CHAPTER 6. FRAGMENTED MOTOR CERTIFICATION

This subject has become a highly controversial issue as a result of the mushroom growth of highway transportation. It is not difficult to understand why the early motor carrier certificates were issued in limited form: (1) there was recognition that there was too much competition in the motor carrier industry and, (2) that since for legal reasons grandfather rights had to be provided, it was necessary to strictly interpret grandfather rights and to limit the carriers to these operations. Another factor was and still is that a substantial minority of the carriers engaged in handling specialized traffic do not desire more extensive certificates commodity wise but probably most would welcome freedom to add to their present routes and points served.

Our study of this problem indicates that the primary responsibility for atomized or fragmented authorization lies with the Government.. Lack of research and planning resulted in failure to identify and in-terpret the trends that were to develop into our present highway freight system in time to adapt control of entry to the potentials of the new mode. As the confusion and multiplication of operating authorizations increased it seems we concentrated on the welfare of existing carriers and the desires of individual shippers rather than on the important question of guiding the development of this new mode along lines of the overall public interest. Today the records of entry and extension cases are replete with the claims of opponents and proponents but nowhere in any record appears an objective analysis of the overall public interest in flexible, economical service. Public convenience and necessity is represented only by the statementsof a limited number of shippers who might or might not actually utilize the proposed service.

It is of academic interest to note that voices in the wilderness warned of the consequences to be expected from atomized certificates. The last extensive investigation of this subject, conducted by theBoard of Investigation and Research, resulted, in 1944, in recommendations for sweeping liberalization of motor carrier certificates.1 The Board commented on the reluctance of the Commission to disturb competitive relationships which recalls the statement of the great Joseph Eastman in 1935, "On the other hand, whatever the publicinterest may require ought to be done no matter how it may affect private interests".2 As usual with prophets, they had no honor in their own country. We have found no evidence to controvert the findings of the Board or to indicate any material reduction of or change in the nature of the problem as it existed at that time. The Board failed, however, to stress the fact that their recommendations could be implemented only over an extended period, with due notice and in accordance with a phased program.

It is interesting to speculate on the extent to which restrictions. imposed on common carriers have fostered the growth of private carriage and have provided much of the justification for exemption of certain transportation operations from control of rates and entry.

1 "Federal Regulatory Restrictions Upon Motor and Water Carriers," S. Doc. 78, 79th Cong., 1st sess.

2 Report of Federal Coordinator of Transportation," 1934, H. Doc. 89, 74th Cong., 1st sess., p. 107.

Lacking specific evidence on this question we nevertheless find strong indication that this factor has had material influence on the growth of unregulated transportation. Cases have been brought to our attention of the inability of shippers to use one or even a few motor common carriers to meet their trucking requirements from a single origin to a compact destination grouping and some users have stated that this was a strong factor in their adoption of private carriage.

Shippers of fresh agricultural and fisheries products have consistently stated the need for flexibility in route and points served in justifying exemption of transportation of these products from regulation.

The primary function of the regulatory agency should be to protect and to further the interest of the whole public. Secondary to this responsibility should be the function of safeguarding the interests of regulated carriers as a group and of the modes thereof. It is in the long range public interest that concepts developed in an earlier day be not perpetuated when they impose an avoidable continuing cost upon transportation as a whole. It is in the true interest of all regulated motor carriers that operating costs of their industry not be increased in comparison with unregulated carriers by the imposition of unnecessary circuity, directional, intermediate point and gateway restrictions, commodity restrictions and other manmade handicaps which stand in the way of maximizing the potential of their service. On the other hand, we recognize it is not desirable to create entirely new operating patterns not envisioned when original authorizations were granted without prior determination in each case that such new patterns are justified in the public interest.

That the need for a review of motor carrier certificates is still a live subject is evidenced by Ex parte No. MC-55 now pending before the ICC. This proceeding contains four specific proposals for broadening route authorizations and one to abolish the distinction between regular and irregular route carriers.

The reaction pattern of the motor common carriers to MC-55 generally follows the line that might be expected. Carriers holding extensive rights, satisfactory to them, desire to maintain the status quo. Carriers who expect individual gain approve one or all of the proposals, apparently as it affects their business. Rail carriers quite naturally voice their opposition to any moves that might increase the efficiency of motor common carriers. Shippers, as represented by the National Industrial Traffic League, endorse the proposals but, properly, subject to carefully studied implementation.

The examiner's comments stress the impact upon individual carriers' competitive situations with little or no discussion of the public interest from a viewpoint of efficiency, reduced overall economic cost or improvement of service. He raises questions of the law, particularly as expressed in sections 207 and 208 of the Interstate Commerce Act, and recommends discontinuance of the proceeding. It is notable that he does state "the objectives announced in the order here considered are entirely laudable and desirable in the public interest ***"

We can agree with the examiner that any sudden change in the direction of broadening motor operating authorizations would have the effect of increasing competition along important routes and of creating additional service where no showing of public convenience

and necessity has been made. It is true, as he states, that, were this a result of an ex parte proceeding, damage could be done to some operating carriers without their having an opportunity to be heard. We consider that in some ways the proposals contained in MC-55 go too far too fast; however, we conclude that the efficiency of motor common carriers can and should be enhanced in the public interest by judicious broadening of operating authorizations on request and where improved transportation service is indicated.

A recent example of atomized authorization is contained in the application of Alterman Transport Lines, Inc., of Miami, Fla., for extension of their frozen foods rights to permit them to serve High Point, N.C., in addition to already authorized origins (MC-107107 Sub-122). The case is summarized herein only as being typical of actions which are counter to our national economic interests:

(a) Alterman already held authority to transport frozen foods from southern origins to the Northeast and Midwest.

(b) He requested authority to add High Point, N.C., as an additional origin for frozen foods.

(c) He specialized in less-than-truckload lots of frozen foods. Evidence indicated he had frequent unutilized capacity passing High Point northbound to accommodate the traffic.

(d) The application was opposed by several motor carriers. Only two of these submitted evidence and the record states that one had a record of service unsatisfactory to the shipper and the other could not serve High Point except by interchange with other carriers.

(e) The traffic to be served consisted at the time only of frozen hush puppies. It was expected to expand into other specialty frozen foods.

(f) Frozen hush puppies do not normally move in truckload lots.

(g) Alterman's application to transport frozen foods from High Point was denied. He was granted authority to carry frozen hush puppies but forbidden to tack his new authority to his existing authorizations.

The decision will require Alterman to request new authorization each time the shipper develops a new frozen food product. The effect of such process on the workload of the regulatory agency is apparent. The cost of such processes to the regulated transportation industry and to the public is also obvious and, of course, there is always the possibility that a different carrier might well be awarded the rights to transport the new product thus denying the user the convenience of dealing with a single carrier. A shocking implication of the decision is that we will thus require two groups of frozen food carriers, one authorized to carry frozen uncooked foods, the other frozen cooked or specialty foods.

Commissioner Goff, in his dissent, partially expresses the objections to such control of entry. He stated:

I agree that the applicant is entitled to authority to transport the abovenamed commodity. In my opinion, however, the grant is unnecessarily atomized. Since existing service is unsatisfactory and inasmuch as there is evidence that the shipper here intends in the future to produce other frozen food items, I believe it more feasible to grant a broader commodity description, namely, frozen foods. Such a grant would enable the shipper to utilize the applicant's