Effects of Value-of-Service Pricing Upon Motor Common Carriers

Abstract

ADOPTION of a form of value-of-service pricing by the motor common carrier industry has implications of which neither the Interstate Commerce Commission nor the motor common carriers themselves appear to be aware. It is evident that motor common carriers are losing traffic to both contract and private carriers of property, in either an absolute or a relative sense. In addition, the refusal of the Interstate Commerce Commission to require motor common carriers to adopt a rate structure based more closely upon cost of service tends to vitiate the congressional mandate of 1940 requiring preservation of the advantages' of each carrier type as between motor common carriers and railways. The purpose of this note is therefore twofold: (1) to analyze the reasons for the traffic loss on the part of the motor common carriers (a) to contract carriers and (b) to private carriers and (2) to explore the meaning of inherent advantages and the type of pricing policy best suited to their preservation.