authorizing motor common carrier operations cannot be restricted against service for a named shipper. Moreover, these carriers contend that applicant's dual operations as a motor common and contract carrier arising out of a grant of the authority recommended by the joint board would be inconsistent with the public interest. AAA Transfer and Widing also argue that the record does not establish a need for the transportation of commodities in bulk; and that these commodities were improperly included in the recommended service authorization. Widing further avers that the joint board erred in holding that its "size and weight" authority does not allow it to transport containerized freight. AAA Transfer and Widing jointly conclude that a grant of this application will make for a further destructive diversion of traffic in an already highly competitive motor carrier transportation market without a commensurate improvement in service to the general public.

Garrett, O.N.C., and Silver Wheel contend that applicant has not established a need for the broad territorial grant of authority recommended. They collectively contend that 97 percent of applicant's container traffic is within the commercial zones of port cities in Oregon and Washington. They argue that there are no substantial or recurring service failures on the part of existing carriers, and that existing service is adequate to meet shippers' needs.

Applicant in its reply to the foregoing contentions has presented certain proposals which deal with several of the issues raised by protestants. It now requests that any general-commodities authority granted in this proceeding exclude, in addition to household goods as defined by the Commission, classes A and B explosives, commodities in bulk, articles of unusual value, and those requiring special equipment. Additionally, applicant requests that the application be amended to one seeking authority for the transportation of general freight "in containers or in trailers." As seen later in this report, applicant's proposed amendments will be given effect in the service authorization herein to the extent they are consistent with the evidence and the applicable law. Concerning the dual operations issue, applicant initially offered to restrict the requested common carrier authority against the performance of a transportation service for the shipper (Del Monte Corporation) which it serves under its contract carrier operating authority. The joint board accepted this proposal. Applicant now contends that this proposal would be contrary to the regulatory concept of motor common carriage. Therefore, in order to resolve the dual operations

problems which would be created upon a grant of authority in this proceeding, applicant now proposes, in connection with such grant, to seek the conversion of its existing motor contract carrier operating rights to corresponding motor common carrier operating rights.

Concerning the fitness issue raised by protestants, applicant maintains that during the period when its emergency temporary authority or temporary authority had expired the lawful nature of these services may be questionable. However, it argues that such operations were conducted in good faith under a color of right, in reliance upon the sometimes mistaken advice of its former counsel, and cannot be characterized as a willful evasion of the Commission's rules and regulations. It further argues that certain movements questioned by protestants were movements in intrastate commerce or movements of exempt commodities, which required no operating authority from the Commission. Considering the nature of the operations performed, the belief that such were authorized at all times, and applicant's intent in the future to comply with all Commission regulations and requirements, applicant submits that a negative determination of applicant's fitness would not be justified. Applicant asserts that it has established a need for its proposed service throughout the sought territory. Furthermore, it contends that it has been established that existing motor carrier service is unable adequately to handle the increased volume of containerized traffic in the involved area; and that the public convenience and necessity require authorization of the proposed operation in its entirety.

The evidence, the joint board's recommendation, the exceptions, and applicant's reply to the exceptions have been considered. An expansive report of the facts is necessary for a complete understanding of the issues herein.

PROCEDURAL MOTIONS

Protestant Hayes in its exceptions moves to strike the first full paragraph on page 16 of the initial decision, the last full paragraph on page 16 and continuing to page 17 insofar as relates to the issue of dual operations, all references to the proceedings No. MC-32882 (Sub-No. 50), Mitchell Brothers Truck Line, Inc., Extension Seagoing Cargo Containers, and No. MC-9194 (Sub-No. 2), AAA Transfer, Inc., Extension-Cargo Containers, appearing on pages 17 through 23, and the ultimate findings (i.e., the recommended authorization) of the joint board at page 23 continuing through page 24. It argues that these matters contain.

errors of fact as well as irrelevant statements. In relation to this motion protestant further proposes to substitute its own opinions in lieu of the materials stricken. The motion goes more properly to the weight to be attributed to the questioned matters than to their admissibility, and is accordingly hereby overruled.

APPLICANT

Applicant is authorized to conduct operations as both a motor contract and common carrier. In its Permit No. MC-47010, it holds so-called "open-ended" contract carrier authority to transport fresh fruit and vegetables, canned goods, cannery supplies and machinery, and seeds, over irregular routes, between points in Oregon and Washington. Its Permit No. MC-47010 (Sub-No. 5) authorizes the transportation of tin plate, over irregular routes, from Vancouver, Wash., to Toppenish and Yakima, Wash., under contract with Del Monte Corporation. Its operations under both of these permits are currently confined to services on behalf of Del Monte. Applicant also holds Certificate No. MC-133276 (Sub-No. 9), authorizing it to transport as an irregular-route motor common carrier aqua ammonion and ammonia phosphate, in bulk, in tank vehicles, from Vancouver, Wash., to points in Oregon, restricted to the transportation of traffic originating at the facilities of Tidewater Barge Lines. It operates 22 tractors, 37 trailers, 5 straight trucks, and 3 forklift trucks, and maintains terminal facilities at Portland, Oreg. There is no question as to applicant's financial ability properly to conduct the proposed operation.

