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Why are common carriers subject to stricter economic regulation than contract carriers?

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Mosaic portrait of Emperor Justinian I with a jeweled crown and halo, from the 6th-century Basilica of San Vitale in Ravenna, Italy. — Carriage of goods Justinian I, detail of a 6th-century mosaic at the Church of San Vitale, Ravenna, Italy.

Common carriers are subject to stricter economic regulation than contract carriers primarily because of their role in serving the general public. A common carrier holds itself out as ready to transport goods for the public at large, whereas a contract carrier only serves specific individuals or entities under private agreement.

Because common carriers offer services to the public, they are legally obligated to serve anyone who makes a lawful request. This public-facing nature necessitates strict oversight to protect the public interest, including prohibitions against charging unreasonably high rates or engaging in unjust price discrimination. In contrast, contract carriers have greater freedom to select their customers and negotiate rates, as they do not hold themselves out to the general public.

Historically, economic regulation—such as that enforced by the Interstate Commerce Commission—was also implemented to curtail the abuse of monopoly powers and ensure fair competition, preventing carriers from exploiting their position to the detriment of shippers and the communities they serve.12