INTERSTATE COMMERCE COMMISSION REPORTS Scales by Territories for the year 1966 because updated special study factors were substituted where appropriate in the formula used to produce these unit costs, and the findings in Docket No. 34013, supra, were implemented in the formula. The variable costs reflect the average switching conditions and average train operations of the territories in which the traffic moved, the average weight of load, the average length of haul, the type of equipment and the empty-return movement of the equipment. It is believed that recognition of these transportation characteristics in the application of the costs is sufficiently representative of the costs incurred by the carriers for transporting the major portion of the commodity classes. Since only the territorial movements as a whole are under consideration, a special operating practice that would concern only a portion of a movement would not be as representative of the costs as are the territorial average conditions reflected in these costs. Certain classes of commodities have individual characteristics which vary from the territorial average conditions reflected by this procedure. Specific recognition of such differences has been made by adjustments in the variable unit costs of the following commodities: iron ore (101), copper ore (102), bituminous coal and lignite (112), coke (33113) and railroad equipment (374) moving on its own wheels. These adjustments are due mainly to movement in larger than normal size trains (way and through trains with a greater than territorial average gross ton weight of cars and contents, excluding cabooses), and a smaller than average amount of terminal switching service, and result in reductions in a portion of the costs in Region III, Official Territory, and Region VII, Western District. These reductions necessitated an offsetting increase in the costs applicable to the remaining traffic. A discussion of the adjustment of unit costs for specific commodities is contained in the ensuing paragraphs. Commodity Class 101, Iron Ores In the Western district the costs of handling iron ore were adjusted to reflect the cost and operating characteristics of two railroads in that district whose iron ore traffic was 87 percent of the total tons carried by them during the year 1966. Three components of terminal cost were adjusted to reflect the characteristics of these two roads, i.e.: Group IV, Carload switching expenses at origin and destination; Group VIII, Carload station clerical expenses; and Group XI, Train supplies and expenses. The line-haul costs were adjusted to reflect the train weights and length of haul in way trains of these two roads, and to reflect a 100 percent empty return of freight train cars. The cost of movement of iron ore in the Official territory was adjusted to reflect the lower terminal cost for Group IV, Carload. switching expenses at origin and destination; Group VIII, Carload station clerical expenses; and Group XI, train supplies and expenses based on ratios previously developed. The line-haul costs were adjusted to reflect the heavier than average train weight for iron ore in the Official territory for way and through trains based on Verified Statement 177 in Ex Parte No. 256, Increased Freight Rates, 1967, 332 ICC 280. Commodity Class 112. Bituminous Coal and Lignite The cost of switching bituminous coal at origin and destination in Official territory and Western district was based on the relationship of switching minutes per equated car handling of four large coal hauling railroads in the Official territory to the regional average. The adjustments in terminal costs for clerical costs and train supplies and expenses in the Official territory and Western district, i.e., Group VIII expenses and 340 I.C.C. INVESTIGATION OF RAILROAD FREIGHT RATE STRUCTURE Group XI expenses, were based on the relationship of the two iron ore roads to the regional average in the Western district because it is reasonable to assume that the similarity of these two bulk commodities, iron ore and bituminous coal, result in similar handling costs. The line-haul costs in the Official territory were adjusted to reflect the train weights of way and through trains based on two large coal hauling roads in the Official territory. This adjustment had the effect of increasing the average train weights for way and through trains because coal traffic is handled in trains that are heavier (gross tons of cars and contents excluding cabooses) than the usual way and through trains in the Official territory. This resulted in a decrease in the line-haul unit costs. No adjustment was made in the line-haul costs in the Western district. Commodity Class 33113, Coke The terminal unit costs for coke include the same switching adjustment in Official territory as bituminous coal. No other adjustments were made in the costs for coke. Railroad Equipment Moving on its Own Wheels For movement of railroad equipment on its own wheels at lawful tariff rates, the unit costs were determined separately because this commodity incurs different services from the usual traffic. The terminal expenses incurred in moving this traffic are: Group IV, terminal switching of the revenue movement; Group VII, Station clerical; and Group XI, Train supplies and expenses and special services. Those omitted as not applicable are