Full Volume 19 - Federal Maritime Commission

FREIGHT FORWARDER BIDS ON
GOV T SHIPMENTS
625
The fatal flaw in this so called absorption theory is as the Presiding
Officer noted its failure to be applied to commercial accounts II Air Sea
and Meyer would justify their 5 and 411z cent bids to GSA respectively
on the ground that incremental pricing allows them to absorb the
additional work load without additional personnel and with only a de
minimis increase in costs 12 All commercial fees however were priced
well above this level Indeed Air Sea s lowest commercial fee in fiscal
year 1973 was 15 00 Meyer s average
commercial fee for the same
period was 48 30 per shipment Obviously as Hearing Counsel have
pointed out Mr Meyer never considered costing commercial shipments
on an incremental basis even during those years when his employees
were underutilized and he had no GSA contract The record here clearly
indicates that GSA is the only shipper that ever benefited from this
incremental pricing approach Respondents failure to even consider the
application of the absorption theory to its commercial accounts or to
provide any explanation as to why incremental pricing is appropriate for
GSA accounts but not for commercial accounts renders that approach
unjustly and unlawfully discriminatory
Whatever the merits of the absorption or incremental pricing
approach in principle it is beyond dispute as we have indicated earlier
that the incremental costs associated with the processing of a GSA
shipment necessarily amount to more than 411z or 5 cents In addition to
the normal forwarding services which they have contracted to provide
forwarders handling GSA shipments must also maintain a log on each
GSA transaction furnish GSA with a monthly report on shipments
handled transmit copies of bills of lading to the Maritime Administration
and wait between 60 and 90 days to be paid a longer time than on
commercial shipments We simply cannot accept the suggestion that all
this work whatever effort is made to minimize it can be done for as low
as 41 2 cents The Commission therefore concurs in the Presiding Officer s
as between
conclusion that the absorption theory is discriminatory
shipper customers and his rejection of that theory as justification for the
disparate forwarder fees assessed GSA vis avis commercial shippers
It is also argued on exception that continuing the present GSA bidding
practices is in the public interest in that it has caused the Government to
receive quality service at low rates while at the same injuring no one
This contention is without merit By enacting section 16 of the Act
among other provisions Congress has established the public policy to
11
Hearing Counsel advise that none of the Respondents have ever considered incremental pricing with respect to
theircommercial accounts
been limited to 41 2
It On exception Meyer argues that it is incorrect to refer to its schedule fees as having
cents for each shipment accomplished for GSA because most shippers were allegedly charged an additional 5
per shipment for seclring dock receipts This contention is not particularly persuasive First there appears to be
some dispute between Meyer and GSA as towhether Meyer had a contractual right tocharge and collect its 5 charge
on PAS shipments or whether Meyer had an obligation to provide the receipts within the contract price of 4 2 cents
Secondly even assuming that Meyer could legally exact 5 for the issuance of the dock receipt on PAS shipments
and we certainly do not propose to decide this here we cannot find on this record that the 5 fee was in every
instance tacked on to the 41 2 cents bid charge to GSA In fact that the 5 fee was even according to Meyer
assessable only on PAS shipments would in and of itself indicate otherwise
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