INVESTIGATION AND SUSPENSION DOCKET NO. M-10682 FLAVORING SIRUPS FROM DALLAS AND FORT WORTH TO ST. LOUIS Decided July 7, 1958 Proposed reduced truckload rate on flavoring sirups from Dallas and Fort Worth, Tex., to St. Louis, Mo., found just and reasonable. Order of suspension vacated, and proceeding discontinued. C. C. Feldman for respondent. William A. Thie, Toll R. Ware, E. D. Grinnell, Jr., C. W. Fiddes, Dan M. Welch, and M. E. Clinton for protestants. REPORT OF THE COMMISSION DIVISION 2, COMMISSIONERS WINCHELL, MURPHY, AND MINOR BY DIVISION 2: The modified procedure was followed. Due and timely execution of our functions under section 216 (g) of the Interstate Commerce Act imperatively requires the omission of a recommended report and order in this proceeding. Requested findings not specifically discussed in this report nor reflected in our findings or conclusions have been considered and found not justified. By schedules filed to become effective on January 8, 1958, the respondent, Consolidated Forwarding Company, Inc., a motor common carrier member of the Middlewest Motor Freight Bureau, proposed to establish a reduced truckload commodity rate1 on flavoring sirups from Dallas and Fort Worth, Tex., to St. Louis, Mo. Upon protest of rail carriers maintaining rates on the same commodity between these points, the proposed schedules were suspended to and including August 7, 1958. The respondent proposes a rate of 75 cents, minimum 32,000 pounds, which would alternate with its present rate of 101 cents, minimum 20,000 pounds. The protestants' rail rates between Dallas-Fort Worth and St. Louis are 85 cents, minimum 36,000 pounds, and 77 cents, minimum 60,000 pounds. About 2 million pounds of sirup moves from these origins annually to St. Louis. During the last year, all of this traffic moved in the shipper's own vehicles and none over rail routes. The movement 1 Rates are stated per 100 pounds. by rail is in the reverse direction. In the event that the proposed rate becomes effective, the shipper at the Texas origins states that private carriage would be discontinued. As compared with a revenue return of $202 at the present rate, cost data submitted by the respondent indicates that of the minimum revenue of $240 on a 32,000-pound shipment for the haul from Dallas to St. Louis, $211.77 would cover the directly assignable costs for line-haul and terminal expenses, leaving a profit of $28.23. On the other hand, the protestants show that the respondent's system average operating cost, excluding terminal expense, for 1956 and the first two quarters of 1957, was 52.14, 54.92, and 55.94 cents per truck-mile, respectively. These averages are compared with the minimum truckmile revenues under the proposed rate of 36.4 cents from Dallas, 659 miles, and 35.1 cents from Fort Worth, 686 miles. The respondent's operating ratio in the foregoing periods was 97.1, 100.9, and 99.2 percent, respectively. The protestants express apprehension that the proposed rate would tend to disrupt their rate adjustment on this commodity in the reverse direction. No underlying data in support of its claimed costs were submitted by the respondent, and thus they are of little probative value. That is true also of the system average costs submitted by the protestants, which include the expense, other than terminal, of less-than-truckload as well as truckload traffic. The proposed rate would yield minimum revenue exceeding by $38 the minimum revenue under the present rate. As stated, this traffic is now moving in private carriage, but if it were to be moved by the respondent the prospects of a profit therefrom would appear to be better at the proposed rate and higher minimum than at the alternating present rate and lower minimum. The protestants' fear of a disruption of their rate adjustment in the reverse direction if the proposed rate takes effect, appears to have substance only if they should see fit to reduce their rate or rates from the Texas points to St. Louis. Since they have not been moving any of this traffic in that direction, and no such movement is in prospect, it is unlikely that their best interests would be served by a reduction in their rates to St. Louis. In these circumstances, no sound basis appears for a finding that the proposed rate constitutes a destructive competitive practice. We find that the suspended schedules are just and reasonable. An order discontinuing the proceeding will be entered. WINCHELL, Commissioner, dissenting: Respondent has the burden of establishing the compensatory character of the proposed rate. For this purpose it stated that its directly assignable costs for performing the service would be $211.77, which would leave a profit of $28.23. As indicated in the report, respondent submitted no underlying data in support of its claimed costs. Moreover, the respondent's statement of its costs is based on a one-way movement, without any indication as to how much, if any, of the return movement would be a revenue haul. Assuming, however, that the return movement would consist of a load approximating the average of 24,000 pounds for all truckload traffic handled by the respondent in 1956, the average round-trip load between these points in that event would be 28,000 pounds. Statement No. 3-57, prepared by our cost finding section and referred to by the