Traffic—Rates, Charges, Tariffs and Costs

SECTION DISCUSSION GROUP

Chairman Kenneth J. McAuliffe: Fellow members and guests, and members of this forum:

As was the case yesterday, this is to be a forum and not a panel, though I am sure I will probably refer to it as a panel sometime during the morning. I apologize for that beforehand.

I have been asked by President Pinkney to suggest that anyone who has a suggestion for a proposed resolution, please to submit it to the Special Committee on Resolutions which he appointed yesterday. Please get in touch with that Special Committee through Mr. Wilbur LaRoe, Jr. If you will recall, those resolutions have to do with the program and discussion yesterday, and more particularly with the line of action to be taken by the Association in respect of the matters discussed yesterday.

I was considerably honored to be selected by President Jim Pinkney to head this panel. In fact, I got puffed up about it until suddenly I had a horrible thought. For some four years I was assistant to Jim Pinkney at the Commission. During those years he had a great deal of trouble getting a word in edgewise. The commentator leader, or whatever you call it, is supposed not to talk at this type of forum. I am afraid he put me in this position to keep me from talking; but I will make up for it somewhere along the line.

We have appreciated very much the numerous suggestions which came in from around the country for matters to be discussed at this forum. They have come from all over the country from people interested in the Practitioners Association and the Interstate Commerce Commission. Very naturally, they came from different segments of the transportation and regulation industries, and very naturally they showed a sort of advocacy, depending on whether they came from a counsel for carriers, an industrial traffic manager, or from whatever particular

source.

In an effort to make this more of a forum and less of a speechmaking proposition, we have been asked to make a very radical change in the procedure as compared, for instance, with yesterday's forum. The members of the forum have agreed to limit their principal remarks to five minutes, and then the gadfly, who will be identified more definitely later, may have one minute, either at the end of the first statement of a member of the forum, or he may interrupt, if he sees fit, at a particularly significant time and take his minute at that time, in which event the speaker who is interrupted will defend himself as best he may. After each statement, and after the gadfly has made his appropriate remarks, the question under discussion will be open on the floor of the house, and anyone may speak. But we are not as liberal as John Turney. You may speak only one minute, although you may be recognized more than one time, if you are that lucky. In the pink program, Mr. Paul Coyle's name does not appear. I think it was because he had no specific subject

to discuss. Mr. Paul Coyle is the gadfly. I have indicated that he may do a little free wheeling on any of the subjects that come up for discussion. When you rise to speak you must, of course, announce your name and, if necessary, spell it for the reporter. The proceedings are being recorded. State also the city from which you come, to help in identification.

I will proceed to introduce the members of the panel.

The Honorable Howard Freas, Commissioner of the Interstate Commerce Commission.

Mr. Edward H. Cox, Director, Bureau of Rates, Tariffs and Informal Cases, Interstate Commerce Commission.

Mr. Reuben G. Crimm, Attorney-at-Law, Atlanta, Georgia.

Mr. Paul Coyle, the Gadfly. Otherwise, we have Mr. Coyle as Chief, Section of Complaints, Bureau of Motor Carriers, Interstate Commerce Commission.

Mr. Roland W. Bay, Member, Board of Suspension, Interstate Commerce Commission.

Mr. Eldon Martin, Vice President and General Counsel, Burlington Lines.

Mr. J. D. Lawson, General Manager, Middlewest Motor Freight Bureau, Kansas City, Missouri.

Last but not least, our friend, Mr. Edward K. Laux, Traffic Manager of the Port of New York Authority.

In addition to Mr. Paul Coyle, who didn't get a mention in the pink program, we have to my right here a young man who hasn't even a label on him. But despite the fact that he is not labeled, he is a very important member of this group, as of now, because the suggestions seem to have been prepared largely with fire in the eyes of the authors. We decided that the proceedings will be conducted under the Marquis of Queensbury Rules, with the exception that the rounds will be five minutes, as I have indicated. In order to be fair to everyone, therefore, we must have a timekeeper. Stuart Smith of New York City is a very experienced timekeeper in rough and tumble debates. He will perform that function.

This contest, of course, is authorized by the Association of Interstate Commerce Commission Practitioners. I want the contestants to defend themselves at all times. Shake hands now and come out fighting. Dozen."

Mr. Reuben Crimm will talk to the subject of "Cheaper By The

Mr. Reuben G. Crimm: Mr. Chairman, Mr. Commissioner, ladies and gentlemen, I believe that I am impartial on this subject-I am in favor of minimum weight requiring the use of more than one motor vehicle. No doubt the assignment of this subject to me for discussion arises out of the recent decision of Division 3 of the Commission in I & S Docket No. M-4547 (Fabrics-Georgia & North Carolina to Oklahoma & Texas) in which proceeding motor carrier rates subject to a minimum weight in excess of the carrying capacity of a single motor vehicle were found just and reasonable. I consider the decision noteworthy for two reasons:

First: It is one of the very few decisions dealing with motor carrier competitive rate-making which has recognized the propriety and the reasonableness of a minimum weight in excess of the carrying capacity of a single motor vehicle unit. Second: It appears to me that the reasoning of the Division for its conclusions bespeaks a desire to put an end to destructive competitive practices and permit two forms of transport to compete on as near equality as possible.

