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Show charges without unfair or destructive competitive prac- tices. [Emphasis supplied.] Generally speaking, rate issues relating to competition between water carriers and railroads have come before the Commission by way of requests for suspension and result- ing suspension investigations, applications by railroads for fourth section relief, and other investigations presenting primarily the question of the minimum reasonableness of water-competitive rates of railroads. These types of pro- ceedings involving competitive conflict raise some of the most difficult and perplexing questions that come before the Commission. They have been decided on the individual facts and merits of each case, as the Commission saw them, subject to certain general though flexible standards. One of the general standards has been to hold proposed reduced railroad rates to a level of 125 percent of the competitive water cost. But there have been many departures from this, depending upon (1) the character of the commodity and the amount of difference in rates that would affect the shipper's choice between the competing modes of trans- portation, and (2) the character of water competition sought to be met, such as private or other exempt operations. A large share of the traffic of the railroads, on the other hand, is not water-competitive and from this traffic they are able to maintain their total revenues at a profitable level while carrying water-competitive traffic at rates which may yield little or no profit. Thus, the shippers of noncompetitive traffic, and the areas not affected by water competition, subsidize the railroads' water-competitive traffic; it being obvious that the railroads could not afford to handle all traffic at the levels of rates established where there is water competition. This operates, of course, to siphone off the advantages to the public which have been calculated into waterways expenditures. The question arises whether, in the regulation of rail and water-competitive rates, sufficient attention has been given to destructive as distinguished from legitimate competition. It has been apparent in many situations of proposed re- duced rail rates that shippers were playing the railroads and water carriers against each other in attempts to beat down the rates of both. In such situations regulation might well take a stronger hand than it has taken. Reliable estimates place the volume of the exempt type of bulk traffic handled in water service at between 90 and 95 percent of the total domestic water-borne traffic. The general exemption of bulk commodities in section 303 (b) of the Interstate Commerce Act applies only in the case of commodities in bulk which are loaded and car- ried without wrappers or containers and received and delivered by the carrier without transportation mark or count, and is subject to the further condition that not more than three such commodities and no nonbulk com- modities shall be transported in the same vessel or tow. The exemption of liquid cargoes in bulk in tank vessels, in section 303 (d), is absolute in that it applies even though a tank barge, for example, be included in a tow containing nonbulk commodities. A separate exemption, section 303 (c), applying to contract carriers of bulk commodities on the Great Lakes apparently was inserted for emphasis, since the same traffic is exempt under section 303 (b). However, removal of the section 303 (b) ex- emption alone would not affect the traffic now exempt under section 303 (c). Certain other types of trans- portation which are made conditionally subject to regu- lation, which may be removed by the Commission, or conditionally exempt, subject to the power of the Com- mission to place them under regulation, are not par- ticularly important in the consideration of the question under discussion. Principal among the commodities which may move in exempt service are ore, grains, coal and coke, petroleum and some products, sulfur, sand, gravel and stone, and phosphate rock. The general exemption is not a complete one, and a particular bulk commodity may be exempt under one circumstance of transportation and subject to regulation under another. This is the basis of such disagreement as exists over the exemptions within the water-carrier in- dustry. Many carriers engage exclusively in exempt trans- portation by conforming to the conditions of section 303 (b). They may charge such rates as they see fit and change them at will. The regulated common carriers of general commodities also handle bulk-type commodities but because they frequently must transport such com- modities in vessels or tows with package or other non- exempt freight, they generally are obliged to transport the bulk commodities as regulated traffic subject to published tariff rates. The regulated common carriers assert that this condi- tion places them at a competitive disadvantage and has caused them to lose business. A group of these carriers operating on the Mississippi River system recently re- quested Congress to remove the general bulk exemption in section 303 (b). They contend that the present con- dition results in instability of rates and is definitely harm- ful to the regulated common carriers. Exempt operators, opposing the proposal of the com- mon carriers, claim that the absence of regulation of bulk commodities has resulted neither in excessive charges nor in a chaotic competitive condition within the bulk-carry- ing industry, and that additional regulation will work to the disadvantage of the public in that competition will be reduced and to a great extent eliminated. They contend that the common carriers have not undertaken to provide a true common carrier or all-purpose service, or to provide equipment adapted thereto, but instead selectively compete with the unregulated carriers. The railroads are on the side of the common carriers in oppos- ing the exemptions. It is difficult to appraise the effect of the unregulated portions of the water-transport industry on the regulatory controls and standards and on the quantity and type of waterway transportation services provided. Probably the regulated carriers are at some disadvantage, rate-wise, in competing with the unregulated carriers for bulk traffic. On the other hand, they have a field of operation in the handling of regulated traffic which the exempt carriers do not have and in which the latter do not compete. It would appear that on the whole the exemptions have not retarded the development of water-transportation service, but instead may have contributed to a fuller use of water- ways than would be true if all domestic water transporta- tion had been under regulation. There is, of course, com- petition between the railroads and the unregulated water carriers for various kinds of traffic, of which grain, sulfur, and phosphate rock may be used as representative. Some traffic can hardly be said to be adapted to other than exempt water movement. This applies particularly 911609-50------31 439 |