Chicago between May 1942, when the rate was increased to 27 cents, and August 1942, inclusive, or on the average about 1 empty vehicle a day.

Undoubtedly there is some relation between the decrease in the volume of iron and steel carried by the respondent and the increase in the number of its vehicles moved empty from Detroit to Chicago, but it is questionable whether the decrease in the iron and steel traffic is entirely responsible for the empty movements. In February 1941, the respondent transported, from Detroit to Chicago, 773,501 pounds more of iron and steel articles than in December 1941, although it moved 14 empty vehicles from and to these points in February 1941, and only 1 empty vehicle in December 1941. In June 1942, the respondent transported a greater weight of iron and steel from Detroit to Chicago than in March, April, or May, 1942, although it moved 39 empty vehicles from and to these points in June 1942, 1 in March 1942, 8 in April 1942, and 14 in May 1942. In July 1942, it transported 796,532 pounds of iron and steel articles and moved 47 empty vehicles, and, in May 1942 it transported 438,101 pounds, and moved only 14 empty vehicles. The volume of iron and steel articles shipped from Detroit to Chicago by the shipper supporting the proposed rate has decreased to some extent since the beginning of the war, because a number of its former customers do not use the kind of iron and steel articles it has been manufacturing since that time.

The rail carload rate on iron and steel articles from Detroit to Chicago at the time of the hearing was 30 cents, minimum 40,000 pounds. Despite the difference of 3 cents in favor of the motor rate, there had been a substantial rail movement of these articles from Detroit to Chicago. Effective May 15, 1943, the rail rate was reduced to 28 cents pursuant to the suspension by the Commission of the general increase of 6 percent in the rail rates authorized in March 1942.

The purpose of the respondent in proposing the reduced rate is to regain at least some of the traffic which it believes has been diverted to the rail carriers. It contends that it would be better to transport iron and steel from and to these points at noncompensatory rates than to move its vehicles empty to Chicago. Obviously its position would not be improved if the competing motor and rail carriers would make comparable reductions in their rates.

The steel company which supports the proposed rate ships from 4,000 to 5,000 tons of iron and steel articles a month from Detroit to Chicago. It used highway transportation for this traffic almost exclusively prior to the increase in the motor rate to the present basis of 27 cents, and since that time has divided its traffic from and to these

42 M. C. C.

points about equally between the motor and rail carriers. It prefers rail transportation when the rail and motor rates are equal because, (a) up to 50 tons of iron and steel articles can be handled in a single unit of rail equipment, whereas several units of motor-vehicle equipment are required for the transportation of an equivalent load; (b) iron and steel articles, which are usually hot when they come from the finishing mills, can be loaded directly into rail cars without being cooled, whereas they must be cooled before being loaded into motor vehicles, and (c) in shipping iron and steel articles by rail less time is consumed in loading and in the preparation of shipping documents than when motor carriage is used. The steel company contends that the truckload rate should be from 5 to 6 cents less than the rail carload rate from Detroit to Chicago to attract the movement of these articles which come from the mills hot, although a motor rate 3 cents lower than the rail rate would be an inducement to utilize motor service for the transporation of these articles when cooled.

Distance considered, the rail carload rate on these articles from Detroit to Chicago is on the same basis as the rail carload iron and steel rates between other points in central territory, which, generally, are on the level of the maximum reasonable rail rates prescribed in Iron and Steel Articles, 155 I. C. C. 517, as modified by subsequent applicable major rail rate adjustments. The motor truckload rates between points in central territory are generally the same as the rail carload rates on iron and steel articles, with approximately 20 exceptions, including the situation here considered. Since the present motor rate from and to these points is lower than the rail carload rate, the rail carriers oppose any further reduction therein as tending to jeopardize the rail rate structure.

The motor carriers and their associations, which oppose the rate in issue, contend that the proposed rate would not be compensatory. There is a substantial movement of iron and steel articles in truckloads from Chicago to Detroit, and one motor carrier transports from 3,000 to 4,000 tons of such traffic a month. These protestants take the position that the 27-cent rate from Chicago to Detroit, which all the motor common carriers now maintain, cannot be continued if the west-bound rate is reduced to 24 cents. A 24-cent rate from Detroit to Chicago would also tend to force reductions in truckload rates ranging from 25 cents to 28 cents on iron and steel articles to Chicago from points in Michigan intermediate to Detroit or less distant than Detroit from Chicago, such as Jackson and Ypsilanti, Mich.

The average revenue, and total and partial average truck-mile expenses for all traffic of the respondent in 1940, 1941, and, in part, during the first quarter of 1942, are shown in the following table:

Average expense, including only operation and maintenance expenses, except terminal expense..

Average expense, including operation and maintenance expenses other than terminal expense, plus other expenses.

Average expense, based on operation and maintenance expenses including terminal expense, but excluding other expenses..

Based on a 25,000-pound load, the truck-mile revenue of 22.4 cents under the proposed rate would be somewhat higher than the respondent's 1941 average expense of 19.2 cents a truck-mile, which excludes all terminal expense from the expenses for operation and maintenance. Although the respondent's terminal expense undoubtedly is less for the transportation of truckloads of iron and steel traffic than its average terminal expense for the transportation of all traffic, including both less than truckloads and truckloads, it is obvious that some terminal expense properly should be allocated by the respondent to the transportation of iron and steel in truckloads. See Keeshin Lines, Commodities, Chicago And Eastern States, 27 M. C. C. 145, 148. There is no evidence of record, however, which would permit a determination as to the amount of such expense which should be allocated to respondent's iron and steel traffic.

