One trucking company has permission to carry empty ginger ale bottles between a few points in Virginia and Pennsylvania, but it can't carry empty cola or root beer bottles. Another trucker is allowed to haul five-gallon cans, but not two-gallon cans.
And then there is the rule that allows one trucking company to carry raw nuts -- shelled or unshelled, but requires separate permission if they're cooked.
These and other similar examples in a crazy-quilt set of federal rules have become the focus of one of the biggest congressional lobbying efforts of the year: the battle over trucking deregulation.
Pitted against each other are the nation's major trucking companies, represented by the politically powerful American Trucking Associations and the Carter administration, backed by key congressional leaders and a host of consumer groups.
At stake are billions of dollars in potential trucking industry profits. But the nation's business community is far from unanimous in its support for the truckers. Major business groups such as the National Association of Manufacturers and the American Retail Federation have endorsed deregulation while the U.S. Chamber of Commerce has remained silent on the issue.
To understand the deregulation battle, however, requires an understanding of the byzantine world of the nation's trucking industry and its relationship with the Interstate Commerce Commission, one of the nation's oldest federal regulatory agencies.
Many of the trucks on the road are not directly regulated by the Interstate Commerce Commission -- they don't even have to report to the agency -- but it's decisions significantly affect their operations by limiting their ability to compete to carry goods that are regulated, and that includes almost everything but agricultural commodities.
Altogether analysts estimate that there are about 150,000 trucking companies in the industry, though no one knows for sure. The largest number of companies -- estimated at about 100,000 -- technically are unregulated. Often operators of single trucks, the companies haul commodities that are exempt from federal regulation -- the agricultural products. Legally they can't haul commodities that are regulated. Independent owner-operators are generally in this group.
Also technically unregulated are the so-called "private carriers," companies such as Sears, Roebuck & Co. that are not in the transportation business but own their own trucks and provide their own transportation. Though no precise figures are available, private carriage -- freed of ICC commodity, rate and route restrictions -- is said to be the fastest growing segment of the industry, which economists say is an indication that companies are not finding the right services and prices available from the ICC-regulated firms.
Although not regulated by the ICC, even the private carriers are restricted by regulation: They cannot carry noncompany business or hire themselves out to carry the goods of any of their affiliates or subsidiaries.
The regulated segment of the industry comprises about 17,000 companies, but a relatively small percentage of these have most of the financial clout. The ICC divides the regulated motor carriers into three major categories:
12,900 companies whose annual revenues are less than $500,000 a year.
Another 2,900 companies with revenuew between $500,000 and $3 million a year.
About 1,050 companies with annual revenues in excess of $3 million.
Of the all these companies, however, the top 100 generate about 52 percent of the total revenues reported to the commission by the largest 4,000 companies. (Companies with revenues of less than $500,000 don't have to file the same detailed reports.)
The largest of the companies include United Parcel Service, specializing only in the delivery of small packages, with annual revenues in excess of $3 billion; Roadway Express, with annual revenues near $1 billion; Consolidated Freightways, with revenues of $820 million; and Yellow Freight System, with annual revenues approaching the $800 million mark.
The regulated carriers gained their federal operating certificates in one of three ways:
Grandfather rights. The vast majority of operating rights are held by companies that were operating in 1935 when trucking regulation was enacted.
Application before the ICC. Althought the ICC has been changing recently -- loosening up on its legal requirements and hoop-running -- an appliant historically has had to prove that the transportation service applied for is "required by the public convenience and necessity." Few major applications have been granted over the years because the commission found that proposed services were not "required" if existing carriers either could show that their service was adequate or that the proposed service would endanger or impair their operation by diverting traffic from them.
Purchasing of operating authority. Because certificates were scarce relative to demand, and because the application process has been time-consuming, expensive and often futile, many companies just purchased operating authority from another carrier, often paying quite a bit for it. Eastern Freightways, for instance, reportedly sold rights carried on its books at $450,000 for approximately $3.8 million. When Associated Transport Inc. went bankrupt in 1976, the operating rights carried on its balance sheet at less than $1 million sold at public auction for more than $20 million.
Although expensive to come by, expansion of a company's operating authority is worth the price because of the high profits that have characterized the regulated trucking industry -- on the average a 20 percent rate of return of return on equity.
The high average profits are believed by economists to be a function of the restrictions on entry and of a system of legalized price-setting that gives windfalls to the efficient carriers and protects the weaker ones by.
Although the American Trucking Associations, the industry trade group representing the builk of the regulated carriers, says the regulated system works well and provides uniform nondiscriminatory transportation services all over the nation, proponents of reduced regulation argue that there are serious problems with it. They say current regulation may contribute to inflation, cause wasteful consumption of fuel, stifle innovation, impose unwarranted inefficiences, and impose on the public higher-than-necessary rates for shipping freight.
Take the rates issue. Although rates of the unregulated segments of the industry are set in the marketplace, freight rates for the regulated companies are for the most part collectively set in rate bureaus, private associations of trucking companies given anti-trust immunity in 1948 (over President Truman's veto) to meet privately to discuss and decide on rates they will charge to all shippers throughout the country.
"This immunity allows trucking firms to set prices in ways that would be a felony in virutally every other American industry," complains Sen. Edward M. Kennedy (D-Mass.), an early proponent of trucking deregulation and the sponsor of a bill to strip the rate bureaus of their antitrust immunity.
The rate agreements are subject to ICC review but only recently has it begun to take a serious look at them. And although independent pricing actions by the trucking firms theoretically are guaranteed, they are not prevalent. In fact, there is no real incentive to lower the rate but there would be with reduced regulation and more competition, according to economist Alfred E. Kahn, the president's advisor on inflation.
