quirement for the establishment of public convenience and necessity under Part II. New or additional forwarder authority may thus be granted even though existing service is adequate, provided such a grant of authority is supported by proof of a public interest factor of equal or dominant importance. See Frank P. Dow Co., Inc., ExtensionLongview, 322 I.C.C. 103 (1964); D. C. Andrews & Co. of Illinois, Inc., Ext.-Baltimore, Md., 326 I.C.C. 743 (1966); and Brinke Freight Forwarder Application, 335 I.C.C. 861 (1970). Quite naturally, the forwarder respondents in this proceeding support further restrictions on entry for competitive reasons, whereas the participating shipper associations favor the status quo. We believe that entry standards should provide basic statutory guidelines, yet allow sufficient latitude in the exercise of our expertise in this area. Extreme statutory liberality or strictness would hamper our ability to determine the real need for additional services on a case-by-case basis, and could severely handicap us in discharging our obligation to promote the National Transportation Policy in this regard. We view the present statutory criteria, embodied in Sec. 410 (c) of the Act, under which we must find that "the applicant is ready, able and willing properly to perform the service proposed, and that the proposed service, to the extent authorized by the permit, is or will be consistent with the public interest and the national transportation policy" to be the type of reasonable legislative statement upon which sound regulatory decisions can be made. No modification of this statement appears warranted on the facts disclosed in this proceeding.

Sections 410 (c) and 411 of the Act govern the relationship that may exist between persons controlling and controlled by forwarders. Thus, forwarders may not acquire control of common carriers subject to Parts I, II, and III of the Act. Nor can such carriers obtain freight forwarder permits. Common carriers subject to Parts I, II and III, and persons controlling such common carriers, however, may obtain control of forwarders. The general tenor of the above provisions is that: (a) common carriers by rail, motor, and water, do not need, and therefore will not receive, freight forwarding permits to operate within the lawful scope of their authorities, Continental Dispatch, Inc., Common Carrier Application, 95 M.C.C. 483 (1964); (b) forwarders should not be allowed to control underlying modes of transportation, see Glendenning Motorways, Inc.-Pur.-Moland Bros. Trucking, 93 M.C.C. 174 (1963); and (c) the underlying carrier modes may control forwarders.

The Act also prohibits any person whose principal business is manufacturing or selling, and whose business operations are such that freight forwarders are commonly used, from engaging in service subject to Part IV. This appears to be in general conformity with this Commission's attitude about the users of a common carrier service having such control of that service that their traffic may be preferred over that of other shippers. Cf. Alter Trucking and Terminal Corporation Extension, 107 M.C.C. 644 (1967), aff'd. Alter Trucking and Terminal Corp.

v. U. S., 299 F. Supp. 819 (S.D. Iowa, 1969). Such a person may, however, receive a freight forwarding permit if, in addition to the other criteria, a specific finding is made that the proposed service will be consistent with the public interest and with the national transportation policy. Cf. Encinal Terminals-Control-Shippers Exp. Co., 109 M.C.C. 536 (1970).

It appears that legislative efforts to preclude forwarder control of common carriers have been largely unsuccessful. The statutory language does not actually proscribe such control; rather, it prohibits a forwarder from acquiring control of an underlying carrier. This requirement has been readily circumvented by having the motor carrier first obtain a certificate under Part II, and then having the motor carrier obtain control of the forwarder.

In other words, the provisions of Section 411 (g), when taken together, lead to the following confusing results: a person who initially gains control of a common carrier subject to Parts I, II, or III of the Act may subsequently acquire control of a forwarder, but a person cannot first acquire control of a freight forwarder and then acquire control of a common carrier; a person who acquires control of a common carrier and a forwarder, in that order, cannot later acquire control of another common carrier, although the common carrier controlled by such person can acquire control of another common carrier.