the Group IV, switching for spotting and pulling empty cars and the Group VI, freighttrain car expenses, road train to industries (origin plus destination). In the line-haul unit costs, there is no provision in the cost per car-mile for tare weight of the car as the weight of the car is treated as lading and costed out using costs per ton-mile. The line-haul car costs omit freight-train car ownership costs and the expense of any empty return. Commodity Class 102 Copper Ore Copper ore moving from the mine to the smelter is thought to be a special type of movement and to differ from the average of other traffic in the Western district. In 1961 computation of the cost of transporting copper ore was done in detail to reflect differences in switching costs, station clerical costs, cost of special services and weight of train. For expediency, relationships in the 1961 study were applied to the 1966 costs to produce the specific costs applied to copper ore. In addition, the line-haul costs were computed with a 100 percent empty return of cars and were not increased for circuity. COMPUTATION OF AGGREGATE COSTS The variable cost of handling any particular traffic was determined by multiplying the service units developed in the carload waybill study by the appropriate unit costs and totalling the results. The unit costs were applied by type of car and by territorial movement. The terminal unit costs used for interterritorial movements, i.e., Official to South, South to Official, Official to West, West to Official, South to West, and West to South, were based on one terminal handling in the origin territory and one terminal handling in the destination territory. The cost was obtained by taking one-half of the terminal unit cost in the originating territory and one-half of the terminal unit cost in 340 I.C.C. INTERSTATE COMMERCE COMMISSION REPORTS the terminating territory and applying the resultant unit cost to the tons and carloads of traffic in the interterritorial movement involved. In a similar manner, the line-haul unit cost was obtained by applying one-half the line-haul unit cost in the originating territory for way and through trains, respectively, and one-half the line-haul unit cost in the terminating territory for way and through trains, respectively, to the respective car-miles and ton-miles in the interterritorial movement, as applicable. This, in effect, is the same as applying the originating territorial line-haul cost to one-half the distance the traffic moves, respectively, in way and through trains and terminating territorial line-haul costs to the remaining distances the traffic moves, respectively, in way and through trains. The aggregate constant costs for each territorial movement were computed by applying the appropriate constant unit costs to the tons and ton-miles of each commodity class. For each commodity the constant costs were added to the variable costs to obtain the fully allocated cost for each commodity on a territorial movement basis. RESULTS The rail carriers as a whole received $83,649,869 in 1966 for the transportation service rendered to the carload traffic included in the one-percent waybill sample. The variable costs for that service amounted to $63,832,324 or 76.3 percent of the revenue. The total revenue contribution, that is, the amount by which the revenues exceeded the variable costs, was $19,817,545 or 23.7 percent of the revenue. The breakdown of these totals by commodities and by territorial movements within each commodity is set forth in the table. The most significant information is the revenue cost relationships in columns (10) and (11) which are shown separately for the individual classes and for the commodity groups by territorial movements. Column (10) shows the ratio of revenue to variable cost whereas column (11) indicates the ratio of revenue to fully allocated cost. The table also shows, by commodity classes and by territorial movements, the average load (in tons), the average haul (in short-line miles), the revenue, the variable cost and the contribution to the transportation burden. Therein is reflected the relative share of the burden contributed by each commodity class for the United States as a whole and separately for each territorial movement. Items in the column of contribution marked "DEF" indicate the deficit contribution, i.e., the amount by which the revenue from a given commodity movement failed to cover the variable costs. The data in the table for all commodity classes, U. S. to U. S. movement, show that practically no commodity classes (3-digit level) move at exactly fully allocated cost. However, about 14 percent of the revenue is derived from the sample carload traffic in the United States for the year 1966, which moves at rates approaching that level, i.e., ranging from 98 to 103 percent. The remaining 86 percent of the carload revenue is divided 18 percent to traffic which is rated at less than approximate fully allocated cost and 68 percent rated higher. The latter group may be separated again into two groups; first, 66 percent in the revenue category between approximate fully allocated cost and 50 percent above such costs and second, 2 percent of the traffic rated above 150 percent of fully allocated costs. 340 I.C.C. NOTE.