We find that the proposed classification ratings and minimum weights are just and reasonable. The finding in the prior report is hereby reversed. It is ordered, That the order of the Commission, Review Board No. 4, entered July 8, 1969, canceling the schedules described herein, be, and it is hereby, vacated, and that this proceeding be, and it is hereby, discontinued. 335 I.C.C. INVESTIGATION AND SUSPENSION DOCKET NO. M-21742 REDUCED SEASONAL HOUSEHOLD GOODS RATES Decided January 6, 1970 Upon reconsideration, tariff rule establishing reduced seasonal rates on household goods found not unlawful in violation of section 216(d) of the Interstate Commerce Act, nor in contravention of the national transportation policy. Findings in prior report, 332 I.C.C. 512, reversed, to the extent that unjust discrimination was found to be present, and proceeding discontinued. Appearances as shown in prior report. REPORT AND ORDER OF THE COMMISSION ON RECONSIDERATION BUSH, Commissioner: The respondent, Republic Van & Storage Company, Inc., is a nationwide motor common carrier of household goods conducting operations in interstate and foreign commerce pursuant to certificate No. MC-11508. Through its publishing agent, Movers' & Warehousemen's Association of America, Inc., it has caused to be published for its own account a rulel whereby reduced local distance commodity rates would apply on shipments of household goods tendered to the respondent during its so-called slack season, the period between October 1 and May 31 of each 12-month period. In order for a shipper to qualify for the reductions of about 10 percent under the normal rates, at least 60 percent of its total shipments in respondent's service during the prior year must have moved during the slack season; however, there is no requirement that any particular aggregate of tonnage be tendered to the respondent, either during the slack season or the year as a whole. Once a shipper qualifies in any particular year, it is entitled to the reduction on all shipments tendered directly to the respondent during the slack season in the following year (by booking The rule in its entirety is set forth in appendix A to the prior report. the shipment through either of its two principal offices), regardless of the distribution of the shipper's traffic in that, the ensuing year. The rule is further restricted to apply only when the payor certifies that the transportation is made for his own benefit or for the benefit of an employee of the payor who is transferred in the course of employment or at the commencement thereof. On a revenue basis, the respondent's business is distributed among three principal sources: the government, businesses, and individual householders, being 52.7, 28.7, and 18.6 percent, respectively, of the total. The principal purpose of the rule is to encourage the respondent's business customers to shift some portion of their employees' moves from the peak to the slack season. At present, their traffic moves in approximately equal volume during the two seasons. Republic, like carriers of household goods generally, encounters a chronic seasonal fluctuation in its traffic. The 8-month slack season of 1966, for example, accounted for 48.5 percent of its total revenues, whereas the peak season accounted for the remainder; thus, slightly more than 50 percent of the respondent's revenues were derived from a 4-month portion of the year. The chronic seasonal fluctuation causes a number of operational and service problems and, in addition, prevents Republic from attaining the maximum profit which could be secured if the total business which it is able to attract as a result of its reputation, advertising, and good will could be more evenly distributed throughout the year. During the peak season, the respondent necessarily must refuse traffic tendered because its capacity is already being overtaxed. The concentration of shipments in this period causes great strains upon the carrier's administrative personnel, requiring them to incur substantial amounts of overtime which impairs their efficiency. In contrast, during the slack season Republic has considerable excess capacity. Administrative and overhead expenses nevertheless continue throughout these 8 months on approximately the same level as in the peak season, and the scarcity of traffic prevents the respondent from covering expenses in that period. The carrier depends upon owner-operators for the performance of the actual transportation services, and it has found that drivers lost during the slack season because of the lack of business are difficult to replace during next year's peak season. Finally, the respondent foresees that the 60-percent qualifying ratio for the reduction will aid in predicting the traffic pattern for the following year's slack season, therefore allowing reliable long-range preparation for managing the movements. The protestants2 oppose the rule on the grounds that it is unduly preferential and unjustly discriminatory in violation of section 216(d) of the Interstate Commerce Act. In the prior report, 332 I.C.C. 512, division 2 found that the reduced rates resulting from the application of the rule are compensatory and would not result in undue preference and prejudice but that the proposal is unjustly discriminatory in violation of section 216(d). The rule was ordered canceled without prejudice to the publication of an amended rule which would make reduced rates available to all shippers during the respondent's slack season, without regard to factors unrelated to the services to be rendered. Subsequent to the division's report in this proceeding, division 2 issued its report and order in Huron Portland Cement Co. v. B. & O. R. Co., 332 I.C.C. 655 (1968). There is a conflict between the prior report herein and the decision in Huron. By our order of December 26, 1968, this proceeding was designated as one involving an issue of general transportation importance. Pursuant thereto, a petition for reconsideration and request for oral argument was filed by the respondent, to which the protestants replied. The proceeding is hereby reopened for reconsideration on the present record. The request for oral argument is denied since the matter which led us to declare the proceeding as being one of general transportation importance has been adequately briefed and oral argument would serve no useful purpose. DISCUSSION AND CONCLUSIONS We affirm the division's findings in the prior report that the proposed reduced rates resulting from the application of the rule are compensatory and would not result in undue preference and prejudice. The sole remaining issues then are whether the proposal would result in unjust discrimination among shippers or in a violation of the national transportation policy. The respondent contends that the division's conclusion in the prior report "that a difference in rates for the same service cannot be justified by factual conditions arising prior to the time that the service is actually performed," is unsupported by precedent and has not been followed in the more recent Huron decision, supra. In Huron, the division found that competition and 2 Household Goods Carriers' Bureau and Movers & Warehousemen's Association of America, Inc. volume of movement can in fact create a material dissimilarity in the circumstances and conditions underlying a particular movement and that such dissimilarity precludes a finding of unjust discrimination. The respondent also relies upon Coal from Ky., Va., and W. Va. to Virginia, 308 I.C.C. 99 (1959); Coal to New York Harbor Area, 311 I.C.C. 355 (1960); and Weekly Rates on Petroleum Products-from Sparks, Nev., 322 I.C.C. 541 (1964). It contends that in all of the cited proceedings discrimination was found not unjust, the rates being restricted by factual conditions which arose prior or subsequent to the transportation services to which any specific rate was applicable. We agree with the respondent that in itself the fact that the applicability of rates is determined by conditions arising prior or subsequent to the transportation does not per se make such rates unlawful. Applying that principle to the instant facts, we find that respondent encounters substantial operational problems due to its chronic seasonal fluctuation of traffic. In our opinion, these problems are of sufficient gravity to warrant innovative remedies. Therefore, unless the proposed remedy is clearly violative of the act or inconsistent with the national transportation policy, it should receive our approval. And, we so conclude that the factual situation herein is not persuasive of any unlawfulness. We are not convinced that the proposed off-season discount would cause a major change in traffic distribution, because competing household goods carriers are free to counteract respondent's rule by establishing similar rules of their own, and thereby prevent any major diversion of traffic. If, therefore, the proposal accomplishes its intended result of rearranging traffic in the slack and peak seasons, it appears that all household goods movers could equally benefit without disrupting present competitive traffic patterns. This probability is further enhanced by the fact that no particular quota by weight, or even number of shipments, is required to obtain the discount. Such a tonnage requirement, absent here, would strongly suggest the possibility of competitive traffic diversion. Additionally, as seen previously, the discount privilege is strictly limited solely to those shippers which, in addition to tendering 60 percent during the prior year's slack season, must also exclusively contact a principal office of the carrier for arrangement and only in behalf of an employee moving in the course of business. The effect of the discount is further restricted by the fact that more than half of respondent's household movements are for the government already enjoying discount rates. |