Federal Regulation of Domestic Small-Shipment Services. An Economic Appraisal

Abstract

* The material in this article is adapted from Sidney L. Miller, The Small Shipment Problem (unpublished thesis in University of Pennsylvania Library I959). The author wishes to express his appreciation to Professors Joseph R. Rose and Arnold K. Henry, Wharton School, University of Pennsylvania, for helpful advice and criticism of the above dissertation. t M.A. 1949, Stanford University; Ph.D. 1959, University of Pennsylvania. Assistant Professor, Department of Transportation and Public Utilities, Wharton School, University of Pennsylvania. The term has no universal definition. Under carrier tariff provisions, there are two concepts, maximum weight and size (parcel post), and residual weight-that is, individual shipments billed weighing less than the weight required for quantity rates (all other carriers). For statistical purposes, the ICC includes only shipments weighing under o0,000 pounds, and the CAB makes no distinction between small and large shipments in published statistics. Unrevised Commission data for 1951 indicates that shipments weighing 300 pounds or less constitute over 90% of the small shipments under Io,ooo pounds and about one third of the total weight. U.S. BUREAU OF TRANSPORT ECONOMICS AND STATISTICS, ICC, STATISTICS OF SMALL SHIPMENTS, STATEMENT NO. 5325 (I953). Small shipments consist primarily of finished products of manufacturing and move in both straight and mixed lots. The term small-shipment includes services performed for individual small shipments as defined and for a number of shipments concentrated and billed under quantity rates. Services usually consist of assembling, concentrating, interterminal movement of bulk, separating, and distributing processes. Concentrating and separating are performed at times by noncarrier enterprises. Services are performed by direct carriers (air, highway, rail, water) and are provided by indirect carriers (express, freight forwarder, parcel post), which in part employ the services of direct carriers, particularly for interterminal movement of bulk. Regulated, exempt, and private direct and indirect carriers engage in services. Interterminal movement of bulk is performed primarily by regulated direct common carriers. With respect to regulated carriers only, highway common carriers of general commodities account for about two-thjrds of the total weight (individual and concentrated lots), and the parcel post handles about three-quarters of the total shipments, almost all of which are single pieces. Under regulated carrier services, rules, and charges, discernible differences appear by type of carrier in average weight per shipment, weight per piece, and length of haul. Traffic tends to be concentrated regionally, along certain routes, between metropolitan areas, and among a limited number of carriers of each type. Srnall-shipment traffic in recent years (including concentrated lots) is estimated by the writer to exceed annually 1,5oo,ooo,ooo shipments, which weigh in excess of 125,000,000 tons, a majority of the total shipments of all weights and a less significant portion of total weight shipped. Small-shipment services are used primarily by business firms (manufacturers, wholesalers, retailers) rather than by individuals. Large firms appear to account for most of the weight shipped. Individual small shipments are significantly less important to rail and to water carriers as a source of freight revenue than they are to other direct and indirect carriers, which derive from 50 to Ioo1/% of freight revenue from small shipments. Concentrated lots of small shipments, however, are an important source of freight revenue for a number of railroads and some water carriers. 3 Costs of assembling, concentrating, separating, and distributing per shipment are higher, and user requirements are increasingly more diverse, complex, and urgent, than they are for large shipments. Service to and from small localities is often inferior compared with service between large cities, and sometimes total charges are greater, weight and distance considered. 'Supra note 3. In addition, rate relationships between small and large shipments have always been controversial. This controversy has affected, and has been affected by, market competition among institutions, or channels of trade, and among areas or localities. Increased carrier competition during the