net ton, or 54.05 cents, not subject to that increase, published in the Hinsch supplement, allegedly was applicable.

Discussing first the complainant's procedure in arriving at the rates claimed: Item 672 of the Hinsch supplement contained a commodity description for fertilizers, with a reference to a list which included peat. At the extreme right-hand margin of the page was a column headed "Commodity Rate Column (See Item 605 of tariff)," below which, opposite the commodity description, appeared the number 1001. Item 605 of the tariff provided as follows:

APPLICATION OF COMMODITY RATE COLUMNS

The numbers shown under "Commodity Rate Columns" provide the key for commodity rates in Section 3 and 3-A of this tariff on articles described in this section for application between points in C. T. R. T. B. Tariff E-1009, I. C. C. 4487, issued by H. R. Hinsch, Agent.

Section 3 of the Hinsch supplement, headed "Standard All-Rail Commodity Rates (See Item 900 of tariff)," contained columns headed "Rate Basis Number" and "Commodity Rate Column Numbers," one of the latter bearing the number 1001. Item 900, on the first page of section 3 of the tariff, under "Method of Determining Rates," provided as follows:

To determine a rate:

1. Find the Commodity Rate Column assigned to the commodity in Section 2;

2. Find the Rate Basis Number applicable from origin to destination in C. T. R. T. B. Tariff E-1009, I. C. C. 4487, issued by H. R. Hinsch, Agent; and apply the rate for that Rate Basis Number under the appropriate Commoditity Rate Column published in this section.

The tariff specified in the above quotation and a national rate basis tariff published by the same agent, to which reference was made in the former, provided rate basis numbers for movements from Capac to eastern points which, when used in accordance with the item next above, resulted in the rates claimed to have been applicable.

Referring back to item 672 of the Hinsch supplement, containing the commodity description, in addition to another fertilizer description and a note regarding different charges which are not pertinent to the present issue, that item also included sections headed "APPLICATION" and "EXCEPTIONS," the latter likewise not pertinent. Under "APPLICATION," the following appeared:

Between points in Central Territory

Between points in Central Territory and points named in Item 258 of tariff, as amended.

Capac is in central territory, and the points named in item 258 were in New York and Pennsylvania along the border between central and trunkline territories.

The complainant urges that there is ambiguity which should be resolved in its favor. Most of the items in the Hinsch tariff contained an "APPLICATION" section, and it is the defendants' position that the specific provision therefor defeated the application sought by the complainant.

The complainant avoids the application section of the commoditydescription item on the theory that, in following the steps described above, a tariff user never reaches that section. In practice, however, the reverse procedure would be normal; that is, the entire item first would be read, in the course of which the specific provision for geographical application would determine whether the item could otherwise be used in making a rate.

It is clear from the heading of item 605 in the tariff that its purpose is to inform the user concerning the function of the numbers set forth in the commodity-rate columns of the commodity-description items, and not to define territorial application. Similarly, the heading of item 900 indicates that its only purpose is to describe the mechanical method of determining rates. While it refers to the tariff from which rate-basis numbers for movements between particular points of any commodity named in the Hinsch tariff and supplement must be obtained, the points between which the rates on the complainant's commodity could apply were fixed initially in item 672. The specific provision for geographical application therein supplied did not include the destinations of the complainant's shipments, and we discern no ambiguity in the described provisions.

We find that the rates charged were applicable. An order will be entered dismissing the complaint.

304 I. C. C.

INVESTIGATION AND SUSPENSION DOCKET NO. M-9420

PAPER COVERS FROM MILWAUKEE TO DETROIT

Decided June 5, 1958

Upon reconsideration, reduced truckload rate on paper covers from Milwaukee, Wis., to Detroit, Mich., found just and reasonable. Findings in prior report, 302 I. C. C. 470, reversed, and proceeding discontinued.

Appearances as shown in prior report.

