Re: Machines, Systems or Devices, data processing, or Components or Parts thereof Item

Transcription

1 Re: Machines, Systems or Devices, data processing, or Components or Parts thereof Item Staff Contact: William F. Mascaro Telephone (703) Proponent: Commodity Classification Standards Board Present Classification Provisions Item Description Class NOTE Also applies on switchboard sections, partially crated, when securely braced in truck, and on the iron work, loose. MACHINERY GROUP: subject to item Business or Office: subject to item Machines, Systems or Devices, data processing, or units that form components of data processing machines, systems or devices, including Facsimile (FAX) Machines, in boxes or Package 2254, or Parts thereof, NOI, in boxes or Package 2253; or Electronic Telephone Switching Systems or components for such systems, in boxes or crates, see Note, item 63242, or in Packages 2050, 2286 or 2291; see Note, item : Sub 1 Released to a value not exceeding $5.00 per pound Sub 2 Released to a value exceeding $5.00 per pound but not Sub 3 exceeding $10.00 per pound Released to a value exceeding $10.00 per pound but not exceeding $25.00 per pound NOTE The released or declared value of the property must be entered on the shipping order and bill of lading at time of shipment in the following form: The agreed or declared value of the property is hereby specifically stated by the shipper to be not exceeding per pound. If the shipper fails or declines to execute the above statement or designates a value exceeding $25.00 per pound, shipment will not be accepted, but if shipment is inadvertently accepted, it will be considered as being released to a value of $5.00 per pound and the shipment will move subject to such limitation of liability. (The released values upon which the classes herein are dependent have been authorized by the Interstate Commerce Commission by Released Rates Order No. MC-894 of May 10, 1977, as amended August 10, 1979 and January 7, 1983.) 2012 National Motor Freight Traffic Association, Inc. Subject 2, Page 1 of 8

2 Proposed Classification Provisions Item Description Class NOTE No Change. MACHINERY GROUP: subject to item Business or Office: subject to item Machines, Systems or Devices, data processing, or Components, Parts or Peripherals thereof, see Note, item B-NEW, viz.: Automated Teller Machines (ATMs); Computers, including Personal Computers, Laptops, Notebooks or Tablets, or Components, Parts or Peripherals thereof, NOI; Electronic Telephone Switching Systems, or Components thereof; Facsimile (Fax) Machines; Machines, Systems or Devices, data processing, or Components, Parts or Peripherals thereof, NOI; Printers or Scanners, computer or data processing network or system, or Parts thereof, NOI; Servers, or Storage or Networking Devices or Hardware, or Components or Parts thereof, NOI; Software, NOI, data processing machine, system or device; In boxes, crates or Packages 2050, 2253, 2254, 2286 or 2291, released to a value not exceeding $25.00 per pound, see Note, item A-NEW, subject to Items 170 and 171 and having a density in pounds per cubic foot of: Sub 1 Less than Sub 2 1 but less than Sub 3 2 but less than Sub 4 4 but less than Sub 5 6 but less than Sub 6 8 but less than Sub 7 10 but less than Sub 8 12 but less than Sub 9 15 but less than Sub but less than Sub or greater NOTE Cancel; no further application. Subject 2, Page 2 of National Motor Freight Traffic Association, Inc.

3 Proposed Classification Provisions Continued Item Description Class A-NEW NOTE Unless otherwise provided in individual participating carriers' tariffs, articles moving under the provisions of item shall only be accepted subject to a maximum liability of $25.00 per pound. If shipper fails to declare a value, or declares a value in excess of $25.00 per pound, shipment will not be accepted, but if the shipment is inadvertently accepted, it will be considered as being released to a value not exceeding $25.00 per pound and the shipment will move subject to such limitation of liability. In no instance will carriers' liability exceed the actual value of the article lost or damaged. B-NEW NOTE Provisions do not apply on cellular or radio telephones, including smartphones. For cellular or radio telephones, including smartphones, see item 62820, Radio-telephone Transmitting or Transmitting and Receiving Sets, for provisions based on released value, and item 62850, Radiotelephones, cellular (Cellular Telephones), for provisions not based on released value. THIS SPACE INTENTIONALLY LEFT BLANK 2012 National Motor Freight Traffic Association, Inc. Subject 2, Page 3 of 8