--Pages 895-915, Revenue Contribution, etc., tabulation, omitted. INTERSTATE COMMERCE COMMISSION REPORTS APPENDIX C Study of Railroad Rate Structure Characteristics The purpose of this study is to provide a body of basic information about the relationships among rates comprising the railroad rate structure. The information, not now available, is needed to define and clarify issues for further investigation of asserted rate anomalies. It is proposed to select approximately 10,000 waybills from the 1966 rail carload waybill study on a stratified, random sample basis in a manner to give representation to major traffic in terms of tons and revenues. Railroads participating in the movements represented by the selected waybills will be requested to supply additional information about each such move by responding to a questionnaire. The responses to the questionnaire will be reviewed, compiled, summarized and analyzed to produce the desired information. The 1966 rail carload waybill sample data now available on computer tape include the following: 1. Commodity description (STCC 7-digit code). 2. Origin (railroad, station, county, State, rate territory). 3. Destination (railroad, station, county, State, rate territory). 4. Car initial and number (permits identification of type of car). In addition, from the above data, it is possible to obtain ton miles, car miles, average haul and revenue per hundredweight, per ton, per ton mile, and per car. Further, these data may be variously compiled and summarized to produce estimates of traffic flow, for example, between origins and destinations, by local or interline service, by mileage block, by type of car, and by month of termination. The questionnaire now under consideration by the staff would solicit the following additional information pertinent to the selected waybills: 1. Tariff reference for line haul revenue. 2. Tariff reference for all accessorial and other charges. 3. Identification, with tariff reference, of all changes in applicable rates since the movement occurred. 4. Description of any accessorial services performed but for which separate charges were not made. 5. A count of the number of interchanges identified: a. Between line haul railroads. b. Between line haul and switching railroads. c. Between line haul railroads where another carrier performs intermediate switching. 340 I.C.C. INVESTIGATION OF RAILROAD FREIGHT RATE STRUCTURE 6. In reference to 5b and 5c above, the amount of switching charges absorbed by each line haul railroad. Whether absorption represents full amount of charges. If not, the amounts absorbed and unabsorbed. 7. Whether the movement involved float service. 8. Actual weight of lading. 9. Routing and actual mileage by railroad and territory, including identification of gateways. 10. Number of car days subject to demurrage. Whether the demurrage was paid under the straight demurrage plan or balanced under an average agreement. 11. Amount of platform handling, if any. 12. Whether the move occurred in an assigned car. If so, contents of any orders concerning the return of the car to loading point. 13. Whether movement occurred as part of a unit train. If so, weight of train in tons. 14. Number of days elapsed from release of loaded car by shipper at origin to actual or constructive placement at destination. 15. Whether car moved in an expedited service of “run-through train”. If so, list the rate or charge for such service. 16. The amount paid by each railroad on 1966 claims for loss and damage in transporting commodities of this description. 17. If TOFC, whether interchanges were by rail or over-the-road., 18. TOFC plan number. 19. Whether traffic is an export, import, or domestic movement. 20. If export or import, whether rates charged are designated specifically in tariff as export or import rates. 21. Whether movement was seasonal, sporadic, regular or intermittent. Explanation. 22. For terminating railroad, description of the applicable rate in terms of type such as group, proportional, seasonal, blanket, differential (port or otherwise), unit train, multiple-car, incentive, volume, etc. Explanation. 23. For origin railroad, whether any like traffic was originated for the same or successor shipper, plant facility, etc. in 1971. Whether the volume increased or decreased since 1966. Approximate percentage of change in tonnage. Reasons for this change. 24. For destination railroad, whether any like traffic was terminated for the same or successor consignee, plant facility, etc. in 1971. Whether the volume increased or decreased since 1966. Approximate percentage of change in tonnage. Reasons for this change. 25. For origin railroads, provision of a copy of a waybill for a movement of the same commodity, from the same origin to the same destination, by the same or successor shipper in the same week of 1971. If there were no like shipments in the same week, the same month, quarter, or, if necessary, the year may be used. (For November and December shipments, 1970 may be used.) For each selected waybill, the following supplementary information: a. Tariff references for all rates and charges. b. Accessorial services for which separate charges were not made. c. Actual routing, includiing identity of interchange points if not clearly shown on waybill. d. Actual weight of lading. e. Number of days elapsed from release of car by shipper at origin to actual or constructive placement at destination. 340 I.C.C. |