topography and municipal annexation policies. Using the base municipality's population in figuring out the formula distance is also criticized. Since the population within many city limits is stagnant or declining, while the suburban population is growing, it is asserted that using only the base municipality's population leads to an inaccurate commercial zone description. Some suggest that only through individual determinations can proper commercial zone limits be drawn, and that method should be adopted, at least for major cities.

There is little support among carriers, shippers, and local interests for use of Standard Metropolitan Statistical Areas. Since they are devised on a county-wide basis, it is asserted that they are too large and include economically unrelated areas. It is also argued that since the SMSA concept is not under Commission control, its utilization would amount to an abdication of our responsibility to administer the Interstate Commerce Act.

Comments of the United States Department of Transportation.-The Department of Transportation (DOT) representations include a general statement of its position with supporting arguments, verified statements by two persons having a background in transportation research and analysis, and the results of a study of the Atlanta and Boston commercial zones conducted by a private transportation research and consulting firm. DOT believes that present commercial zone limits have been vastly outdistanced by industrial and residential development. Zone expansion would assertedly result in more competition providing shippers with more service options, and, consequently, lessening the need to invest in private carriage. Long-haul carriers should benefit by the enlarged terminal areas to which they can provide direct service on truckload freight movements. Short-haul carriers may benefit since they could serve a larger area on less-than-truckload shipments. DOT feels that competitive forces will efficiently allocate traffic according to the carrier best equipped to handle it. Lower rates should result from enhanced operating efficiencies, not cutthroat competition.

DOT criticizes the population-mileage formula, because it is arbitrary and does not correspond to easily identifiable political boundaries. Nor does DOT favor the use of Bureau of Census Urbanized Areas. The Urbanized Area includes a central city of at least 50,000 inhabitants and a surrounding closely settled territory, which is defined in terms of certain population density standards. DOT contends that this method does not consider other necessary economic facts. As a city grows, population location loses its value

as an indication of shipper location, and this is especially true in newer cities. Furthermore, this method is objectionable, since urban areas are not drawn along political boundaries.

DOT proposes a combination approach, utilizing Standard Metropolitan Statistical Areas (SMSA), Standard Consolidated Statistical Areas (SCSA), and an expanded population-mileage formula. The SMSA concept was developed by the Office of Management and Budget and is defined in terms similar to those used in our commercial zone definition. An SMSA is defined as:

a metropolitan area [which] consists of a central aggregation of urban population of substantial size and an area around this center whihe has close economic and social interrelationships with its central aggregation.

SMSA's consist of an urban center with a population of at least 50,000 and surrounding areas which possess particular characteristics of urban population, population growth, population density, and employment commuting patterns." It must be noted, however, that SMSA's are designated on a county-wide basis. If any part of an adjacent county meets the economic and social criteria for integration with the central city, the entire county is included in the SMSA. In certain areas where there is a continuously developed, high density population having certain metropolitan commuting patterns, two or more SMSA's have been combined into an SCSA. The 13 SCSA's are intended to reflect those metropolitan areas where the characteristics of development and economic integration are prevalent on a wide geographic scale. In many regions of the country no SMSA's or SCSA's have been designated, either because insufficient concentrated population exists or because proper data have not yet been collected. In those cases zone expansion would have to be implemented by an alternate method, such as an increased population-mileage formula. DOT states that since SMSA's and SCSA's are defined along county lines, shippers and carriers should be able to easily identify zone limits. It is also noted that SMSA's and SCSA's are updated on a regular basis by use of Decennial Census information, thus minimizing the need to consider individual commercial zone determinations. Although some SMSA's or SCSA's are very large, especially in the West, there is no reason this should cause carriers to adhere to noncompensatory rates for exempt zone operations. Since tariffs correspond to "rate base numbers" (RBN) for transportation "These criteria are specifically stated and more fully explained in Appendix B.

services in a commercial zone, carriers should be allowed to establish a number of RBN's depending on the distance traveled within the zone.

One of the two persons who supported the DOT viewpoint makes two initial points. First, he feels this Commission should recognize that although its commercial zone determinations are intended to reflect economic fact, they also help create this economic fact to a certain extent. Secondly, he states that prior Commission decisions in this area have overemphasized the need for economic development of contiguous and continuous tracts of land in order to find commercial integration with the central city. Present land use planning goals require that there be some open space between industrial developments. The Commission, it is asserted, should recognize the need for these "buffer" zones.

After making these observations, the evidentiary presentation of DOT's expert focuses on the Philadelphia metropolitan area. Using data from the Delaware Valley Regional Planning Commission, the expert analyzes the effects of adopting several alternative methods for Philadelphia zone expansion-namely, Bureau of Census Urbanized Areas, a 20-mile radius, a 25-mile radius, or the SMSA." Selecting SMSA employment figures for manufacturing and trade two primary users of transportation services-the following comparisons are presented:

(1) From 1960 to 1970 manufacturing and trade employment in the Philadelphia SMSA increased by 9.6 percent, whereas manufacturing and trade employment in the existing commercial zone decreased during the same period by 10.0 percent;

(2) In 1960, 78.9 percent of Philadelphia SMSA manufacturing and trade employment was concentrated within present commercial zone limits. In 1970, this figure had dropped to 64.7 percent.

