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non-transportation services represent about 30 percent of the

total charges paid by the shipper.

On shipments moving

relatively short distances, 500 to 700 miles, the

non-transportation charges are frequently 40 to 50 percent of the

total charges.

The percent of the total charges attributable to

non-transportation services on shipments transported 1,500 miles

or more usually represent only 25 percent or less of the total

charges.

These non-transportation charges are customarily

identified as accessorial and assumption of liability charges.

As will be further discussed, the larger portion of these charges

are passed on by the carrier to the agents and owner-operators

who actually perform the services from which the revenue is

derived.

Between 1975 and 1980 the household goods market was

expanding at a rate estimated to be between 5 to 8 percent

annually.

During the second quarter of 1980 the expansion ceased

and the tonnage for that quarter declined below the tonnage transported during the second quarter, 1979. The decline continued throughout 1980 and the aggregate tonnage for the

industry for the year appears to have been about 6 percent below

the tonnage in 1979.

Review of the operating and financial

statistics of nine major carriers, which in the aggregate had 48

percent of the total estimated revenues of the industry in 1981, discloses that 6 of the 9 continued to experience a decrease in

tonnage in 1981 but at a much lower rate than in 1980.

Taking

into consideration the three carriers which had a tonnage

Increase in 1981, the aggregate tonnage for the nine carriers

increased one percent in 1981 compared to 1980.

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Revenue in relation to tons transported has increased

cons 18tently for the past four years due to a series of rate

increases.

From 1978 through 1981 the average revenue per ton

transported under the three provisos by the nine carriers

increased from $350.51 to $489.04 or 39.52 percent. During the

same period the Consumer Price Index increased from 195.4 to

272.4 or 39.41 percent.

This suggests that the national household goods market has

declined when measured in tonnage since 1979 but the decline

appears to have slowed and possibly bottomed out.

When measured

in dollars the market has increased but, on a carrier by carrier

bas18, the amount of the increase varies.

The market is

unquestionably sensitive to fluctuations in the general economy and 18 particularly sensitive to variations in the home mortgage

interest rate and the number of new house starts per year.

Even

though the industry does not appear to be in dire straits due to

the present state of the national economy, it is suspected that

throughout the industry there are many small carriers and agents which are being seriously adversely affected by the economic conditions within the limited areas they serve.

Shippers of first proviso household goods ordinarily have limited options as to if, when and where they move. While a

number of variables, such the selling or buying of real estate,

may require discretion in scheduling the specific dates for a

move the shippers are in most instances, for employment,

financial, health or other reasons, committed to a move and are without the ability to reasonably amend their plans.

Limited options are available to a shipper as to what type

of carrier or type of transportation service they will employ for

a move.

At most, only a very small percent of the consumer

who

make intercity moves are capable or willing to move themselves

using an owned or rented vehicle.

For the most part no options

exist and the services of a professional mover must be employed.

The element of customer satisfaction is not a dominant

factor in determining the share of the market enjoyed by any one

carrier.

At any given time a significant percent of the shippers

using one carrier are the dissatisfied customers of other

carriers.

Most shippers of first proviso household goods move

intercity a limited number of times in a lifetime.

A shipper who

experiences what he or she considers to be a "bad" move will in

most instances retain the memory of the experience much longer

than one who enjoys a successful, problem-free move.

Market share appears to be significantly influenced by the

number and geographical distribution of the agents employed by a

carrier and by the ability of the carrier to service the traffic

generated by the individual agents. Agents who have reason to believe that a carrier which they represent will service moves in

a manner reasonably consistent with the service and price

commitments they are required to make to sell the service will in

most instances aggressively seek additional traffic.

Agents who

find that a carrier they represent is unwilling or incapable of

providing the support they require to compete in their local

market will seldom continue to represent the carrier beyond a

short period of time.

To what extent the level of a carrier's charges impacts on

market share is uncertain.

Presumably all shippers give

consideration to the anticipated final costs of a move when selecting a particular carrier but there is reason to believe

that in only a minority of all moves are the anticipated costs

the determining factor in the selection of a particular carrier.

The two factors which appear to impact the most on a

shipper's selection of a particular carrier are, first, the shipper's perception of the carrier's willingness and ability to

provide the service required and, second, the shipper's

perception of the carrier's estimation of the final costs as

being reasonably certain.

The two most common fears expressed by

consumers seeking assistance in selecting a carrier is their fear

that the carrier will not provide the service within the time

frames and at the level of quality they require and the fear that

they will be confronted with substantially greater costs than

anticipated before the move is completed.

Quality of service and price certainty do not appear to

influence the overall volume of the intercity household goods

transportation market. Subject to some fluctuation depending on the state of the national economy, a reasonably predictable

percent of the total population moves each year regardless of the

service and price options available.

Distribution of the market

among the participating carriers is sensitive to service and

price options and as price certainty through the use of binding

estimates becomes more common the policies of the carriers with

respect to binding estimates may result in some redistribution of

the market.

However, as the use of binding estimates becomes

more the rule instead of the exception, the influence of this

marketing and pricing tactic may diminish.

PART III

Composition of the Interstate Motor
Carrier Household Goods Transportation

Industry

At the start of 1982 there were approximately 2,500 to 2,700

motor carriers authorized to engage in the interstate

transportation of household goods either under specific household

goods authority or under unrestricted general commodity

authority.

of this number less than half, around 1,100 to 1,300,

are believed actually to be conducting operations of sufficient consequence to be considered part of the viable industry. Of the

balance, an estimated 350 to 500 are engaged in limited

operations as pack and crate type carriers operating under

contracts with the Department of Defense or providing service as

origin or destination agents for exempt freight forwarders.

The

remainder are thought to be either engaged in operations as

agents for other carriers and not utilizing their own authority,

or to be out of business.

Based on data reported by the ten largest carriers in their

1981 annual reports (Schedule 722) their aggregate revenues from

transportation conducted under the three provisos of the

households goods authority were $1,445,318,418 or 58 percent of

the estimated 2.5 billion dollar market.

These carriers and

their estimated market shares are:

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