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C. 87, the same respondent showed an average operating cost per mile of 14.07 cents for the first 6 months of 1941 based on 617,854 miles operated. Some of the proposed rates are joint rates (for example, those on chocolate coating from St. Louis to the Texas points) and would apply over respondent's lines and those of its connecting carriers. The operating costs of the latter carriers are not indicated.

An exhibit introduced by the protestants, based in part on the Commission's statistical reports of class I motor carriers for 1940, shows the following average truck-mile costs of such carriers for the regions indicated: Northwestern, 26.7 cents; central, 20 cents; midwestern, 20 cents; and southwestern, 19.7 cents. These are compared with the respondent's submitted average cost per truck-mile. For the reasons pointed out in other proceedings, but little weight can be attached to the showing of the average costs per truck-mile of groups of carriers engaged in varied operations.

The respondent herein contends that, since the revenues under the proposed rates exceed the figure of 13.9 cents given as its average truck-mile cost for the first 9 months of 1941, the proposed rates have been shown to be reasonably compensatory. The respondent's witness conceded that its vehicles have moved empty to many points, and, as noted, its total mileage for the period on which the average cost is based exceeded its loaded mileage by 17.27 percent. Manifestly, the respondent's cost for loaded movements only exceeds 13.9 cents a truck-mile. Nearly all of the proposed rates would yield revenues per truck-mile lower than or slightly above the respondent's cost per loaded truck-mile. On brief, the respondent stated that, if the proposed rates were approved by us, it would increase them by 6 percent to reflect the general increases of March 1942. The proposed rates, when increased by 6 percent, appear, on the whole, to be reasonably compensatory. We conclude that the proposed rates have not been shown to be just and reasonable, but that such rates increased by 6 percent would be reasonably compensatory.

We find that the proposed rates have not been shown to be just and reasonable. Our findings are without prejudice to the establishment by the respondents of rates 6 percent higher than those proposed. An order will be entered requiring the cancelation of the schedules, and discontinuing this proceeding.

42 M. C. C.

APPENDIX

The respondent's present and proposed rates and those maintained by the bureau and rail carriers from and to the points herein considered

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1 Applies on anhydrous ammonia and methyl chloride only.

Applies on compressed gases rated fourth class in the governing classification.

42 M. C. C.

No. MC-C-311

MIDDLEWEST MOTOR FREIGHT BUREAU v.
H. F. SCHAFFER

Submitted April 5, 1943. Decided June 25, 1943

Motor common carrier rates of the defendant to Milbank and Revillo, S. Dak., on all commodities from Minneapolis and St. Paul, Minn., and on binder twine from Duluth and Stillwater, Minn., found unreasonable in certain respects. Minimum reasonable rates prescribed for the future.

F. P. Aughnay for complainant.

Robert D. Jones for defendant.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MILLER, PATTERSON, AND JOHNSON BY DIVISION 3:

No exceptions were filed to the order recommended by joint board No. 143, but we stayed the taking effect thereof. Our conclusions differ somewhat from those recommended.

By complaint filed October 11, 1941, as amended,1 complainant, an incorporated association of motor carriers, hereinafter called the bureau, alleges that the rates and charges of the defendant, a motor common carrier of Milbank, S. Dak., for the transportation of all commodities from Minneapolis and St. Paul, Minn., hereinafter called the Twin Cities, to Milbank and Revillo, S. Dak., and of binder twine from Duluth and Stillwater, Minn., to Milbank and Revillo are unjust, unreasonable, and unduly and unreasonably preferential and prejudicial in violation of section 216 (b) and (d) of the Interstate Commerce Act, and that the maintenance of such rates results in unfair and destructive competitive practices in contravention of the national transportation policy declared in the act. Lawful minimum rates are sought for the future. In general, complainant seeks the prescription of its members' rates as reasonable minima. Rates will be stated in amounts per 100 pounds.

The defendant's rates, here in issue, are as follows: On all commodities from the Twin Cities to Milbank and Revillo, 35 cents on shipments weighing 500 pounds or less, and 30 cents "on shipments weighing 500 pounds-except as noted"; and on binder twine, mini

1 By order entered March 24, 1942, the Middlewest Motor Freight Bureau was sub. stituted for the Northwest Tariff Bureau, Inc., as a party complainant, and by order entered June 30, 1942, Earl W. Rensberger was dismissed as a party defendant.

mum 6,000 pounds, to Milbank and Revillo, 39 cents from Duluth and 33 cents from Stillwater. The weight provision in connection with the defendant's 30-cent all-commodity rate is not clear, but it appears that it is intended that the 30-cent rate shall apply on shipments weighing over 500 pounds. The bureau compares the defendant's rates with certain rates maintained by its members, shown in the following table:

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1 These rates, and the minimum of 10,000 pounds in effect at the time of the hearing, have since been canceled.