protestants, shows the average costs for the central region in the year 1956 of 177 motor common carriers, including the respondent. Using the highway distance of 659 miles between Dallas and St. Louis and an average load of 28,000 pounds, the out-of-pocket line-haul cost shown in that statement would be 0.119 cent per hundredweight-mile, or 78.4 cents per 100 pounds. The out-of-pocket cost for pickup and delivery service for a shipment of the same weight appears in that statement as 7.9 cents, or a total out-of-pocket cost for the round trip of 86.3 cents, which is 11.3 cents in excess of the proposed rate. The fact that the minimum revenue under the proposed rate would be greater than that under the present rate is without significance, for the present rate has attracted none of this traffic. Nor is there any showing that the respondent's traffic is unbalanced in one direction or the other, and that the traffic which the proposed rate is to attract would alleviate such a condition. The Commission has pointed out repeatedly that a minimum requirement in meeting the burden of proof resting upon carriers proposing reduced rates is a positive showing that the proposed rates would be reasonably compensatory. This record falls far short, in my opinion, of meeting that requirement. I agree that common carriers should be encouraged by all lawful means to meet private-carrier competition. Approval of rates which are not shown to be compensatory may be of some immediate advantage to the carrier proposing reduced rates, but this ignores the effect such rates may have on other common carriers. 304 I. C. C. INVESTIGATION AND SUSPENSION DOCKET No. M-10884 ZINC INGOTS-MIDDLE ATLANTIC CONFERENCE Decided July 17, 1958 Proposed reduced motor-carrier rate on zinc ingots from New York, N. Y., to Lancaster, Pa., found just and reasonable. Proceeding discontinued Herbert F. Parmer for respondents. No appearance for protestants. REPORT OF THE COMMISSION DIVISION 3, COMMISSIONERS TUGGLE, MURPHY, AND MINOR BY DIVISION 3: The modified procedure was followed. Due and timely execution of our functions under section 216 (g) of the Interstate Commerce Act imperatively requires the omission of a recommended report and order in this proceeding. Requested findings not discussed in this report nor reflected in our findings or conclusions have been considered and found not justified. By schedules filed to become effective on February 26, 1958, the respondents, Lancaster Transportation Company and Shein's Express, proposed to establish a reduced commodity rate1 on zinc ingots, loose or on skids, from New York, N. Y., to Lancaster, Pa. Upon protest of the trunkline-territory railroads, the operation of the proposed schedules was suspended to and including September 25, 1958. The present and proposed rates are 42 cents, minimum 34,000 pounds, and 39 cents, minimum 36,000 pounds, respectively, and both provide that shipments will be loaded by the consignor and unloaded by the consignee. The respondents transported approximately 2,000,000 pounds of zinc ingots from New York to Lancaster in 1957, and a like amount is contemplated for movement in 1958. Owing to a change in contractual arrangements and prices, the shipper must now absorb part of the freight charges, and it states that it cannot afford to pay a rate higher than 39 cents. The shipper estimates that by the use of its own or leased equipment it could transport the traffic at a cost of 35 cents per 100 pounds, but it prefers to continue using the respondents' services. The consignee's plant at Lancaster is not served by a rail siding, and the rail lines have not transported any 1 Rates are stated per 100 pounds. of this traffic. To use rail service would require the consignee to accept delivery on the rail team tracks and truck the traffic to its plant, and this would increase its costs. The Lancaster Transportation Company contends that the proposed rate would permit it to continue to transport this traffic in lieu of private carriage, and that the movement is not even potential traffic for the rail lines, as the consignee's facilities demand delivery by truck. The protestant rail lines offered no evidence. The proposed rate would yield minimum revenue of $140.40 per truck and 95 cents a truck-mile for the distance of 148 miles. Such revenue appears to be reasonably compensatory, and there is no reason to believe that the respondents could continue to participate in the transportation of this traffic at a rate higher than 39 cents. We find that the proposed schedules are just and reasonable. An order will be entered discontinuing the proceeding. MURPHY, Commissioner, dissenting: The proposed reduced rate is to apply over the joint lines of Lancaster Transportation Company and Shein's Express. This is necessary since neither Lancaster nor Shein's Express have operating authority to move the traffic from origin to destination without interchange. Lancaster was the only carrier to make an appearance, and it failed in my opinion to offer any rate comparisons or cost data upon which the compensativeness of the proposed rate could be determined. In view of this situation and the fact that Shein's Express failed to make an appearance or offer any evidence, I believe this joint. proposal has not been shown to be just and reasonable. 304 I. C. C. |