4 Proposed Classification Provisions Concluded It is concurrently proposed to amend Item (Rule) 172, Limitation of Carrier Liability Where Value is Not Declared by Shipper, as follows: ITEM 172 LIMITATION OF CARRIER LIABILITY WHERE VALUE IS NOT DECLARED BY SHIPPER Where item 62820, 63025, 70080, 88160, 99400, , , , or of this Classification applies, and shipper fails to declare a value as required by those provisions, the shipment will not be accepted, but if the shipment is inadvertently accepted, the carrier s liability shall be limited as follows: ITEM NO. DESCRIPTION VALUE LIMITATION Radio, Radio-telephone or Television Transmitting or Transmitting and Receiving Sets or other Radio Impulse or Wireless Audio (Sound) Impulse Transmitting or Transmitting and Receiving $10.00 per pound Sets, separate or combined Semiconductors, viz.: Devices, NOI; Diodes; Rectifiers; Thermistors; Transistors $20.00 per pound Flatware, Dresserware or Holloware, sterling silver; or Flatware, Dresserware or Holloware, with sterling silver parts, such as $5.00 per pound backs, covers, frames, handles or tops Glassware, NOI $19.00 per pound Hides, Pelts or Skins, dressed or tanned or not dressed nor tanned, NOI, dry $7.50 per pound Jewelry, costume or novelty, made of materials other than solid or filled precious metals, not mounted nor set with precious stones $5.00 per pound Machines, Systems or Devices, data processing, or $25.00 per Components, Parts or Peripherals thereof pound Metal, NOI, or Metal Alloys, NOI $5.00 per pound Radioactive Materials, Articles or Isotopes $5.00 per pound Watches or Watch Movements $10.00 each Where the provisions of other tariffs apply, and those provisions specify a limitation of the carrier s liability absent a release or value declaration by the shipper, the carrier s liability shall be limited to the extent provided by such applicable provisions when the shipper does not make the requisite or specified release or value declaration. Subject 2, Page 4 of National Motor Freight Traffic Association, Inc.

5 Analysis Research Project 1114 Research Project 1114 was initiated in April, 2010 to investigate the transportation characteristics of articles moving under the provisions of item , Machines, Systems or Devices, data processing, or units that form components of data processing machines, systems or devices. The complete description is found under the Present Classification Provisions. During the course of Project 1114, survey forms were mailed to 913 potential shippers and 56 trade associations in May of 2010 and, again to those that did not respond, in June of 2010, inviting them to participate in the research. From this sampling, 191 surveys were returned as undeliverable, 53 companies responded that they did not ship the involved articles, and 12 companies provided at least some information. Regarding the 56 trade associations, six responded that they did not represent shippers of the involved articles, and four surveys were returned to sender. No response was received from the remaining associations. History of Provisions The basic structure of item was established as a result of action taken on Docket 741, Subject 51 (January, 1974) and first appeared in Supplement 11 to NMF 100-D, effective October 1, 1977, as authorized by the former Interstate Commerce Commission (ICC) in Released Rates Order No. MC-894 of May 10, Subsequently, references were added in item for facsimile (fax) machines and electronic telephone switching systems. Item has remained substantially unchanged to the present. At the time item was established, motor carrier transportation was regulated by the ICC, and motor carriers were prohibited from establishing classification provisions based on released value unless specifically authorized by the ICC. Historical information gleaned from the CCSB s files shows that the released value provisions of item were an attempt to address concerns over the availability of LTL transportation service for data processing equipment. File references show that shipper interests were concerned with the potential lack of service for this type of equipment, shown at the time to range in value from less than $5.00 to over $7, per pound, especially given that other modes, primarily rail and household goods carriers, offered released value provisions. It was also felt that released value provisions would be less onerous than actual value provisions, even though recovery for loss or damage would be limited to a maximum value of $25.00 per pound. While item , through the application of Note, item , provides for a maximum carrier liability of $25.00 per pound, at the highest assigned class of 250, it does allow the shipper, by declaring a lower value, the option to obtain a lower class, i.e or 150. It also provides that if the shipper fails to declare a value, or designates a value exceeding $25.00 per pound, the default liability level is the lowest level provided, which is $5.00 per pound, at class National Motor Freight Traffic Association, Inc. Subject 2, Page 5 of 8

6 % of Figures in Interval CCSB DOCKET About Data Processing Machines, Systems or Devices When the provisions of item were established, most data processing machines, systems or devices consisted of multiple components that were built onsite into a unit. Personal computers, which were in their relative infancy, were much larger than they are today. In addition, many related articles such as laptops and tablets, as well as certain components and peripherals, did not exist when the provisions were established, or are vastly different today. For example, in addition to desktop, laptop and tablet computers, item also applies on data processing equipment ranging from ATMs and point-of-sale terminals used in commercial establishments, to servers, routers and other devices for enterprise applications. Item also applies on components or peripherals, e.g. keyboards, mice, USB flash drives, printers and monitors used exclusively in data processing applications. In addition to what is commonly referred to as computer hardware, item applies on computer software. Transportation Characteristics Density The information of record includes 63,443 density observations submitted by shippers and carriers, obtained by CCSB dock surveys and culled from the CCSB s Density Study 1. The observations range from 0.06 to pcf, with a simple average density of 9.05 pcf. A frequency distribution of the overall density range is provided below. Frequency Distribution 25% 20% 15% 10% 5% 0% 0% 0% 25% 21% 20% 8% 9% 8% 6% 1% 2% Density Intervals (pcf) 1 The Density Study is part of an ongoing effort by the CCSB to collect information on actual shipments; it is not tied to any particular research project, nor does it target any particular product category. Carriers that choose to participate in the study periodically submit shipment data captured through their respective freight auditing programs. The data is identified by NMFC item, and only verifiable data points, which include the weight and the dimensions and/or cube of the shipping unit involved, are used. Subject 2, Page 6 of National Motor Freight Traffic Association, Inc.