In addition to the rates shown, subsequent to the hearing the bureau members established the following rates on binder twine: From Duluth, to Milbank and Revillo, 64 cents and 65 cents, respectively, minimum 12,000 pounds, and 60 cents and 63 cents, respectively, minimum 18,000 pounds; and from Stillwater to the same points, 53 and 56 cents, respectively, minimum 12,000 pounds, and 51 and 53 cents, respectively, minimum 18,000 pounds.

A motor common carrier member of the bureau, which transports property between points in the affected territory, has experienced declining income since January 1, 1941, although its gross revenues for the first 5 months of 1942 were more than for the same period in 1941. This is attributed to increases in its costs for labor, equipment, fuel, and taxes. Its net operating income for the first 5 months of 1941 was $3,278.13; for all of 1941, $3,069.59; and, for the first 5 months of 1942, $1,731.70. From January to May, 1941, its operating ratio was 92 percent, and, for the same period in 1942, 96 percent. This carrier's cost for handling 16,414,279 pounds of traffic through its St. Paul terminal in 1941 was $20,127.55, or 12.3 cents per 100 pounds. Approximately two-thirds of this tonnage was in truckloads and on-third in less than truckloads. It estimated that its St. Paul terminal cost for handling less than truckloads only was about 16 cents per 100 pounds. The cost for delivery at Milbank is approximately 5 cents per 100 pounds. The same carrier's average operating costs were 18.6 cents a truck-mile in 1940 and 20.1 cents a truck-mile in 1941, and its operating costs and revenues per

ton-mile, respectively, were 4.36 and 4.44 cents in 1940 and 4.40 and 4.53 cents in 1941.

Another motor-carrier member of the bureau, which transports general commodities, among other points, between the Twin Cities and Milbank, attributes the loss of traffic to and from Milbank to lower competitive motor-carrier rates. In 1940, it earned a profit of 15 percent, but, in 1941, its profit was less than 1 percent. Its terminal costs at the Twin Cities range from 15 to 16 cents per 100 pounds, and its cost for delivery at Milbank is approximately 5 cents per 100 pounds. An exhibit of record, based in part on the Commission's statistical reports, shows that the class I motor carriers in the northwestern region, in 1940, had average revenues of 27.83 cents a truck-mile and average expenses of 26.65 cents a truck-mile. The defendant's operation is conducted with one tractor and semitrailer, which has a capacity of approximately 1,000 cubic feet. He transports livestock and empty containers from Milbank and points within 25 miles thereof to the Twin Cities and South St. Paul, Minn., and general commodities from the Twin Cities and binder twine from Duluth and Stillwater to Milbank and Revillo. He has been granted an appropriate certificate authorizing these and other operations. His average load in each direction has been approximately 16,000 pounds, although his vehicle sometimes moves empty eastbound to pick up west-bound shipments. On the average, the revenues derived from east-bound traffic are the same as from westbound traffic. Unlike the operations of the two members of the bureau, hereinbefore referred to, the defendant maintains no terminals at the Twin Cities or elsewhere, and shipments are transported directly between the shipper's and consignee's places of business. He employs two drivers and a part-time bookkeeper, and maintains an office at his home near Milbank. The defendant's initial investment in the trucking business was $2,000, the cost of the tractor and semitrailer. Although his principal business is trucking, he devotes only a small portion of his time thereto.

In 1941, defendant's total receipts and expenses were $11,406.62 and $8,155.82, respectively, resulting in a net profit of $3,250.80, or an average of $270.90 per month. For the first 6 months of 1942, the defendant's average monthly net profit was $334.12. The expenses shown do not include any amounts for supervision or salary for the defendant. The total mileage operated by the defendant in any one period is not shown, so an approximation of his average operating cost is not possible.

The defendant urges that an increase in his rates would divert a substantial part of his traffic to private carriage. In this connection, he points to a Twin City shipper which delivers with its own vehicle

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