The respondent and the supporting shipper gave various estiinates as to the average weight of a truckload of iron and steel articles, such as 20,000 pounds (the usual minimum), 25,000 pounds, "between 25,000 and 30,000 pounds," and as high as 31,000 pounds. The truckload minimum weight is a factor in the truckload rate, and, in connection therewith, should be used in computing the truckload earnings, rather than a speculative load in excess thereof. Compare J. F. Solley & Co., Inc., v. Baltimore & O. R. Co., 178 I. C. C. 777, 781. If the proposed rate were in effect, the respondent would be obliged to accept 20,000 pounds as a truckload shipment. Under these circumstances, the compensatory character of the proposed rate properly should be measured by the minimum revenue.

The highway distance from Detroit to Chicago is approximately 267 miles. For this distance, the 24-cent rate at the 20,000-pound minimum would yield revenue of 17.97 cents a truck-mile. This is 5.43 cents a truck-mile less than the respondent's average total costs

for the first quarter of 1942, and 5.86 cents a truck-mile less than its average total costs for 1940, 1941, and the first quarter of 1942. While the average cost of a carrier, incurred in transporting all traffic, is not the most reliable measure of the compensatory character of its truckload rates, the respondent has given us no other. Undoubtedly the cost of transporting iron and steel articles in truckloads would be somewhat less than the respondent's average cost, but the record is not convincing that it would be 5.5 cents a truck-mile less. The burden of showing that the proposed rate will be just and reasonable is by the act placed upon the respondent. We conclude that the revenue under the proposed rate has not been shown to be reasonably compensatory, and, therefore, that the proposed rate would be less than a minimum reasonable rate, and unlawful.

In arriving at our conclusions herein we are not unmindful of the fact that it is here proposed to establish a rate more nearly related to rates from and to these points formerly in effect for many years. The record is persuasive, however, that such former rates were unduly low and compelled by intense competition.

We find that the proposed rate has not been shown to be just and reasonable. An order will be entered requiring the cancelation of the schedules which were under suspension and discontinuing the proceeding.

SPLAWN, Commissioner, dissenting:

I do not agree that the facts recited in this report sustain the finding that the respondent has not shown the suspended rate to be just and reasonable.

The testimony is that past shipments have averaged 25,000 pounds. Such a loading would yield 22.4 cents a truck-mile which appears compensatory for the truckload movements here involved in view of the fact that the respondent's average total cost is for handling traffic which is mostly in less than truckloads.

42 M. C. C.

BRASHEAR FREIGHT LINES, INC., COMMON CARRIER APPLICATION

Decided October 19, 1943

1. On reconsideration, findings in original report, 33 M. C. C. 279, modified. Other report, 41 M. C. C. 761.

2. In No. MC-26876, authority granted applicant to continue operations as a common carrier of general commodities, with exceptions, from and to Belleville, Ill., and St. Charles, Mo., eliminated and otherwise restricted so as to provide that no service shall be rendered in connection with any shipment originating at, or destined to, Belleville, Ill., and Perryville, St. Charles, St. Clair, and Sullivan, Mo.

3. In No. MC-26876 (Sub-No. 1), authority granted applicant to conduct certain operations as a common carrier by motor vehicle of general commodities, with exceptions, restricted so as to provide that no service shall be rendered in connection with any shipment originating at, or destined to, Belleville, Ill., and Perryville, St. Charles, St. Clair, and Sullivan, Mo. 4. In No. MC-59421, applicant's outstanding certificate authorizing operations as a common carrier by motor vehicle of general commodities, with exceptions, amended upon its request so as to provide that no service shall be rendered in connection with any shipment originating at, or destined to, Belleville, Ill., and Perryville, St. Charles, St. Clair, and Sullivan, Mo. 5. Holding by applicants in Nos. MC-26876, M-26876 (Sub-No. 1), and MC-59421 of certificates, and by applicant in No. MC-77326 of a permit, under the authority granted in the above-entitled proceedings as modified herein, found consistent with the public interest and the national transportation policy.

6. Issuance of appropriate certificates and a permit approved, upon compliance by applicants with certain conditions.

Appearances shown in prior report.

SECOND REPORT OF THE COMMISSION ON RECONSIDERATION

DIVISION 5, COMMISSIONERS MAHAFFIE, ROGERS, AND PATTERSON

BY DIVISION 5:

In the original report herein, 33 M. C. C. 279, decided April 16, 1942, we found, in No. MC-26876, that the predecessor of Brashear Freight Lines, Inc., of St. Louis, Mo., was on June 1, 1935, and that such predecessor and Brashear Freight Lines, Inc., herein called the Freight Lines, continuously since had been, in bona fide operation as a common

1 This report also embraces No. MC-26876 (Sub-No. 1), Brashear Freight Lines Extension of Operations-Tulsa, No. MC-77326, Brashear Truck Company Contract Carrier Application, and No. MC-59421, Kern, Inc., Common Carrier Application.