affiliations who seek authority to operate sightseeing and pleasure tours. It was determined that appropriate resolution of these issues could be accomplished more effectively through a rulemaking approach than on a case-by-case basis. In instituting the rulemaking proceeding, the Commission took the somewhat unusual step of proposing specific language for the regulations tentatively contemplated to deal with these situations.

Where licensed passenger brokers are affiliated with motor carriers authorized to transport passengers in special operations, in sightseeing and pleasure tours, the duplicative operations which can result may present dangerous opportunities for unfair competition or lead to unjust discriminations and preferences as to rates and practices. Thus, the Commission felt it was appropriate to investigate available means of protecting the public from such dangers. The proposed tentative text of the regulations would require every broker affiliated with a motor common carrier of passengers to file a registration statement identifying that affiliation. In turn the Commission would issue a clerical notice acknowledging such registration, which notice would then define the scope of an automatic prohibition which would attach to the licenses of those brokers affiliated with carriers holding authority in their own right to conduct sightseeing and pleasure tours. The prohibition would apply in scope only to the extent of tours which would be territorially duplicative of the carriers' operations, and would leave the brokers free to pursue other legitimate aspects of their businesses. Appropriate provisions would also be made to deal with terminations of such affiliations.34

The National Transportation Policy requires the Commission to recognize and preserve the inherent advantages of each mode of transportation and to promote safe, adequate, economical, and efficient service. In dealing with motorbus operations, the most significant aspect of this statutory mandate is the preservation of service at small communities across the nation which may have no means of public transportation available except for regular-route motorbus services. In one application it was proposed to re-route a particular service to make use of a more direct highway and, incidentally, provide a new service at a town which had no public transportation. However, the evidence showed that this re-routing would effectively deprive residents of towns located along the old route of a direct service for which there was a continuing need. In balancing the competing interests of the population along each of the routes, the Commission concluded that the needs of neither could be ignored. The applicant's request to abandon operations along the old route was denied. The grant of authority to operate along the new route

34

Greyhound Lines, Inc., Ext.-Special Operations, 120 M.C.C. 629, and Passenger Brokers Affiliated with Motor Carriers, 120 M.C.C. 656.

594-091 0-75

was conditioned upon the applicant's providing a reasonable amount of service along both routes.3

35

In a different situation, a Canadian charter bus operator sought authority to provide round-trip service from Canada into the United States and return. The applicant, supporting witnesses, and protestant were domiciled in Canada. Canadian regulatory authorities had already granted authority for the Canadian portion of the proposed operations. Since the most significant elements of the services would occur solely within Canada, it was determined that the Commission should not consider on its own these aspects of the proposal. Rather, the authority was granted upon consideration only of the questions of whether the applicant was fit and able to operate properly in this country.36

35 American Buslines, Inc., Discon.-Nebr. and Colo., 121 M.C.C. 415.

36

Diversified Transp. Ltd., Com. Car. Applic., 120 M.C.C. 289.

FREIGHT FORWARDERS

From 1965 to 1974, the number of class A freight forwarders more than doubled from 61 to 124. The relative percentage increases in transportation purchased and total operating revenues were slightly higher over the decade but the overall growth of the forwarder industry is far behind the pace of other surface transportation modes.

During the same 10-year period, tons of freight received from shippers recorded a meager rise of 15 percent and number of shipments received from shippers fell about 21 percent. The growing trend in favor of piggyback on the part of forwarders accounts for the decrease in number of shipments handled, accompanied by a continued increase in average weight per shipment. Total originations of trailers and containers were 163 thousand in 1965 compared to 265 thousand in 1974, up 63 percent. Payments to railroads for piggyback service increased 227 percent, and total tonnage originated by forwarders almost doubled.

Although class A freight forwarders ranked next in importance to motor carriers in respect to the small shipment tonnage carried by regulated carriers, they accounted for less than 5 percent of the total tonnage during the past decade. Since their tonnage has been rather static, there is little to suggest that their relative position will vary to any great extent in the near future.

In Compass, Nippon, and Transmarine-Investigation, 344 I.C.C. 246, the operations of certain maritime carriers and their affiliates were found to be those of freight forwarders as defined in section 402 (a) (5) of the Interstate Commerce Act. The maritime carriers solicited traffic in Japan destined to inland U.S. points. It was concluded that the maritime carriers operated as forwarders for compensation, performed assembly, consolidation, break-bulk and distribution, and assumed responsibility for the transportation from point of receipt to destination. Reaffirming the policy to promote intermodal coordination and cooperation, the Commission noted that joint rates and through routes of ocean carriers and carriers regulated by this Commission may be established, thus obviating a need for ocean carriers to become freight forwarders.

On appeal the decision of the Commission was reversed1 by a statutory three-judge District Court which held that "compensation" as that term is used in section 402 (a) (5) of the act means the reward for which a forwarder bargains, but that in these proceedings there was no evidence that the ocean carriers and their agents had bargained for anything in return for their providing forwarding services. The court found that it was the intent of Congress to regulate only those who provide freight forwarding services where some mutual consideration in the nature of a quid pro quo passes between the parties to the forwarding agreement, the actions of the plaintiffs in arranging for inland motor and rail transportation were, in fact, performed free of charge. Inasmuch as the plaintiff ocean carriers and their agents received no "compensation," they are not freight forwarders subject to regulation under part IV of the act.

1Japan Line, Ltd. v. United States of America and Interstate Commerce Commission and Nippon Yusen Kaisha Lines, Inc., et al. v. United States of America and Interstate Commerce Commission, Civil Actions No. C-74-1511 SC and No. C-074-2029 SC, respectively, decided January 22, 1975, 393 F. Supp. 131 (1975).

WATER CARRIERS

In spite of a sharp decline in the national economy during the 1974 calendar year, freight revenues, tons of revenue freight carried, and revenue ton miles of water carriers increased. Although the rates of increase were slightly lower than those of calendar 1973, the financial condition of water carriers was relatively good.

The outlook for water carriers appears favorable. If recovery from the economic recession progresses as predicted, the future condition of the industry seems even more propitious. Completion of the proposed replacement of Lock and Dam 26 at Alton, IL, should greatly enhance expansion of navigation of the entire upper Mississippi River System.

Water carriers continued to expand their lighter-aboard-ship (LASH) operations last year. Generally a LASH operation consists of floatable steel containers filled with cargo which are transported in the hold of a larger mother ship between ports. In port, they are unloaded, and propelled by tugs to their destinations.

In a recent application, a water carrier sought authority to transport LASH barges.1 Protestants sought to delay the proceeding because a question existed as to the jurisdiction over the inland waterway portion of these movements of LASH barges. It was concluded, since the entire Commission by a declaratory order had ruled that the Commission had jurisdiction over the movement of LASH barges, that the motions were moot, and the application could be decided on its merits.2 In determining that the public convenience and necessity required the proposed operation, it was ruled the prior color of right operations by applicant were entitled to serious consideration now that applicant was seeking the necessary authority to operate lawfully. Protestants did not demonstate their ability to meet these needs, while applicant had done so, and since these LASH operations were performed in the past by applicant, it was determined a grant of authority would not adversely affect the existing competitive balance.

1 No. W-417 (Sub-No. 5), Merry Shipping Company, Inc., Extension-New Bern, N.C. (not printed), decided April 1, 1974.

2 Port Royal-Declaratory Order "LASH" Operations, 344 İ.C.C. 876, decided December 12, 1973. Subsequently affirmed in Port Royal Marine Corp. v. U.S., 378 F. Supp. 345.