REPORT OF THE COMMISSION ON RECONSIDERATION

DIVISION 2, COMMISSIONERS WINCHELL, MURPHY, AND MINOR BY DIVISION 2:

1

In the prior report, 302 I. C. C. 470, division 2 found not shown to be just and reasonable, certain schedules published by the respondent, C. A. Conklin Truck Line, Inc., a motor common carrier, proposing to establish a reduced commodity rate of 68 cents, minimum 32,000 pounds, on paper covers from Milwaukee, Wis., to Detroit, Mich. Pursuant thereto, an order was entered on December 10, 1957, requiring the cancellation of the schedules and discontinuing the proceeding. Upon petition of the respondent, and the protestant's reply thereto, the proceeding was reopened for reconsideration and the effective date of the order stayed pending disposition of the matter. The rate under investigation, which became effective on September 14, 1957, and has since been increased 7 percent to 73 cents, will be referred to herein as the proposed rate. The facts stated in the prior report will be restated only where necessary for a clear understanding of the issues.

The respondent's prior rate applicable on this traffic was a class 35 rate of 81 cents, minimum 20,000 pounds. Traffic out of Detroit is light, and the respondent's purpose in publishing the reduced rate and higher minimum weight was to encourage heavier loading, which would require less equipment to move the same volume of traffic into Detroit and reduce the number of empty units moving from that point. The respondent moves the traffic in leased equipment which can readily be loaded to the higher minimum weight.

In the prior report, the division stated that the record was inadequate to permit a determination of the compensativeness of the proposed rate. This conclusion is contested by the respondent.

1 Rates and costs are stated per 100 pounds.

It submitted of record a detailed analysis of its fully distributed costs, including transportation expenses, insurance, over-the-road drivers' lodging, welfare, and pension expense, Federal use tax, costs per freight bill, and "all other costs," based on the use of leased equipment for a one-way movement from Milwaukee to Detroit of 357 miles. Its costs on a shipment of 20,000 pounds and the minimum truckload yield therefrom at the prior rate of 81 cents were $116.99 and $162, respectively. The corresponding costs and minimum truckload yield on the basis of the proposed rate and minimum are $137 and $217.60. These yields reflect minimum truckload profits of $45.01 or 28 percent, and $80.60 or 37 percent. As stated, the heavy flow of the respondent's traffic is to Detroit, and no showing was made of the volume of traffic moving in the reverse direction. Based on the one-way mileage, the minimum truck-mile yield under the proposed rate and higher minimum would be 60.9 cents, and the average truck-mile cost, 38.3 cents.

The protestant's principal criticisms of the respondent's cost analysis are that it is based on one-way movements and does not conform to Highway Form B, a simplified procedure for determining the cost of handling freight by motor carrier, developed by the Commission's cost finding section and widely used in proceedings before the Commission. The respondent apparently regrouped several items in its cost analysis and thus does not conform strictly to Highway Form B, but it is clear and understandable. There were certain discrepancies between items in the respondent's 1956 annual report filed with the Commission and its cost analysis, owing to the failure to consider in the latter as an item of operating expense certain funds paid to personnel under a profit-sharing plan. Where, as here, knowledge is lacking as to the vehicle load in the return direction, Highway Form B provides that costs may be computed on an assumed return load equivalent to the system average load of the carrier, in this instance 22,820 pounds as officially noticed in the respondent's annual report for 1956. Making the necessary adjustments, and using a round-trip factor based on the average of the proposed minimum in one direction and the respondent's system average weight in the other direction, the following table shows the respondent's costs based on data contained in its 1956 annual report as applied to the cost formula in Highway Form B:

As stated in the prior report, the fact that traffic is light out of Detroit posed the question whether the respondent's return load could be considered equivalent to its system average load. The respondent, however, is a common carrier of general commodities, maintaining terminals at Adrian, Hillsdale, and Sturgis, Mich., and Toledo, Ohio, among other points, 69, 96, 138, and 57 miles, respectively, from Detroit, from which points it may normally be expected to obtain some volume of outbound traffic. As above indicated, the respondent has increased the proposed rate by 7 percent in accord with a like increase added to the corresponding rate published by the protestant. While this traffic has moved at times in 32,000-pound loads, the evidence is clear that the proposed adjustment will increase loadings and truckload revenues, and thus foster more efficient and economical use of equipment. Considering all of the foregoing facts, we are satisfied that the proposed rate is reasonably compensatory.

Upon reconsideration we conclude that the proposed schedules are just and reasonable. The prior findings are reversed. An order will be entered vacating the order of December 10, 1957, and discontinuing the proceeding.

304 L. C. C.