Tenn., the Illinois Waterway south of and including Chicago, and the Gulf Intracoastal Waterway between and including New Orleans and Galveston and Houston; and (i) from New Orleans and Houston to Memphis, Chicago and Joliet, Ill., Evansville, Louisville, and Cincinnati; and (2) of commodities generally, (a) between Cincinnati, Louisville, and Evansville, on the one hand, and, on the other, points along the Tennessee, French Broad, Hiwassee, Clinch, and Emery Rivers; and (b) between ports and points along the Ohio River from Cincinnati to Louisville, inclusive.

No. W-435 (Sub.-No. 14)1

SAUSE BROS. OCEAN TOWING CO., INC., EXTENSION— PACIFIC COAST (2)

Submitted July 2, 1954. Decided September 7, 1954

Operation by applicant as a contract carrier by non-self-propelled vessels with the use of separate towing vessels in the transportation of lumber and lumber products from ports and points in Washington and Oregon along the Pacific coast (except those on Tillamook Bay, Oreg., and its tributaries) to ports and points in California along the Pacific coast south of San Francisco Bay found consistent with the public interest and the national transportation policy. Fourth amended permit issued, and application in all other respects denied.

Henry Sause, Jr., for applicant.

Norman E. Sutherland, Howard Dent, Jr., Andrew A. Eggum, John F. McCarthy, and Arno H. Denecke for protestants.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MAHAFFIE, JOHNSON, AND MITCHELL BY DIVISION 4:

No exceptions were filed to the report proposed by the examiners. By application filed May 18, 1953, as amended, Sause Bros. Ocean Towing Co., Inc., of Garibaldi, Oreg., seeks a revised permit under the provisions of section 309 (g) of the Interstate Commerce Act authorizing extension of its operations as a contract carrier by water to include the performance of general towage and the barging of lumber, lumber products, piling, boom sticks, steel products (including pipe and plate), and heavy articles or packages between all ports and points along the Pacific coast and tributary waterways, not including local service between ports and points on Puget Sound, the Columbia River, or San Francisco Bay, except to the extent that such

1 This report also embraces, for the purpose of giving effect to the determination herein, Nos. W-175, Ocean Transportation Company Applications; W-435, Coast Tug and Barge Company Applications; W-435 (Sub-No. 3), Sause Bros. Ocean Towing Co., Inc., Extension-Pacific Coast; and W-435 (Sub-No. 8), Sause Bros. Ocean Towing Co., Inc., Extension-Lumber.

operations are authorized by its present permit. Foss Launch & Tug Co., Consolidated Navigation Co., Upper Columbia River Towing Co., W. R. Chamberlin & Co., and Wilbur J. Smith-Longview Tugboat Co., hereinafter called Foss, Consolidated, Upper Columbia, Chamberlin, and Smith, respectively, oppose the application. With the exception of Chamberlin, who is a contract carrier, all are authorized to operate as common carriers by water.

Applicant has been engaged in transportation along portions of the Pacific coast continuously since 1945. Pursuant to third amended permit issued June 20, 1952, in No. W-435 (Sub-No. 8), it is authorlized to operate as a contract carrier (1) by non-self-propelled vessels with the use of separate towing vessels in the transportation of (a) logs between ports and points along the Pacific coast and tributary waterways from Port Angeles, Wash., to Humboldt Bay, Calif., inclusive, except ports and points along the Columbia River above Astoria, Oreg., (b) lumber and lumber products from ports and points on Tillamook Bay, Oreg., and its tributaries to all ports and points along the Pacific coast and its tributaries, except points on San Francisco Bay, Calif., Coos Bay, Oreg., the Columbia River, and Puget Sound, and (2) by towing vessels in the towage of logs in rafts along the Pacific coast and tributary waterways from Grays Harbor, Wash., to Tillamook, Oreg., inclusive, except ports and points along the Columbia River above Astoria.

