo rates and charges were no longer filed with or regulated by the CAB. Although airline
rates, rules, liability terms, and services are currently deregulated, airline tariffs continue to be
published in a tariff publication entitled “Airline Tariff Publishing Company”. However,
effective January 1, 1983, airlines are no longer required to file their tariffs with any federal
agency.
4.7 International water regulations
4.7.1 Freedom of the seas
The transportation using seas is dependent on the opportunity of the oceans regulation—a rule
set forth in the 17th century, basically constraining national rights and locale over the seas to a
restricted ocean belt encompassing a country’s coastline. The remainder of the oceans were
considered free for all. However, by Logistics Transportation Systems the middle of the 20th
century there was a need to reconsider seaward assets.
There was concern about beachfront fish stocks by long-separation angling armadas and about
the danger of contamination and pollution to the sea.
4.7.2 United Nations Law of the Sea Convention
The UN’s pivotal work in creating the 1982 Law of the Sea Convention settled a few significant
issues identified with sea use and jurisdiction, such as:
1. Setting up opportunity of route rights
2. Setting regional ocean limits 12 miles of coastal area
3. Setting select monetary zones up to 200 miles coastal area
4. Setting principles for stretching out mainland rack rights up to 350 miles of coastal area.
5. Creating the International Seabed Authority
6. Creating other compromise components (e.g., the UN Commission on the Limits of the
Continental Shelf).
4.7.3 Protection of marine environment and biodiversity
The Regional Seas Program acts to ensure protection of seas and oceans and advance the
economical utilization of marine assets. The Regional Seas Conventions and Action Plans
ensures the protection of seas and oceans at the provincial level. UNEP likewise created the
Global Program of Action for the protection of the marine environment from land-based
activities. It is the main worldwide intergovernmental instrument legitimately tending to the
connection between earthbound, freshwater, beachfront and marine environments. The United
Nations Educational, Scientific and Cultural Organization, through its Intergovernmental
Oceanographic Commission, facilitates programs in marine research, perception frameworks,
and risk moderation, and oversees sea and beachfront zones.
4.7.4 Marine shipping and pollution
To guarantee that transportation is cleaner and greener the IMO has embraced guidelines to
address the emanation of air contamination from ships and has sanctioned productivity measures
to decrease ozone harming substance discharges from sea vessels. These incorporate the
International Convention for the Prevention of Pollution from Ships of 1973, as altered by a 1978
Protocol (MARPOL), and the 1954 International Convention for the Prevention of Pollution of
the Sea by Oil.
4.7.5 Polar code
In 2017, the International Code for Ships Operating in Polar Waters (Polar Code) went into
power. The Polar Code covers the full scope of structure, development, hardware, operational,
preparing, salvage, and ecological assurance matters applicable to ships working in the cold
waters encompassing the two shafts. The Polar Code is designed to protect ships and its seafarers
and passengers, in the harsh and vulnerable environment of the waters surrounding the two poles,
and at the same time protecting those environments.
4.7.6 Piracy
Recently, there has been an increase in the pirate activity off the shoreline of Somalia and in the
Gulf of Guinea. Pirate attacks are a threat to the welfare of sailors and the security of sea
transportation routes and trade. These criminal demonstrations results in death, physical mischief
or capturing of sailors, critical interruptions to trade and route, money-related misfortunes to
shipowners, expanded protection premiums and security costs, expanded expenses to customers
and makers, and harm to the marine condition. Pirate attacks can have serious implications,
including averting philanthropic help and expanding the expenses of future shipments to the
influenced zones. The IMO and UN have received extra goals to supplement the guidelines in the
Law of the Sea Convention for managing robbery.
4.8 Importing procedures
4.8.1 Customs and importers
The Customs and Border Patrol has the following mission:
1. Protecting the nations revenue by assessing and collecting duties, taxes, and fees incident to
international traffic and trade
2. Controlling, regulating, and facilitating the movement of carriers, people, and commodities
between the United States and other nations
3. Protecting domestic industry and labor against unfair foreign competition Logistics
Transportation Systems
4. Protecting American consumers and environment from hazardous products
5. Detecting, interdicting, and investigating fraudulent smuggling and other illegal practices
aimed at preventing prohibited articles from entering
into the United States.
6. Detecting interdicting and investigating fraudulent activities intended to avoid payment of
duties, taxes, or fees, or to otherwise evade legal
requirements of international trade.
7. Detecting, interdicting, and investigating illegal international trafficking in arms, munitions,
currency, and acts of terrorism at the US ports of entry.