Kahn says some evidence suggests that regulation might raise rates artificially, and rates therefore might fall if regulation were removed or cut back:
In the mid-1950s, fresh and frozen poultry and frozen fruits and vegetables, regulated until then, became exempt agricultural commodities. The U.S. Agriculture Department estimates that transportation rates dropped 33 percent on poultry and 19 percent on fruits and vegetables.
Intrastate truck rates in New Jersey, where there is no trucking regulation, are between 15 percent and 20 percent lower than comparable interstate shipments.
An association of shippers in Connecticut who coordinate their shipments to fill trucks estimate that it is able to charge its members an average of nearly 17 percent less than regulated carriers providing similar service.
A survey of household goods movements in Maryland, where intrastate shipments are not subject to economic regulation, indicated rates ranging from 27 percent to 87 percent below the rates on identical interstate shipments of comparable length.
The ATA contends instead that the current regulatory system administered by the ICC acts as a "referee" and that without it trucking rates, especially to small communities, would go up. Only some very large shippers with economic power could get some lower rates, the ATA says.
Some rates might go up, but on balance rates would go down, ICC member Thomas A. Trantum, a former securities analyst, believes. "If freight rates would go up without regulation, believe me, the trucking companies would have been all over Congress 20 years ago to board us up at the ICC," he says.
Trantum is one of a majority of current ICC members who have urged Congress to rewrite the agency's mandate to put more emphasis on competition in their decision-making.
The ATA also argues that the rate-setting system makes it easier for shippers to know what rates are and that without it they would be faced with a confusing array of thousands of different rates. Although the top management of large companies supporting trucking deregulation aren't worried that the rates will be too confusing, the traffic managers of those companies are. For instance, although officials of PPG Industries told Congress the company supports change, C.R. Looney, PPG's general traffic manager, told a recent seminar he wanted to see the system stay intact. "I grant you some of these rates are a little higher than they should be -- some could be lower -- but it is a trade-off we shippers should accept," he said. There are so many different products that "I just don't see how we could keep up" if trucking companies were setting their rates individually, he said.
Whether the number of rates will grow or diminish is subject to question. Many believe the current complicated system of different rates for every conceivable product would be replaced by a simplified system. In any case, ICC member Marcus Alexis, an economist, say that it's natural for the traffic managers, or anyone else, to want to keep a system they know how to deal with and feel comfortable with. They also like knowing what their competition is paying. "But I don't think this commission ought to be interested in preserving this ease of life," he says."The consumer pays for it. We're concerned about the public interest."
In the deregulators' view, commodity and route restrictions on certificates not only limit competition, they also cause the regulated carriers to operate less efficiently than they could if they were free to manage their own operations.
Carriers with the very prevalent commodity restrictions are barred from filling their trucks with other cargo even if it could be hauled for very little additional cost. Although the situation has been changing somewhat, a 1965 study by the ICC estimated that 30 percent of all commodity-restricted certificates provided only one-way authority, so even if cargo were available at their destinations, the truckers couldn't carry it on return trips.
Route-restricted authority specifies the roads over which carriers must travel, often adding unnecessary mileage to trips, proponents of change say.
Although the ICC now routinely is granting permission for modest routing deviations, it has turned down a number of requests to eliminate larger deviations because of the effect this might have on competing carriers in the market, according to Department of Transportation analysts.
Route restrictions are also believed to cause excessive interlining: if no one carrier has the necessary authoritiy to carry a shipment its entire trip, two or more carriers must transfer the cargo at some point, raising the cost and delaying the moving time.
Although no one can say precisely what effect the restrictions have on the cost of trucking operations, there is undeniably some impact, says one government aide. "By preventing carriers from making the most efficient use of their resources, they add to the amount of fuel, labor and equipment required to move the available freight," the aide says.
Bennet C. Whitlock Jr., president of the ATA, argues that if the current system is tampered with, small towns and communities will begin to lose their trucking services as motor carriers concentrate their efforts on large markets. But transportation officials question that outcome. Mark Aron, Deputy General Counsel of the DOT, says department surveys indicate the small towns are being served primarily by UPS and private carriers, not generally by the regulated freight carriers who hold certificates. Although the regulated carriers have a "common carrier obligation" to serve the small towns listed on their certificates, the ICC never has yanked the operating certificate of a carrier because of failure to provide service.
ICC member Trantum says he spent his eight yeats as a security analyst of regulated transportation hearing from company officials about how they were getting around their common carrier obligations. "I have yet to know of a trucking company picking up some freight when there wasn't some business reason to do it," he says.
He also noted that the ICC actually prevents carriers from serving small towns by prohibiting them from serving "intermediate" stops between cities in restrictive operating certificates.
Proponents of deregulation also point out that agricultural goods are shipped mainly by unregulated trucking companies and there is no town of any size in the country where fresh fruits and vegetables cannot be found in the markets.
Another issue in the trucking debate revolves around whether there would be more less concentration with reduced regulation. Although there is always the possibility that inefficient companies will go out of business when faced the possibility that inefficient companies will go out of business when faced with rigorous competition, proponents of deregulation reject the argument that it would make the industry more concentrated. The industry is in fact more regulated today than it was prior to regulation in 1935.
In addition, they ask, if the trucking industry is prone to concentration, why hasn't it happened in the sector that is now exempt from regulation. There are an estimated 100,000 companies compared to the 17,000 regulated companies.
Those unregulated carriers could offer the regulated industry some real competition if the strictures were loosened.