The equipment operated by applicant consists of 2 oceangoing tugs of 1,000 horsepower each, an oceangoing tug of 400 horsepower, 2 small inland tugs, a converted LST used as a barge, having about 130,000 cubic feet of cargo space and which carries about 2.3 million board-feet of lumber, and 2 barges with 40,000 cubic feet of cargo space. One of the latter barges and the 400-horsepower tug are leased from their owners, Henry Sause, Jr., and Curtis Sause, copartners, doing business as Sause Towing Co., whose authority was granted in Sause Contract Carrier Application, 265 I. C. C. 417. Other equipment owned and operated by applicant consists of 5 large cranes and 2 lift trucks which are used in loading, stowing, and discharging lumber and logs. Two of its barges carry cranes aboard and can provide service at points or ports which have no shore-based crane facilities. In order to transport all the additional traffic expected to be available under the proposed operation, applicant would need at least another barge. It plans to order a new barge, of a capacity equal to the LST it now operates, to be constructed at a cost of $186,000. As of December 31, 1952, applicant had total assets of $433,206 (including current assets of $133,999), current liabilities of $184,176, funded debt of $206,489, and capital of $42,541, consisting of $20,000 capital stock and $22,541 earned surplus. For the year 1952, its total

revenue was $682,890, the total operating expenses were $675,341, and the net income after provision for income taxes was $1,825. The aforesaid figures reflect an operating ratio for 1952 of 98.9 percent. At the end of such year, applicant's capitalizable assets amounted to $372,031, consisting of $98,762 cash, and $273,269 in tangible property. Its capitalization was $226,489, and its capitalizable assets remaining uncapitalized were $145,542. Applicant's gross annual revenue has increased substantially in the following amounts for the respective years shown: 1946, $5,276; 1947, $48,702; 1948, $173,504; 1949, $247,296; 1950, $429,337; 1951, $608,014; 1952, $682,890; and first 9 months of 1953, $549,696. The revenues shown include some charges for exempt operations such as towing disabled ships or empty barges, and transporting traffic from the Hawaiian Islands.

In the past few years, applicant has transported substantial quantities of logs, lumber, and piling. The total volume handled in the respective years is as follows: in 1950, 40,216,083 board-feet, of which 29,708,584 were moved intrastate; in 1951, 49,867,922 board-feet, of which 30,493,631 were moved intrastate; in 1952, 48,598,621 boardfeet, of which 37,512,173 were moved intrastate; and in the first 9 months of 1953, 43,652,284 board-feet, of which 30,880,124 moved in intrastate commerce. The aforesaid transportation was performed for 28 different shippers. Applicant estimates that, on an annual basis, it is operating at only 60 or 65 percent of cargo capacity due to lack of cargo offered for shipment within the territorial scope of its permit. If the requested authority is granted, applicant would be able to load or discharge cargo at any port by utilizing its craneequipped barges. The proposed operation would also enable applicant to solicit traffic in interstate commerce on northbound moves now being made empty from southern California ports.

A corporation engaged in the wholesale lumber business, among other activities, supports the application. It uses water transportation almost exclusively and, in the 6-month period prior to the hearing, it used applicant's service to its satisfaction from Crescent City, Calif., to Los Angeles, Calif., to transport about 12 million board-feet of lumber. This shipper, who has no need for service northbound, has used the services of protestant Chamberlin and one other water carrier from Oregon ports, including Reedsport, Newport, and Coos Bay, to southern California. At the time of the hearing in November 1953, approximately 3 million board-feet of lumber were booked for shipment from Oregon and Washington ports to California. Transportation by common carrier is not objectionable to this shipper provided it is assured that the cargo will be lifted. Also, this shipper regards the minimum weights, in connection with common-carrier rates, as not being entirely satisfactory with the way it

285 I. C. C.

wants to operate its business. The assurance that its cargo will be lifted is said to be essential to this shipper in making contracts with a mill to purchase its lumber. Therefore, the services of a contract carrier are preferred to those of a common carrier. An outlay by the shipper of from $175,000 to $200,000 is necessary to accumulate a full cargo for movement in applicant's converted LST. Service from Reedsport and Newport has never been refused to this shipper by authorized water carriers but applicant is the only carrier who has specifically offered service from Washington and Oregon coastal points including loading and discharging of the cargo. This shipper's representative was formerly employed by another wholesale lumber company. He stated that protestant Chamberlin served such company satisfactorily and always lifted the lumber at the time it was available for shipment.