4.8.2 Entry of goods
For entry of goods into the United States, an importer must file entry documents for the goods
with a port director at the goods port of entry. The importer of record has a duty to prepare the
goods for inspection and release and must use reasonable care in doing so. Legal entrance in the
United States requires that goods, after arrival at a US port of entry, be authorized for delivery by
customs and that estimated duties and taxes be paid. Proper documentation of imports must also
be done to determine whether the goods may be released from customs custody.
4.8.3 Customs examination of entry goods/document
Customs examines goods upon entry to the United States to:
1. Determine the value of goods for their dutiable status and other custom purposes.
2. Determine whether goods must be marked with their country of origin or require special
labeling.
3. Detect prohibited items and prevent entrance.
4. Determine if goods are correctly invoiced.
5. Determine if goods exceed invoiced quantities or if a shortage exists.
4.8.3.1 Importer obligations
An importer is expected to exercise reasonable care in carrying out all activities related to
importation of goods. Some of these obligations include:
1. Providing a complete and accurate description of goods
2. Providing a correct tariff classification
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3. Obtaining a Customs ruling on the description, marking, country of origin, and valuation of
goods and its tariff classification
4. When claiming goods are entitled to a conditionally free or special tariff
classification, assuring they qualify for such status
5. Providing a proper declared value
6. Providing the correct country of origin marking (if required)
7. If applicable, establishing the legal right to import goods that are trademarked or copyrighted.
8. Assuring goods comply with other relevant agency requirements (FDA, EPA, FTC, DOT, etc.)
9. Compliance with Commerce Department dumping or countervailing
duty investigations
10. Filing the correct type of customs entry (consumption, mail, etc.)
11. Compliance with any special regulations that may apply to the commodity (textiles,
hazardous materials, perishable goods, etc.)
4.8.4 Penalties
Any person who fraudulently or negligently enters, introduces, or attempts to enter or introduce
goods into the United States in a way that violates US customs laws and regulations may be
subject to criminal and civil penalties. Imported goods may be seized or forfeited to pay
penalties. Criminally, an importer can be subject to up to 2 years’ imprisonment, fined, or both.
4.9 Trade agreements
The aim of the Asia Pacific Economic Cooperation (APEC) was to promote trade and investment
in the Pacific basin. It was established in November 7, 1989 to be fighting back against the
dynamic movement of economic progress happened in Western Europe. As a result, the Pacific
Rim silently undertook some unique and unparalleled footsteps that led to greater economic
cooperation. Regardless of whether this will be accomplished is, obviously, still too soon to state.
Up until this point, in any event, the dynamic Pacific district countries have made a gathering for
talking about exchange and monetary issues. For the United States, this offers an opportunity to
standardize its administration in what has turned into the most significant wellspring of the
market for American merchandise. The discussion was held in Canberra, Australia, at a bureau
level gathering of delegates from Australia, Brunei, Canada, Indonesia, Japan, South Korea,
Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States. There they
set up the Asia-Pacific Economic Cooperation group, known as the APEC. They consented to
extend official Logistics Transportation Systems participation on financial and exchange issues,
with the objective of reinforcing the multilateral exchanging framework and upgrading local
monetary development.
4.10 Hazardous materials regulations
The Hazardous Materials Regulations (HMR; 49 CFR Parts 171180) specify requirements for the
safe transportation of hazardous materials in commerce by rail car, aircraft, vessel, and motor
vehicle. These comprehensive regulations govern transportation-related activities by offertories
(e.g., shippers, brokers, forwarding agents, freight forwarders, and warehouses); carriers (i.e.,
common, contract, and private); packaging manufacturers,100 Logistics Transportation Systems
reconditioners, testers, and retesters; and independent inspection agencies.
The HMR apply to each person who performs, or causes to be performed, functions related to the
transportation of hazardous materials such as determination of, and compliance with, basic
conditions for offering; filling packages; marking and labeling packages; preparing shipping
papers; handling, loading, securing, and segregating packages within a transport vehicle, freight
container, or cargo hold; and transporting hazardous materials.
4.11 Foreign trade zones
A Foreign Trade Zone (FTZ) is a secure area defined by US law as being outside the jurisdiction
of the United States Customs; no duty is paid and certain state, local, and federal taxes are
eliminated on foreign goods or material brought into the zone, until the goods are “entered” from
the zone into US customs territory. A FTZ is associated with an air or sea port of entry. In the
United States, the FTZ Board of the US Department of Commerce regulates FTZs. In other
places around the world, such zones are often called “Free Trade Zones.”
4.12 Freight forwarding
Moving merchandise globally and locally can be a problem, particularly if transportation
guidelines are not well understood. That is where a freight for warding administration can prove
to be useful. Cargo sending is the coordi - nation and shipment of merchandise starting with one
goal then onto the next utilizing single or different transporters. Carriers can incorporate differ
ent strategies, including air, marine, rail, or expressway.
4.12.1 Freight forwarding and 3PL logistic providers