Applicant has held both emergency temporary authority and temporary authority similar in scope to that sought by the instant application during various periods from June 29, 1971, through September 7, 1973. Applicant transported container and related shipments from or to Blaine, Longview, Seattle, Tacoma, Toppenish, and Vancouver, Wash., and Albany, Astoria, Aurora, Beaverton, Clackamas, Culp Creek, Donald, Eugene, Gaston, Gresham, Halsey, Hammond, Harrisburg, Hood River, Hubbard, Independence, Madras, Milwaukee, Monmouth, Newport, Odell, Portland, Progress, Redmond, Riddle, St. Helens, Salem, Shedd, Sherwood, Silverton, Tangent, Tigard, West Linn, and Woodburn, Oreg.

'The great majority of motor contract carrier authorities presently being issued by the Commission limit the operations authorized to the performance of service under contract with a specifically named shipper or shippers. However, so-called "open-ended" contract carrier authorities do not restrict the authorized operations to the performance of service under contract with specifically designated shippers.

PUBLIC SUPPORT

Manalytics, Inc., of San Francisco, Calif., is an economic consulting firm engaged in research for the transportation industry. At the request of applicant, it submitted a written statement, and offered a study of the ports in the Pacific Northwest for a hearing before the Federal Maritime Subsidy Board. The testimony submitted by this company in this proceeding is based upon knowledge gained over the years in the course of its business and more specifically from its study for the Maritime Board.

In its testimony and statement Manalytics reaches seven fundamental conclusions which are set forth below.

(1) Containerization of ocean cargo provides a faster, safer, more reliable door-todoor service at lower costs. The major economic advantage of containerization lies in its potential to reduce greatly the unit costs. Containerization transforms general cargo into a uniform size and shape which is provided by the container. In terms of unloading costs, containerization saves approximately 1.0 man-hour per ton of cargo, or 19 man-hours per container in handling. At a direct labor rate of $7 per man-hour, containerization saves over $13 on each ton of cargo loaded or unloaded for labor

alone.

(2) U.S. trade in containerable commodities has been increasing steadily in the past 5 years. Containerable imports increased by 49 percent and exports by 38 percent from 1967 to 1970.

(3) Year by year, increasing percentages of liner cargo have been containerized on all major U.S. trade routes. The annual capacity of full containerships in the Pacific Coast-Far East trade route will total 450,000 40-foot container equivalents in each direction by 1975. This capacity is of the order of 5 million long tons in each direction annually.

(4) The large, fast containerships have high daily costs. Therefore, it is especially important to minimize port time through investment in shoreside container handling equipment. Based upon a ship's discharging and loading 780 containers, 2 extra days in port would cost $30 additional per container for just the ship's time, and does not include additional costs for berth rental time.

(5) Containership berths with high productivity are very expensive to equip and require high throughput to achieve economical unit costs. One hundred percent utilization of a two-crane berth results in a cost of $12.50 per container; when utilization is reduced to 50 percent, the handling costs for each container is increased to $25.

(6) The combination of high containership daily costs and high container terminal throughput requirements makes it economically feasible to transfer cargo overland between nearby ports at a lower total cost than by moving the ship. A containership which operates at 25 knots, and which is loaded and unloaded at each terminus in 3 days, completes a trans-Pacific round trip voyage totaling 9,000 miles in 21 days. This totals 17 voyages annually. However, if the time required for loading and unloading is increased to 5 days at each port terminus, the time required for each round trip increases to 25 days, and the number of annual voyages are reduced to 14.25, a reduction in productivity of 15 percent.

(7) Containerized cargo increases the market for truckers' services for pickup and delivery or for transfer between relatively close ports. Handling costs per ton are reduced for truckers vis-a-vis conventional cargo, but line-haul costs per ton are increased because container dimensions are not optimal for over-the-road movements. Long hauls of containers appear to be unattractive to truckers. The primary role of motor carriers in container operations is the pickup and delivery of container loads at distances from the ports of less than about 400 miles, and the transfer of containers between nearby ports to save costly ship calls. In order to preserve inherent advantages to the shippers of through container movements, it is necessary to provide for effective and proper coordination between water carriers and motor carriers. Only those carriers with flexible operations dedicated to container carriage can provide this coordinated service.

Manalytics further asserts that containerization has resulted in new traffic for regulated motor common carriers. It encourages motor carrier movements of ex-water containerized cargoes by motor carriers creating situations where containers which have prior or subsequent movements by water carriers are moved greater distances. It asserts that containerization has created an immediate need for additional authorized motor common carriers. Containerization continues to increase, and Manalytics does not foresee any return to conventional water carriage. Motor common carriers of general commodities operating over long hauls (400 miles or more) generally do not appear to Manalytics to be responsive to the needs of the container shipping public.

The Port of Portland operates a number of marine terminal facilities which handle containerized freight. It commenced handling container traffic in 1970, and the volume of such traffic has steadily increased. The Port handled an average of 936 containers a month in 1970, 1,339 a month in 1971, 1,726 a month in 1972, and during the first 6 months of 1973 it handled an average of 2,541 containers a month. It foresees a substantial increase in the future in container traffic, and is taking preparatory steps to increase its participation in the movement of containers. In this context it has increased its sales solicitation, and begun construction of an additional two-berth container facility.

The Port is responsible for the movement of containers between its own terminal facilities, such as warehouses and docks. Shippers have the responsibility of arranging for motor carrier movements beyond the Port, but frequently shippers and consignees request the Port to prescribe the routing. Additionally, steamship companies request the Port to select the carrier and the routing. This is most especially true with respect to the movements of containers between terminals.