Because of the statute's plain ineffectiveness, this Commission has on several occasions recommended to Congress that such control restrictions be eliminated from the Act subject, however, to strict Commission control over such transactions pursuant to Sec. 5 of the Act. Recent developments throughout the transportation industry persuade us, however, that this report should not contain such a recommendation. Introduced before the 91st Congress was legislation, actively supported by us, which would accord us extensive powers to look beyond the nominal corporate ownership of carriers subject to our jurisdiction. It would allow us to inquire into the true status of transportation companies within the complex picture of conglomerate corporate holdings. Pending what we hope will be passage of such legislation, we will withhold any statement about forwarder affiliations or control. Should that legislation be passed, we will be able to learn just how deeply intercorporate relationships exist within the field of transportation. This will afford us a better basis for any future recommendations to Congress in this area.

Forwarder terminal areas.-Through the years, and especially since Federal regulation has begun, forwarders have vehemently argued that the high cost of motor transportation has been difficult to absorb. The history of Secs. 408 and 409 attests to the problems experienced by Congress, this Commission, and those we regulate, in arriving at a workable solution. From the Acme and Proportional Rate cases, supra, to the allowance of Sec. 408 assembly and distribution rates, to the two amendments to Sec. 409, the major policy issue before us, insofar as forwarders are concerned, has been their treatment with respect to

motor carriers. Under present law (Sec. 408), motor carriers can publish assembly and distribution rates which are lower that rates for other traffic, if such lower rates can be justified by a difference in transportation conditions, and subject to the proviso that all persons, not only forwarders must receive the benefit of these lower rates if their traffic is tendered under similar conditions. Also, under Sec. 409, forwarders can enter into contracts with motor common carriers. To the extent that the contract is for the performance of assembly and distribution services, the compensation can be without regard to the published rates of the motor carrier. As to truckload lots, however, only those line-haul movements between concentration and break-bulk points less than 450 miles apart can be for less than the motor carrier's published rate. The economic data submitted in this proceeding show that (eliminating the traffic handled by Midwest Haulers), the great majority of purchased motor transportation is performed pursuant to Sec. 409 contracts, and very little pursuant to published assembly and distribution rates. Nevertheless, the testimony at the hearings on H.R. 10293 and the data and statements received by us point to a substantial lack of forwarder service outside major economic centers. One rather apparent reason for this lack of service may be the cost of motor service, even when secured at reduced assembly and distribution rates. It may be that if forwarders were authorized to operate their own motor vehicle equipment in a broader terminal area, their overall transportation costs would be reduced. Increasing demands are being made for service to and from areas beyond the commercial zones of urban centers. And this is precisely the area of transportation in which there seems to have been increasing consumer dissatisfaction in recent years. All modes of transportation have rejected, to some extent, small shipments moving to or from outlying points. We feel that some tangible inducement must be made to solve this ever-growing problem. We view the possible expansion of forwarder terminal areas as complimentary to the proposed legislations and as representing an additional approach to a solution.

Sufficient notice of this proposal has not been accorded, however, to all those parties who may be most affected by any extension of freight forwarders' terminal areas, namely the motor carriers who specialize in short-haul transportation and the shippers who utilize their services. No proposed regulations were published and no indication was given that extension of terminal areas would be considered. Thus, it would not be fair to charge all interested persons with constructive knowledge of the possibility that this action would result from this proceeding. From the data we have gathered in the first part of this proceeding, and the representations submitted in the second part, as well as the statements made before Congress, however, our initial opinion tends greatly in favor of terminal area expansion. But it would be premature to state that this will be our ultimate conclusion without first receiving pertinent data and representations from all interested parties. For this reason, we shall institute, through the entry of a subsequent Notice of Proposed Rulemaking and Order, another proceeding

designed specifically to consider the expansion of the freight forwarders' terminal areas. That proceeding, like this, would envision the filing of statements and representations, but it will be more limited in scope.

Our hope is that the proposed expansion will have a number of positive effects, beneficial both to the consumers and the providers of transportation services. By decreasing costs to the forwarders, we would expect an expansion of the territory within which complete freight forwarding operations are performed. The economic data discussed earlier indicate that forwarders serve territories in and around only a limited number of markets. By expanding terminal areas, it is hoped that a sufficiently broad spectrum of traffic will be available at reasonable profit margins to warrant expansion of forwarder services both to centers presently without service, and to wider areas around those centers at which service is already available. A combination of reduced rail charges and wider terminal areas would generate additional traffic and revenue for forwarders in markets that appear presently to be without adequate transportation services. It would enable forwarders. to expand their participation in and share of the transportation business. Increases in revenue and volume will tend to increase their profits. Such increases will result from improved service to the public, rather than from the benefits accorded them merely because of their status as regulated carriers. Moreover, because rail is still the principal source of underlying forwarder transportation, it must be presumed that the bulk of additional forwarder traffic will be tendered to the railroads, thus providing new traffic to affect any lower rates which may be published if negotiated rates are permitted.