(3) In 1970, approximately 70.8 percent of SMSA manufacturing and trade firms were located within the commercial zone. Figures for 1960 in this category are not available.

(4) Of the 249 industrial parks in the Philadelphia SMSA, only 67, or 26.9 percent, are in the present commercial zone.

(5) A comparison of the Urban Area, 20-mile radius, and 25-mile radius methods breaks down as follows:

Percent of Philadelphia SMSA employment (manufacturing and trade)

"The Philadelphia SMSA consists of Bucks, Chester, Delaware, Montgomery, and Philadelphia counties in Pennsylvania, and Burlington, Camden, and Gloucester counties in New Jersey.

This verified statement also contains a discussion of a study conducted after part of the Fort Washington Industrial Park was included within the Philadelphia commercial zone in 1964. Shipper traffic managers were asked to recall and evaluate the before and after situations. Although there were some exceptions, most shippers experienced improved service after their inclusion in the commercial zone due to the increased number of available carriers. These shippers noted better transit times and fewer handling problems; some shippers claimed they benefited from rate reductions of from 5 to 30 percent. Even with these improvements a few shippers turned to private carriage, though the motivations for such a move seem to be other than economic. Regulated carriers who had opposed the expansion were also contacted. While suffering short-term losses in some cases, overall there was little serious adverse impact. Their customers often continued to use their services after expansion. The bankruptcy and merger rate for these carriers was no greater than the industry average. Of course, a growing national economy eases the transition, for carrier operations grow and profit as the economy expands.

The second DOT supporting witness conducted a study of the effects of the 1965 expansion of the Baltimore commercial zone which included a 6 square-mile area. As part of the study, 40 shippers and 25 carriers were interviewed. Generally, the shippers were pleased by the expansion results, since they experienced qualitative and quantitative service improvements. The carriers continued to participate in the traffic, although some had a shortterm dip in revenues. The study concluded that none of the opposing carriers suffered the "irreparable harm" they had anticipated.

The consulting firm study of the Boston and Atlanta commercial zones reveals that a substantial majority of shippers favor expansion of the present limits. An opinion survey was conducted soliciting. relevant information concerning commercial zone operations and the desirability of their expansion. Generally, shippers responded that service problems are encountered at suburban points outside the zone. The complaint is that only a few motor carriers have authority to serve outlying shipper locations; consequently, interlining is necessary, and service is poor. Shippers state that commercial zone boundaries have not kept pace with industrial relocation. Shippers also favor freight forwarder terminal area expansion. A majority of motor carriers responding to this survey,

both regulated and exempt, support commercial zone expansion for Boston and Atlanta but oppose enlargement of freight forwarder terminal areas.

Freight Forwarder Representations.-The forwarders argue that economic growth coupled with the convenience of modern expressways and beltways have caused metropolitan areas to extend far beyond their terminal areas. Existing terminal area limits do not allow freight forwarders to retain "old" traffic or obtain a reasonable share of "new" traffic. The movement of business and industrial activity to outlying suburban areas has greatly increased freight forwarder reliance on regulated motor carriers. Since the Act forbids freight forwarders from operating their own equipment except within their terminal areas, they must rely on other regulated common carriers for pickup and delivery service at points beyond terminal area limits. In recent years this situation has become almost intolerable. The forwarders complain that they are at the motor carriers' mercy, since the carriers dictate: (1) costs, (2) whether they will pickup at the forwarder's terminal, (3) when they will pickup from the shipper, and (4) when they will tender a shipment to the forwarder for outbound movement. This makes it impossible for the forwarder to exercise proper control over its freight movements. An added problem has been short-haul motor carrier cancellation of or refusal to enter into Section 409 contracts. Section 409 allows motor carriers for pickup and delivery services beyond terminal area limits and freight forwarders to enter into contracts. The freight forwarders state that many short-haul motor carriers are being purchased by long-haul carriers, and they are unwilling to negotiate Section 409 contracts at reasonable rates for competitive reasons.

The forwarders assert that expanded terminal areas will result in substantial service improvements, especially on small shipments. Presently there is an insufficient number of carriers available to handle small shipments on an expedited basis to and from points beyond the commercial zones of major urban areas. Forwarder ability to control directly and supervise pickup and delivery throughout urban areas would lead to faster, more reliable service. Less handling would reduce freight damage. Furthermore, the added competition of forwarder pickup and delivery would, assertedly, cause existing motor carriers to give better service, since the freight forwarders would no longer be "captive customers."

The freight forwarders state that the establishment of more terminals will not solve their operational problems. They contend