75. The transportation benefits claimed in the report under review were based upon a field canvass initiated in 1935, together with a spot check, by the railroads of the area, of movements of wateradapted commodities over their lines. These studies were extended in 1937 and the prospective tonnage movements analyzed on the basis of comparative rail and water rates then in effect. The prospective water-carrier charges in the report under review were based in large part on percentage differentials prescribed by the Interstate Commerce Commission. Since that time important changes have taken place in the rate structure and in the competitive transportation service available, rendering both the tonnage and savings estimates out of date.

76. Sources of data. -The present resurvey undertakes to determine the prospective tonnage and probable future savings from two sources: (a) A waybill study made by the Board of Investigation and Research of railroad traffic for the year 1939.

(b) A 1945 questionnaire study, supplemented by a field canvass of prospective shippers and receivers of freight to discover changes in underlying economic conditions which would affect prospects for future traffic.

77. Waybill study. The waybill study, which has been made available to the Board of Engineers for Rivers and Harbors, is unique in its authentic coverage of the actual movement of commerce throughout the last "normal" year, 1939. The Board of Investigation and Research directed each railroad in the country to furnish waybills covering traffic terminated for 1 day of each month in the calendar year 1939. By assigning different dates to different railroads, a coverage of some traffic was obtained for each workday in the year. The total tonnage included in the waybill survey amounted to 3.6 percent of the total tonnage for all railroads for the year. Test runs on various selected commodities showed this relationship to be generally true for individual commodity groups as well as for the total.

78. From the waybills collected by the Board of Investigation and Research, there were first segregated shipments from or receipts into Alabama, Mississippi, and Louisiana. Then data as to commodity, origin, destination, weight, and rate were tabulated by International Business Machines. The successive stages in analyzing these data are summarized in table 23.

TABLE 23.-Waybill tonnage considered, eliminated, and accepted as prospective for proposed Tombigbee-Tennessee waterway

Item

Tons

Total rail traffic considered.

47, 015, 752

Elimination by inspection of commodity groups considered not adapted to barge transportation. (Example: Group 110, oranges and grapefruit).

11, 622, 122

Leaving..

35, 393, 630

Elimination by inspection of State-to-State movements which could not be served by the proposed waterway. (Example: Wyoming to Louisiana)..

11, 180, 586

Transferred to detailed analysis sheets.

Leaving..

Elimination by ir spection of point-to-point movements which obviously could not be served by the proposed waterway. (Example: Montgomery, Ala., to Birmingham, Ala.).

Elimination by analysis showing that existing rail or motor rates, in quantities normally offered for shipment, are lower than constructed barge rates or barge-rail rates via the proposed waterway.

24, 213, 044

17,938. 120

6, 274, 924

Accepted for final analysis as prospective traffic..

3,460, 083 2,814, 841

79. Assumptions.-The following assumptions were made in developing the estimate of prospective commerce:

(1) That adequate terminals would be available at all important shipping and interchange points;

(2) That joint traffic would move on port-to-port rates with transfer charges and local rail rates added; and

(3) That adequate common-carrier and contract-carrier barge service would be established.

80. Water-carrier rates.-Estimates of navigation benefits are based on a comparison of the transportation charges now paid, or transporta⚫tion costs now available to shippers with the probable transportation charges on prospective waterway traffic. Most of the prospective tonnage is bulk freight, which does not usually travel by commoncarrier water line but rather by contract or industry-operated barge service, for which there are no published rates. Prospective watercarrier unit charges used in this analysis, therefore, have been built up from studies of barge line and river terminal operations made by the Board of Engineers for Rivers and Harbors and the Board of Investigation and Research, and from exhibits filed by the water carriers in various Interstate Commerce Commission barge and rail rate cases. These data have been supplemented, expanded and verified by analyses of actual detailed annual performance records of three representative common, contract, and industry-operated bargeline services, and the annual reports of 10 of the largest inland-waterway carriers for the years 1936 to 1943. The rates thus constructed cover the expense of line-haul and harbor-terminal service as well as the necessary freight car switching and physical handling of the freight between barge, transit shed, and car, required to duplicate the service performed by present carriers under existing rates. This rate basis differs from that employed in the report under review in that it does not rest on arbitrary differentials assumed to apply on rail rates in effect at that time; specifically, it does not assume that water-carrier rates will be 10 percent or 20 percent less than rail rates. Variations in the rates applied herein recognize the relative density and loading characteristics of the various commodities and the comparative cost of operating tows upstream and downstream in open rivers, and through slackwater of the canalized sections of the inland-waterway system. Elements are combined which will provide prospective water carriers a return on asset values and amounts of annual expenditures approximating the average rate earned by existing transportation agencies in normal years. A comparison of the expenses of the inlandwaterway carriers reporting to the Interstate Commerce Commission. for the past 2 years with the ton-mileage reported to this Department by these carriers indicates that favorable loading factors have more than offset the rise in cost of manpower and materials. Nevertheless because of the abnormal nature of the period involved no reduction in the previously derived water rates has been made. The tests applied have led to the construction of a hypothetical system of barge-lot rates which carriers would find remunerative under the operating conditions which are expected to be provided by the proposed improvement. Rail or motor-carrier rates, against which the probable waterway charges on waybill tonnage are measured in table 24, are current 1945 published charges.

TABLE 24.-Preliminary estimate of prospective tonnage and savings from traffic available for the Tombigbee-Tennessee waterway under traffic conditions of 1939

81. Estimated savings based on study of 1939 traffic.-Table 24 shows the tonnages and savings that could have been made for the volume of traffic available in 1939, at 1945 rates, as indicated by the analysis described in the preceding paragraphs. To the total computed savings resulting from this analysis, in amount $6,236,291, may be added the savings computed for 1939 waterway traffic from use of the Tombigbee-Tennessee as an alternate route for upstream Mississippi River traffic, in amount $639,000. The total indicated annual transportation savings attainable by the proposed waterway, at the 1939 volume of traffic, is thus computed at $6,875,291.

