Petition for Review of an Order of the Interstate Commerce Commission.
Wood, Eschbach, and Posner, Circuit Judges. Posner, Circuit Judge, dissenting.
Four competitors*fn1 of A. Arnold & Son Transfer & Storage Company, Inc., all motor common carriers of household goods, appeal the decision of the Interstate Commerce Commission awarding Arnold contract carrier authority, as distinct from ordinary common carrier authority, to transport household goods for three corporate shippers.*fn2 The competitive spark which ignites this litigation is that with contract carrier authority, Arnold can offer a discount rate to its three customers, whereas without that authority the four competing petitioners are bound to render service on equal terms according to their published tariffs to all customers under substantially similar circumstances. Petitioners argue that the grant to Arnold of contract carrier authority should be vacated as neither rational nor supported by the substantial evidence because the contract service proposed by Arnold in each instance fails to meet the "distinct needs" test for motor contract carrier authority.*fn3 We therefore must examine the statutory differences between motor common carriers*fn4 and motor contract carriers as applied to the household goods moving needs of the three corporate customers.
Under the provisions of the Motor Carrier Act of 1935,*fn5 motor carriers are required to seek a license from the Commission to operate interstate. In United States v. Drum, 368 U.S. 370, 374-75, 7 L. Ed. 2d 360, 82 S. Ct. 408 (1962), the Supreme Court noted that the underlying principle of the federal regulations was to assure an economically healthy system of interstate motor transportation. That purpose was seen to justify administrative surveillance of motor carriers' rates and service, and control over motor carriers' entry into the contract carrier business. Id. The enactment of the Motor Carrier Act of 1980,*fn6 however, along with other legislation, evidenced a relaxation of federal control with the intent to foster carrier growth, competition, and efficiency. Alamo Express, Inc. v. ICC, 673 F.2d 852, 854 (5th Cir. 1982) (citing a provision of the Motor Carrier Act of 1980, since revised by the Bus Regulatory Reform Act of 1982, now found at 49 U.S.C.A. § 10101(a)(2) (West Supp. 1983)). The enactment of the Household Goods Transportation Act of 1980*fn7 followed, the legislative history of which makes clear the intent to introduce into the moving industry the same degree of competition being fostered in the rest of the interstate trucking business.*fn8
This new legislation did not change the requirement that a motor contract carrier of property must either dedicate its equipment to particular shipping customers or provide motor carrier service, in the words of the statute, "designed to meet the distinct needs" of its shipping customers. 49 U.S.C. § 10102(14)(B). The latter concept, not the former, is at issue in this case. However, the service to be provided also must be consistent with the public interest and transportation policy. 49 U.S.C. § 10923(a)(2) (Supp. V 1981).
These recent amendments to the Interstate Commerce Act adopted a transportation policy which was intended, among other things, to promote competitive and efficient motor carrier transportation of property in an effort to meet the diverse requirements of the shipping public interest. These changes show an intent to open up the motor carrier business and to minimize Commission interference with competition.*fn9
Against that background of recent developments in motor carrier transportation law, we examine the particular circumstances of this case.
In 1983, Arnold filed an application with the Commission for authority to offer contract carrier service to three corporate customers, Humana, Brown & Williamson, and Celanese, which Arnold stated would be "full moving service tailored to meet the respective needs of these companies." In more detail the service was described as follows:
The service that we are proposing is a contract service in which we will guarantee that the shippers will receive the highest caliber of service from our company based on timed pick-ups, timed deliveries, [and] continuity of crew . . . . We shall not have a particular dedication of equipment to these particular shippers because we shall use equipment from our regular fleet on an intermittent basis serving these shippers, but, the caliber of service that we offer will be different than that which we can presently offer as a common carrier.
Arnold explained the particular benefits of the proposed contract service as enabling it to offer the three shippers rates approximately ten percent lower than its common carrier rates. In return the shippers would give Arnold commitments for certain amounts of traffic, which would allow Arnold to allocate its crews and equipment to better service each account. Arnold further claimed that the resulting centralized handling of the accounts would benefit corporate employees whose household goods would be shipped because the dispatcher would be familiar with their particular needs and on-time and tracing services could be provided. Also, Arnold claimed that although a specific transportation unit would not be assigned to the exclusive use of a particular shipper, the contract service nevertheless would be provided by assigned vehicles and drivers. That would enable Arnold, it explained, to assign crews and equipment, familiar to the customer, which would provide the required service from start to finish. Arnold also claimed that this would enable shipments to be aggregated for faster service.
Witnesses representing the corporate shippers testified by affidavit in support of Arnold's application. All three stated that their companies' specialized service needs include full moving services for light weight moves over short distances with little notice. Humana is a proprietary health care corporation owning and operating 90 hospitals in the United States and others in foreign countries. In 1980, Humana had 387 moves for administrative personnel and over 300 moves for doctors. It proposed to tender all of its moves to Arnold if contract carrier authority were granted. Brown & Williamson had about 800 employees in its corporate office and 1,000 in the sales field with sales offices in 28 cities. The company requires service for about 250 household moves a year, and planned to use Arnold's ...