tablished in its territory, and has been performing profitable operations for a number of years. It has sufficient equipment, finances, and other facilities to conduct the proposed operations on a reliable and efficient basis.

Three separate receivers and distributors of Dodge and Plymouth passenger cars and commercial vehicles at Houston, Galveston, and Harlingen, Tex., testified in support of the application and as to the need for lessee's proposed service. Each now receives the passenger cars from Detroit, the first two utilizing rail service and the third the truck-away service of another carrier, which he understands will be lost to him in the near future. Commercial vehicles are delivered to all three distributors by the drive-away method. The principal objection to using the rail service is that it is slow and undependable and requires the services of highly skilled and paid mechanics to unload the equipment from rail cars at times when their services are urgently needed in the shop to meet schedules on the repair of automobiles on hand. Unloading from rail cars also is slow, and damage to the lading in the process of unloading is not unusual. Under the truck-away method the lading is delivered to the doors of the dealer and the unloading is relatively simple. The dealers using rail service believe that the truck-away service proposed by lessee will be advantageous to them and the public because of the expedited deliveries and the release of their employees for fulltime and more productive work in connection with the repair and servicing of cars. The dealer at present using the trucking service of another carrier desires the assurance of a continued service.

United has operating rights,2 among others, to transport new automobiles, trucks, bodies, and cabs, by the truck-away and drive-away method, in initial and secondary movements, over irregular routes, from St. Louis to points in Oklahoma and Texas. This record indicates, although it appears doubtful, that United is the only carrier with authority to perform secondary movements from St. Louis to Texas destinations, but similar through service is provided from northern origins to Texas destinations by other carriers through Texarkana. As previously indicated, lessee now participates in those movements. United contends that, contrary to the findings of the examiner, the application should be denied because the applicants have failed to meet the burden of proof required by the policy established in No. MC-F-2463, Commercial Carriers, Inc.-Lease-Boutell, (embracing No. MC-F-2581, Commercial Carriers, Inc.-Purchase-J. & H. Transport, Inc.), 40 M. C. C. 345, herein called the Boutell case, when the proposal is to "couple" initial-movement with

* Under certificates in Nos. MC-71902 and MC-71902 (Sub-No. 35).

secondary-movement rights for purposes of performing a single-line through service. In denying those applications, which involved a proposed coupling of initial and secondary rights, division 4 stated at page 357:

Such unification should be approved only if the record establishes that definite public benefits will result and that existing carriers will not be seriously harmed by the institution of the additional service.

Following the precedent established in the Boutell case, as to the evidence which is necessary to support an approval of such a proposal, division 4 also denied the application in No. MC-F-3011, W. F. Carey and B. B. Beveridge-Control; Commercial Carriers, Inc.-Lease— George F. Burnett Company, Inc., herein called the Burnett case, reported in Carey and Beveridge-Control-Commercial Carriers, Inc., 45 M. C. C. 165.

In support of its contention, United presented evidence to show that prior to the war it handled a volume of vehicles destined to points in Oklahoma and Texas, including Buick, Oldsmobile and Pontiac automobiles which were originated by other carriers at Flint, Lansing, and Pontiac, Mich., respectively; that since the war the General Motors Corporation has built a new assembly plant for automobiles at Kansas City, Kans., which is now being served by a contract carrier, and United no longer handles such automobiles in any volume; that it nevertheless has continued to maintain terminal facilities at St. Louis, Joplin, Mo., Oklahoma City, and other points in its territory; that because of the lack of available traffic, an appreciable number of its vehicles are idle and that, therefore, its facilities are more than adequate to provide all the service that is needed through the St. Louis gateway as proposed by the lessee; that, in fact, on a number of occasions it has solicited the same receivers and distributors who are supporting the instant application requesting their business; that prior to the war St. Louis was one of its principal gateways for receiving traffic and it there received a substantial volume of automobiles from a number of carriers, including lessor, for delivery to points in Missouri, Kansas, Oklahoma, Texas, and New Mexico; and that it has effective tariffs on file, and stands ready, able, and willing, to accept all traffic which the lessor might desire to interchange with it at St. Louis in the same manner as the lessor proposes to interchange with the lessee.

In its exceptions United argues further that, as established by the record, it has been engaged in the transportation of automotive

3 The application in No. MC-F-2463 was subsequently dismissed by order at the request of the parties. However, after a further hearing in No. MC-F-2581, and as a result of the presentation of additional evidence, the transaction proposed therein was approved in report on reconsideration in Commercial Carriers, Inc.-Pur.-J. & H. Transp., Inc., 45 M. C. C. 261, decided December 12, 1946.