7 As shown in the distribution, the majority of the figures are clustered between 4 and 10 pcf, with the greatest percentage of figures in the 6 but less than 8 pcf interval. Also, 74% of the density observations are less than 10 pcf. This indicates that the identified average density of 9.05 pcf may not be reflective of the overall density range. It is also noted that the overall range in density is quite broad, ranging from less than 1 pcf to almost 100 pcf, and approximately 9% of the figures are 15 pcf or greater, and 4% are greater than 20 pcf. Handling Information available indicates that data processing equipment is generally packaged in fiberboard boxes of a regular size and shape that may be palletized for shipment. No unusual or significant handling considerations have been identified. Stowability As with handling, no unusual or significant stowing considerations have been identified. Liability There is no indication that any of the factors that comprise the liability characteristic would present any unusual or significant considerations. Data processing equipment is not perishable, prone to spontaneous combustion or explosion, or likely to damage other freight with which transported. Susceptibility to theft and liability to damage have long been a concern, but information of record does not indicate an unusual or significant claims problem. A limited amount of information available on the value of data processing equipment indicates a wide range, from $10.71 to $ per pound, with a simple average value of $76.81 per pound. While the identified average value is fairly high, a survey of motor carrier claims personnel reveals no indication of a claims problem. It is also noted that articles moving under the provisions of item are currently subject to a maximum liability of $25.00 per pound and this proposal would maintain that liability limitation. Relationship to CCSB Policies and Guidelines CCSB policy calls for classification provisions to be as clear as possible to help preclude the potential for interpretation disputes. While item serves as the general NOI or catch-all provision for data processing equipment and peripherals, many of the products moving under the provision are not named. Amending the description to provide a viz. listing, as proposed, would allow for the naming of many of the different categories of articles moving under item and be in keeping with CCSB policy. As a further clarification, a new Note would be referenced in item to clarify that cellular telephones, including smartphones, are not classified under these provisions. The Note would direct the NMFC user to item for provisions based on released value and item for provisions not based on released value. CCSB policy also calls for classification provisions to reflect a commodity s known transportation characteristics. Information of record developed through Research Project 1114 indicates that articles moving under the provisions of item range in density from 0.06 to pcf, with a simple average density of 9.05 pcf. No unusual or significant negative handling, stowability or liability considerations have been identified, and while the average value of $76.81 per pound is somewhat high, there is no indication of a significant claims problem, and carrier liability is currently, and would continue to be, capped at $25.00 per pound. Under CCSB guidelines, an average density of 9.05 pcf is generally associated with class 100, which calls for a minimum average density of 9 pcf. However, as previously noted, 2012 National Motor Freight Traffic Association, Inc. Subject 2, Page 7 of 8

8 the greatest percentage of density observations are in the 6 but less than 8 pcf density interval, and 74% of the density observations are less than 10 pcf, which indicates that the identified average density may not be reflective of the overall density range. To address such a circumstance, CCSB policy provides that commodities or commodity groups exhibiting a wide density range not accurately reflected by a single overall average density may be assigned density-based classes; especially where there are no unusual or significant stowability, handling or liability characteristics and where there is no other feasible means of effectively narrowing the range. CCSB policy further provides that where densities are distributed throughout the range, commodities or commodity groups may be assigned classes predicated on a full density scale. In this regard, CCSB policy states that when a substantial percentage of the densities involved exceeds 20 pounds per cubic foot, full-scale density classifications should generally provide the CCSB s standard 11-subprovision density progression. In keeping with the aforementioned CCSB policies, this proposal would amend item to provide the CCSB s standard 11-subprovision density scale 2. While eliminating classes based solely on released value, this proposal would maintain the currently applicable maximum liability level of $25.00 per pound provided for in item Accordingly, it is proposed to add a new Note to item stipulating that unless otherwise provided in individual participating carriers tariffs, articles moving under the provisions of item shall only be accepted subject to a maximum liability of $25.00 per pound. The Note would further provide for an inadvertence clause to address situations where a value is not declared, or declared in excess of $25.00 per pound. A corresponding change would be made to the reference to item in Item (Rule) 172 to reflect the change in the default liability level from $5.00 to $25.00 per pound. In addition to being consistent with CCSB policy, such an approach is also in keeping with classification precedent. Docket , Subject 1 (October, 2009) was a proposal to replace released (and actual) value provisions for glassware, NOI with the standard 11- subprovision density scale while maintaining the then-in-effect maximum liability level of $19.00 per pound. That proposal also established a new Note providing an inadvertence clause in the event no value was declared, or a value in excess of $19.00 per pound was declared. The proposal was approved as modified, and those provisions first appeared in Supplement 5 to NMF 100-AI, effective January 9, Based on the information of record, this proposal, as docketed, is in keeping with CCSB policy and precedent. 2 The CCSB s standard 11-subprovision density scale includes reference to Item (Rule) 170, the inadvertence clause, and Item (Rule) 171, the bumping privilege. Subject 2, Page 8 of National Motor Freight Traffic Association, Inc.