A company engaged in the manufacture and sale of lumber, which operates a planing mill and cargo-accumulation yard at Crescent City, also supports the application. This company remanufactures rough lumber at McMinnville, Oreg., which is purchased from smaller mills and reshipped mostly by rail. During the prior 2 years, it shipped 40 million board-feet of lumber from Crescent City to Los Angeles by applicant and the service was found to be entirely dependable and satisfactory. Other carriers, particularly Foss, have not been used for the reason that they will only assure the shipper that they will transport one shipment from Crescent City to Los Angeles until they determine the economic feasibility of such an operation. Furthermore, they are reluctant to guarantee the transportation of shipments in the winter months. Consideration has been given by this shipper to the establishment of cargo-accumulation points at ports in Oregon or Washington, such as in the Puget Sound area, Grays Harbor and Vancouver, Wash., and Portland and Coos Bay, for shipments destined to California ports. Before doing so, however, it desires assurance that transportation by water will be available, and a contract for such transportation on an annual basis is desired. The aforesaid commitments are deemed necessary because a minimum of $200,000 is invested in accumulating a large shipment of lumber. One feature of the applicant's service, that is beneficial to this shipper at Crescent City, is the loading and unloading of cargo by applicant. Foss was willing to move some lumber for this shipper but insisted that the shipper arrange for loading. Additional shipments would be moved if its experience as to costs proved favorable.

A buyer of lumber, representing his own and two other companies, testified in support of the proposed operation. This witness has purchased lumber in California, Oregon, and Washington, which was shipped to California markets during the past 4 years. In the past

2 years, he used applicant's service to transport from 45 to 50 million feet of lumber or lumber products from Crescent City to southern California. Applicant's service from Crescent City has proved satisfactory, both as to prompt performance and careful handling. He claims that he cannot depend on common carriers and mentioned one occasion when a water carrier, other than one of the protestants, failed to lift a cargo despite an oral commitment to do so. His experience has been that the common carriers gave preference to large shippers and that at times he is unable to obtain cargo space. The witness was generally unfamiliar with the service available to him from authorized common carriers operating along the Pacific coast but stated that he would ship only by contract carrier unless there is no alternative. The witness was unaware that Chamberlin, a contract carrier, is authorized to transport lumber and lumber products from Washington and Oregon to southern California ports.

A lumber company engaged in the retail sale of lumber at Van Nuys and San Pedro, Calif., supports the application. It had over 12 million feet on order at the time of the hearing. This company has not been a shipper but buys its lumber through wholesalers who arrange for transportation to San Pedro. It is interested in purchasing the lumber itself at points in Oregon and Washington and arranging transportation by water to its yards in southern California. It has received lumber transported by applicant, by 2 of the protestants, and by another water carrier not a party herein, and is presently receiving at least 5 million feet monthly from ports along the Pacific coast. This company has no objection to the use of common carriers but believes there is a need for additional service on the Pacific coast. At the time of the hearing, it had orders dated back a month or longer but had received only a small percentage of the lumber on order, thus necessitating additional expenses in bookkeeping and handling. For instance, 300,000 board-feet of lumber were available on order at Reedsport but only 64,000 feet had been delivered by 1 of the protestants in 2 movements. The witness did not personally know if the shipper had contacted any other carrier in an attempt to have the lumber lifted, but was advised that the carrier engaged to perform the transportation had insufficient space to load the lumber.

An operator of a sawmill at Reedsport supports the application principally because he desires the availability of a contract carrier using tugs and barges. Approximately 1,500,000 board-feet of lumber are milled each month at this sawmill for shipment to southern California. A contract will be made with applicant if the proposed authority is granted. Common carriers have given satisfactory service except during periods of labor trouble over which they had no control. This witness did not know the exact difference between a con