4

equipment for 15 years; that, in the last normal year of production before the war, it transported more than 37,000 cars, most of which were handled under its secondary-movement authority through the St. Louis and Nealeyville, Mo., gateways; that since the fall season of 1945, when automobile manufacture was resumed, it, like other carriers, has been faced with increasing operating costs without a corresponding increase in business to compare with the prewar level; that under existing higher costs of operation it can only hope to conduct profitable operations by handling a large volume of the commodities which it is authorized to transport; that, although it may be the only carrier besides lessor with secondary movement rights from St. Louis, competition is afforded by a combination of other carriers through the Texarkana gateway, involving practically the same physical operations and advantages; that any diversion of traffic to lessee would be likely to have a serious and adverse affect on its present standards of service; that, as evidenced by the volume of traffic formerly interchanged between the lessee and lessor in Oklahoma, the competition afforded thereby was negligible, but this would not be the case under the leased operations; and that the reason given by the lessor for not resuming its operations into Oklahoma since the war is not supported by the facts, because the record affirmatively shows that it now has 105 tractor-trailer units in revenue service as compared with 189 in 1941, while it is transporting only about 35 percent of the traffic it handled with the larger number of vehicles.

In their reply applicants argue that protestant is seeking to maintain its present monopoly on traffic moving through the St. Louis gateway to points in Oklahoma and Texas; that in event of a denial of this application, there is little doubt but that lessor and lessee will reestablish their former relationship in transporting shipments through to Oklahoma and Texas points, thus providing United with substantially the same competition as would be the case if lessee is authorized to operate out of St. Louis; that the interchange of shipments at St. Louis instead of at some point in Oklahoma, as formerly, in reality would not involve a new service; that no concrete evidence was presented by United to show wherein it would be adversely affected as a result of the transaction; and that, nothwithstanding lessor now has proportionately more vehicles for the volume of traffic handled than formerly, the record shows that changed conditions in automobile transportation makes it necessary to use more vehicles to handle the same volume of business as before. It argues further that the situa

• Although not definitely developed by the record, it is intimated by statements in United's exceptions that its recent operations have been conducted at a loss. Its annual reports filed with this Commission show that, from all its operations, it sustained a deficit of $28,294 in 1945, and, during 1946, its net income was $40,599 before, and $20,855 after, provision for income taxes.

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tion here is not analogous to that present in the Boutell case because here only one carrier would be affected whereas in the Boutell case a number of carriers would have been affected by the proposal.

In our opinion, the fact that United may be the only carrier with authority to use St. Louis as a gateway on Texas traffic is not of real significance when considering the type of transportation involved and the fact that other carriers, including lessee, are in a position to and do provide it with effective competition through the similarily strategically located gateway at Texarkana. Nor do we agree that the proposed operation by lessee would not involve a new service. As above stated, lessee may now perform secondary movements only between points in Oklahoma and Texas, and through interchange with other carriers at points in Oklahoma it may participate in through movements from Detroit, for example, to points in Texas. It proposes, through a combination of its own secondary-movement rights with the initial-movement rights leased, to perform a through singleline movement from St. Louis to points in Texas. It thus would effect a conversion of its secondary-movement rights in the same manner as proposed in the Boutell and Burnett cases, which, it was found, could not be sanctioned unless the record established that definite public benefits would result and that existing carriers would not be seriously harmed thereby.

In the instant case there is the added factor that lessor has conducted no operations whatsoever under the rights proposed to be leased since resumption of the production of automotive equipment for civilian use, and other carriers no doubt have long since adjusted their services to absorb the traffic. The possibility that lessor would resume its former interchange arrangements with lessee on a substantial volume basis, in the event of a denial of this application, also appears somewhat remote, because the lessee would be faced with the same difficulty with respect to its share of the revenue as before the war.

As previously stated, United is in a position to and does provide the same transportation service as that proposed by the lessee, and other combinations of carriers afford a similar service through Texarkana. United has been actively soliciting additional traffic, including that of the distributors who are supporting the application, to replace, at least in part, the traffic which it has lost. In our opinion, the preference of a few shippers for the proposed service of lessee rather than that of carriers already able to provide the service is not a sufficient basis upon which to approve this transaction, with the resulting additional service, to the detriment of existing carriers. In the absence of evidence showing that real public benefits would result from the proposed service, which has not been shown on the

instant record, carriers which have expended their funds and energy in developing facilities to handle available traffic are entitled to protection against establishment of a new service in competition with them. As stated in the Boutell case, such protection should be afforded, not only for the protection of existing carriers, but to promote stability and sound economic conditions in the industry and the rendition of adequate transportation service for the public.

We find that the transaction proposed would not be consistent with the public interest and that the application should be denied. An appropriate order will be entered.

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