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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
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
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
Between 1975 and 1980 the household goods market was
expanding at a rate estimated to be between 5 to 8 percent
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.
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.
Revenue in relation to tons transported has increased
cons 18tently for the past four years due to a series of rate
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.
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.
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
At most, only a very small percent of the consumer
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
At any given time a significant percent of the shippers
using one carrier are the dissatisfied customers of other
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.
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
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.
Composition of the Interstate Motor
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
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.
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: