1949, to class 22, minimum 36,000 pounds, in part of that territory, and a year later to class 24, minimum 36,000 pounds, in the remainder of the territory. These exceptions ratings are the going rates except where commodity rates have been published to cover a limited number of movements. The prevailing carload rates, all subject to a minimum of 36,000 pounds, in the various territories for representative distances, are shown in the table below. These rates do not take into account instances in which commodity rates have been established to cover specific movements. The rates in southwestern territory are somewhat higher than those shown in zone 2 of western trunkline territory:

The minimum revenues under the present and the proposed rail rates for application within central territory and within trunkline territory, called the intraterritorial scale, are illustrated in the following table. Earnings under the higher interterritorial scale would be greater on movements generally under 500 miles:

A comparison is made of the average car-mile earnings under the proposed intraterritorial rates, minimum 36,000 pounds, and on the average loading of canned goods in official territory, 50,000 pounds, with rail data, selected from the Commission's waybill study, showing the average revenue from principal commodity groups in 1951 moving within official territory. These data, set forth in the following table, show that, with one exception, the average revenue received from the principal commodity groups was less than that derived from hauls of like distances on canned goods:

Based upon equal factors of carload weight and length of haul, the table below reflects, among other things, a comparison of the revenue from the proposed intraterritorial 36,000-pound rates with the revenue from canned goods in other territories:

The rail respondents submitted cost studies designed to show that the present and the proposed rail rates are reasonably compensatory. These studies indicate that on both minima of 36,000 and 60,000 pounds, the rail rates exceed, by substantial amounts, the out-ofpocket costs of performing the service. However, the motor carriers differ with the rail respondents as to the amount of the excess. It appears that the rail earnings under the proposed rates exceed in most instances the fully distributed costs based on average loadings. The cost studies, developed by the use of our Cost Finding Section's

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formula, Rail Form A, are based on operating data for the year 1950, adjusted to reflect wage and price levels as of January 1, 1952. Based on costs thus determined for the eastern district,' the earnings per 100 pounds under the proposed intraterritorial rate scale are, for example, 24.2, 57.5, and 84 cents for distances of 100, 500, and 900 miles, as compared with fully distributed costs for the same distances of 26, 60, and 94 cents based on a minimum of 36,000 pounds, and 22, 50, and 79 cents based on the average loading of 50,000 pounds.

All of the rail cost studies submitted are predicated on boxcar utilization, without considering movements in refrigerator cars, a 38-percent empty-return movement, 4-percent return on the investment, and a loss and damage expense of 1.647 cents per 100 pounds, the average for 1951 on 3 major railroads operating in official territory, with the line-haul costs increased by 14 percent to reflect the customary circuity.

The motor rate bureaus criticize the rail costs in three particulars. They urge (1) that the studies should reflect costs for official territory (eastern district, plus the Pocahontas region); (2) that car utilization should be reflected as 60 percent for boxcars and 40 percent for refrigerator cars, which is the utilization for this commodity group as applied to the entire movement throughout the United States; and (3) that the loss and damage expense should be 2.97 cents per 100 pounds, which represents the average loss and damage claim payments on all such traffic for the year 1950, including transcontinental movements. The effect of these adjustments may be shown by comparing the earnings on a 60,000-pound load under both formulas. The following table shows that the fully distributed costs under the revised study exceed the revenue under the proposed 60,000-pound rates only at distances between 100 and 400 miles. Under the rail formula, there is only 1 such instance, at 200 miles:

The record shows that the costs for official territory are, for each mileage block, 1 cent or 2 cents per 100 pounds lower than for the eastern district.

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The rail study used in this table, as indicated, is for the eastern district and includes loss and damage expense of 1.647 cents, while the bureau study is the rail study revised as above explained and reflects costs for official territory.

Based on an exact rate-for-rate parity, there are several factors which tend to make motor carriers the preferred transportation medium on this traffic. Additional costs are incurred by shippers and receivers of freight when rail transportation is utilized, which include. drayage, fitting the car for loading, blocking and bracing the lading, loading at origin and unloading at destination, and maintenance of higher inventories. There is no accurate method by which the precise extra cost of using the average rail service may be determined, in that all of such costs are not incurred on every shipment. For example, some shipments incur only the cost of fitting the car, while others entail extra expense for drayage at destination.

A fairly accurate estimate of a portion of the extra expense of rail service may be arrived at by considering the published rail charge, approximating $11.80 per car, for blocking and bracing, and an estimated 7.5 cents per 100 pounds for loading or unloading. These expenses could be curtailed, of course, when performed by the shipper or receiver. If the combined services are performed by the carrier, the railroad charge would approximate 18.3 cents per 100 pounds on a 36,000-pound car. The record shows that these combined services are, for the most part, performed by shippers or receivers. Drayage charges also vary depending upon the size of the city and the distance between the plant and the rail siding. These charges, where incurred, aggregate generally from 10 to 20 cents per 100 pounds. A majority of the shippers or receivers who participated in this proceeding do not incur drayage expenses, as their plants are located on rail sidings.

Motor carriers maintain rates subject to maxima ranging from 20,000 to 30,000 pounds. Use of motor carriers is shown to be more advantageous than rail service, even on 36,000-pound shipments, because smaller and more frequent shipments reduce warehouse costs and inventories, thus requiring less investment. The cost of many pool-car operations is eliminated when smaller truck shipments are used. Partially offsetting these factors is the rail advantage of according the shippers the privilege of storage in transit.

There are inherent advantages of motor transportation which have no counterpart in rail service. It is individualized, expedited, and more flexible than rail transportation. The individualized service of the contract carriers, with service factors often approaching the characteristics of private carriage, accounts in large measure for the importance of contract-carrier service in the transportation needs of the

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canning industy. The success of the contract carrier in this field may be attributed to its ability to fulfill requirements not ordinarily supplied by the common-carrier medium.

In view of the foregoing, the rail respondents take the position that if minimum motor-carrier rates are prescribed in this proceeding, such rates, subject to a minimum of 30,000 pounds or higher, should be at least 3 cents higher than the rail rates based on 36,000 pounds, and that lower truckload minima should reflect a greater differential in favor of the rails.

Turning now to the rail proposal that the canned-goods rate structure in official territory should reflect lower scales of distance rates, minimum 60,000 pounds, in addition to rates based on 36,000 pounds. As stated, 60,000-pound rates were originally proposed to become effective on September 26, 1952, but were suspended. In Canned or Preserved Foodstuffs in Official Territory, supra, division 2 found the proposal not shown to be just and reasonable, and caused the schedules to be canceled. Two petitions for reconsideration of that action have been denied. The decision in that proceeding, however, was without prejudice to any conclusions which may be reached upon the instant record. It was there observed that approval of a proposal which would have the effect of initiating widespread reductions in motor-carrier rates without materially benefiting the proponents would not satisfy the requirements of the national transportation policy. We have in this consolidated proceeding a more complete record as to the justness and reasonableness of the 60,000-pound rates, and also as to the motor- carrier rates, a situation not presented in the prior proceeding.

As stated, the proposed 60,000-pound rates are referred to by the rail respondents as "incentive rates," and were designed specifically to counteract motor-carrier competition and to offset the growing tendency of canned-goods receivers to order in smaller quantities. The portion of the lading in excess of the minimum of 36,000 pounds results in additional revenue without substantial added service, except the additional tractive effort. See Alcoholic Liquors in the South, 279 I. C. C. 81, 86. Fuller utilization of the carrying capacity of the average freight car enables the railroads to realize the benefit of this inherent advantage.

A comparison of the per-car and car-mile revenue under the proposed intraterritorial distance scale of rates, minima 36,000 and 60,000 pounds, as well as at the 1951 average load of 50,000 pounds, is shown in the table below. It should be noted that the proposed rates, considered in connection with the difference in grouping, are, on the whole, slightly higher than the present rates:

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