While further proceedings on this issue will be necessary, we presently see few adverse effects resulting from this action. Non-profit shipping associations will not be affected greatly, and in fact, a number suggested this action in their representations. A shipper association movement generally costs its members less than they would have to pay for for-hire carriage, so we do not expect any substantial diversion of traffic from shipper associations. Of course, the effect upon associations can only be considered to the extent that such action affects their members.

Many motor carriers try to avoid small shipments traffic moving to the "hinterlands," as one pleading calls it. While they claim to transport a large percentage of the small shipments traffic, the fact remains, as noted earlier, that this service appears to be greatly in need of improvement. Widespread shipper dissatisfaction surfaces each time the issue of small shipments is discussed. This is an indication to us that existing carriers are not operating to the fullest extent of their authorities. This includes forwarders, as well as motor carriers. Our decision in Restrictions on Service by Motor Common Carriers, 111 M.C.C. 151 (1970), is only the most recent in our long series of efforts to require motor carriers to operate in conformity with their certificates. In this connection, we are presently supporting pending legis

lation which would authorize us to require all motor carriers to enter into joint rate and through route arrangements.

Certainly, some motor common carriers will be directly affected by an expansion of terminal areas. We are aware that many small, local cartage companies are attempting to meet transportation needs within their own limited operating territories. Clearly, there is the possibility of diversion of some of this traffic to forwarders. In fact. these local carriers already have aired their existing difficulties in trying to interline their LTL freight with line-haul carriers. The rulemaking proceeding, in which we will specifically consider the need for extension of the terminal area, will also consider in depth the effects of such action on local motor common carriers, and will weigh any adverse effects on their services and operations with the public interest factors supporting extension.

The proposed action will not be without precedent. Where particular circumstances have warranted it, this Commission has authorized broader terminal area operations. Thus, in Express Company Terminal Areas, 332 I.C.C. 91 (1967), aff'd. Northern Freight Lines, Inc. v. U. S.. 304 F. Supp. 536 (N.D. Ga., Atlanta Div., 1969), we found that express companies should have terminal areas sufficiently extensive to serve the needs of the public, and that the size of those terminal areas could continue to be set by the express company itself without regard to the actual commercial zone of the involved municipality. Furthermore, in Motor Transp. of Property Incidental to Air, 95 M.C.C. 71 (1964) and 112 M.C.C. 1 (1970), we held that, subject to certain conditions, the motor carriers operations which are exempt because they are incidental to air (Sec. 203(b) (7a) of the Act) may be performed within terminal areas coextensive with the 25-mile terminal area limit set by the Civil Aeronautics Board for air carriers subject to its jurisdiction. Our investigation here tends to indicate that freight forwarders also perform the type of specialized service for the public which may warrant some modification of traditional concepts about terminal area operations.

We have indicated earlier that the terminal area within which a freight forwarder may perform collection and delivery services conforms generally to the commercial zone of a given municipality. Commercial Zones and Terminal Areas, 54 M.C.C. 21 (1952). While the term "collection and delivery" has been defined by us, it has been distinguished from assembly and distribution services only by the territory in which the particular activity is performed. 54 M.C.C. at pp. 59-60. 64-74. The rulemaking proceeding which will be instituted will consider in greater detail, among other things, our power to alter the forwarder terminal area exemption; the need for forwarder terminal areas of graduated distances beyond municipalities, depending upon the population of the latter; whether uncertificated carriers should be allowed to handle traffic in the expanded forwarder terminal area, and. if not, whether legislation is necessary to preclude such operation; the adverse and beneficial effects on existing carriers and other interested