The facts of the case were briefly these: Prior to the publication of the rates here involved, the motor carriers were transporting a substantial volume of the considered traffic on rates subject to a minimum weight of 30,000 pounds. Such rates were approximately the same as or slightly lower than rail carload rates subject to a carload minimum weight of 30,000 pounds. The rail carriers to meet that situation published alternative rates on minima of 20,000, 30,000 and 45,000 pounds, minimum weights, alternating one with the other. The 30,000 pound rates were slightly lower than the then effective motor carrier 30,000 pound rates and the 45,000 pound rates were substantially lower than the then effective motor carrier 30,000 pound rates. As a result the motor carriers met the three rail rates subject to the same minimum weights. The 20,000 and 30,000 pound motor rates went into effect. On petition of the rail carriers the 45,000-pound motor rates were suspended and that started the case. The motor carriers lost the traffic to the rails by reason of the lower rail 45,000-pound rates on which the traffic began and continued to move.

Respondents proposed on hearing, in lieu of the 45,000-pound minimum weight a minimum weight of either 30,000 pounds or 60,000 pounds -the latter requiring the utilization of two vehicles, it being the position of respondents that the minimum weight was of no significance in controlling the movement; that the rail 30,000 and 20,000-pound rates were "paper rates," moving no traffic; that respondents were willing to establish the 60,000-pound rates to meet the objections of the rail carriers that a 30,000-pound motor minimum weight, compared with a 45,000-pound rail minimum weight would afford the motor carriers a competitive advantage over the rail carriers. Division 3 found:

. . . The level of the rates rather than the minimum weight is the controlling factor in the determination of the choice of transportation agency, and that unless they (the motor carriers) are permitted to meet the column 271⁄2 rail rates (the 45,000-pound rates) they will be unable to regain any of the traffic which they formerly enjoyed." (Sheet 4).

"The facts before us clearly indicate that competition is the moving force behind the proposed change in rates. Respondents lost the traffic to the rail carriers following publication by the latter of lower rates subject to a minimum weight of 45,000 pounds. That these are the rates which respondents must meet if they are to compete with the rail carriers is clear. We are satisfied on the record before us that the physical or legal carrying capacities of respondents' vehicles should not be accorded controlling weight. The fact that rates of a motor carrier are subject to a minimum weight in

excess of the physical or legal carrying capacity of its vehicles does not, in and of itself, establish that such rates are unlawful. Other factors must be accorded consideration . . .” (Sheets 6-7).

‘. . . Obviously, if this minimum weight (60,000 pounds) is used, the disparity in minimum weights to which respondents' rates and the rail protestants' rates would be subject would not result in advantage to respondents in attracting the traffic..." (Sheet 7).

". . . To refuse to permit respondents to maintain rates on the same levels as those of protestants, but subject to the higher minimum weight now proposed, would seem to approach, if not in fact actually to constitute, an attempt by us to apportion the traffic. artificially and thereby eliminate normal, healthy competition contrary to the national transportation policy. We think that we should exercise extreme care to avoid such result." (Sheets 7-8).

This decision in essence states, as I read it:

(1) Motor carriers have the right to meet their competition when they go no lower than necessary to meet such competition.

(2) Motor carriers cannot be deprived of the opportunity of competing for the traffic by the artificial device of the competition setting up varying levels of rates on varying minimum weights only one of which rates actually moves any traffic and contending that the motor carriers must be limited to meeting the non-traffic moving rates of their competitors.

(3) In order to remove the claimed advantages in attracting the traffic by reason of a lower minimum weight than rail on the same rate, and thus eliminate the undesirable effects of possible destructive competitive practices, the minimum weight should be at least as high as the rail minimum weight and the fact that such minimum weight exceeds the physical or legal carrying capacity of a vehicle does not, in and of itself, establish it to be unlawful particularly in the last six or seven years, when there has been a decided rate war between competitive forms of transportation.

In my opinion, these findings are significant for the reasons: First, they tend to stop a rate war between competing forms of transportation.

Second, they realize practicalities of competitive transportation. Third, they are entirely consistent with principles recognized by the Supreme Court of the United States as to the possible necessities in competitive rate making for this type of adjustment.

As to the rate war, the rails had already reduced those rates once as a competitive adjustment to secure the traffic and they secured it all by reason of the movement on the 45,000 pound rates and the inability of the motor carriers to share in the movement on their higher 30,000 pound rates. The rails claimed here if the motor rates were subject to a single vehicle minimum weight it would afford a competitive advantage to the motor carriers who would then have a rate competitive with rail on which the traffic would move but subject to a minimum weight 33-1/3 per cent lower than the rail minimum weight. The decision removes this claimed competitive advantage and at least the claimed