82. Composition of traffic under 1939 conditions. The principal commodities available to the Tombigbee-Tennessee waterway, under 1939 conditions as analyzed from the waybill study, are shown in table 25. These are the commodities that actually moved by rail in 1939, which could move by waterway at savings under the 1945 rates charged by rail and motor carriers.

TABLE 25.-Preliminary estimate of prospective traffic on the Tombigbee-Tennessee waterway-tonnages and savings by commodities, as indicated from analysis of 1939 railroad waybills

TABLE 25.-Preliminary estimate of prospective traffic on the Tombigbee-Tennessee waterway-tonnages and savings by commodities, as indicated from analysis of 1939 railroad waybills-Continued

83. Necessity for revisions in study based on 1939 traffic.-Because 1939 was more nearly "normal" than any more recent year, the analysis summarized in tables 24 and 25 has been taken as the foundation for an estimate of prospective traffic and savings on the TombigbeeTennessee waterway. The computed tonnages and savings shown in these tables, however, cannot be accepted as final, for several reasons:

(a) Between 1939 and 1945, traffic on waterway systems to be connected by the new project has increased by 121 percent, measured in ton-miles, while traffic on 10 railroads serving this area has increased by 119 percent. An analysis of traffic for 1944 would therefore show much higher prospective commerce for the new waterway than was derived from a study of 1939 traffic. While 1944 may have been abnormally high on account of the war, the long-term traffic trend was upward before the war. Furthermore, many of the wartime industries established since 1939 will probably continue in production after the war.

(b) Expansion of the Tennessee Valley Authority hydroelectric project since 1939 increases the probability of sustained industrial production after the war. (c) Completion of the 9-foot channel on the Tennessee River increases the opportunities for utilization of the proposed Tombigbee-Tennessee waterway by traffic from the Gulf which could not move profitably at rail rates, but can move at the lower costs provided by waterway. Such traffic would not appear at all in the 1939 way bills.

(d) On the other hand, completion of the Tennessee River navigation project opens southeastern markets to producers on the Ohio and upper Mississippi River systems, introducing competition that may reduce traffic from the Gulf area in some commodities.

(e) Completion of the Plantation and Southeastern pipe lines into the Tennessee Valley may permanently change the traffic pattern for petroleum products in the area to be served by the proposed Tombigbee-Tennessee waterway.

(f) The proportion of some commodities to total traffic, as shown by table 25, is somewhat different from that found on other southeastern waterways; for example, the estimated tonnage of lumber is relatively much higher than that found elsewhere, while sulfur, which furnishes important tonnages to nearby channels, is not found at all in the list of commodities available for the proposed waterway. A reexamination of prospective traffic by individual commodities was apparently needed.

(g) The proportion of rail-water tonnage predicted is also higher than is usually found on inland waterways. The validity of estimates of joint and combination movements therefore had to be rechecked.

(h) There is some prospective traffic for the proposed waterway, now moving by rail, but originating or terminating outside the three States analyzed in the waybill study. For example, there is considerable traffic in sulfur moving from Texas to Tennessee, and in phosphate rock from Florida to the upper Mississippi River Basin. Such tonnages were not included in the waybill studies.'

84. Questionnaire study. Questionnaires were prepared and sent to shippers and receivers of freight in the area adjacent or tributary to the waterway, the data to serve as a supplement to the information obtained from the waybill study. A mailing list of approximately 2,500 names was compiled of known major firms in the territory. To these firms was sent the questionnaire with a letter of explanation, a map of the project, and a form for reporting prospective tonnage. In a number of cases, this was supplemented by interviews and further correspondence with the firms. A total of 1,338 data sheets were returned, or 52.8 percent of the total number sent out. The returns were analyzed and doubtful tonnages, i. e., those concerning which there was any question as to whether they could move advantageously over the waterway, were eliminated. The various commodities were then classified in accordance with the Railway Accounting Officers' Association standard form and separated according to direction of movement. Rate factors were applied according to the same procedure used in the waybill study. These questionnaires were especially valuable in uncovering prospective movements from Texas and Florida, not indicated by the waybill analysis, and in showing developments since 1939 in new commodity movements.

85. Study of traffic trends by commodities. For each of the 12 most important commodities now moving on the inland waterways of the Southeastern States, an analysis was made of traffic trends by rail and water. These trends, extended to 1950, were used as corrections of the traffic shown for 1939 by the waybill study. In most instances this process resulted in an increase of the estimated prospective tonnage, but in a few cases the result was a decrease. The tonnage estimates finally accepted as reasonably prospective for the proposed waterway were arrived at by applying the judgement of the Board to the figures derived from waybill survey, traffic canvass and trend charts, in the light of experience with other inland waterways.

86. Reduction in benefits.—The basic waybill analysis does not take into consideration the fact that some of the all-rail tonnage movements accepted as prospective could move now by existing waterways at rates somewhat lower than present rail rates. In many instances the evidence points to the inadequacy of the available savings to divert the tonnage from rail. The assumption originally made was that the Tombigbee-Tennessee waterway, by providing a quicker as well as a cheaper route, would attract tonnage which otherwise would continue to seek rail transportation, and that the project was therefore entitled to credit for the full spread between existing rail rates and prospective water rates. In the cases where existing water routes already offer substantial savings, doubt was thrown upon the estimated savings shown in tables 23 and 24. Constructed joint or combination rates via existing waterways, especially the Warrior and Mississippi Rivers, were therefore used as a test of the validity of the savings claimed for rail-barge, barge-rail, and rail-barge-rail movements via the proposed