INVESTIGATION AND SUSPENSION DOCKET NO. M-1058 GLASS MILK BOTTLES FROM ELMIRA, N. Y., TO MARYLAND, PENNSYLVANIA, AND WEST VIRGINIA Submitted September 26, 1940. Decided June 19, 1941 Proposed reduced minimum rates on glass milk bottles, in cartons, in less than truckloads, (a) from Elmira, N. Y., to Keyser, W. Va., found unlawful because respondent lacks authority to perform the transportation, and (b) from Elmira to points in Pennsylvania, with certain exceptions, found unreasonably low. Proposed minimum rates on same commodity, from Elmira to certain points in Maryland found not unlawful. Proposed schedules, to the extent found unlawful, ordered canceled, without prejudice to the filing of certain new schedules in conformity with the views expressed, and proceeding discontinued. C. Arthur Bullock for respondent. A. S. Knowlton for protestant. A. W. Stebbings for interested shipper. REPORT OF THE COMMISSION DIVISION 2, COMMISSIONERS AITCHISON, SPLAWN, AND ALLDREDGE BY DIVISION 2: By schedules filed to become effective May 20, 1940, Paul R. English, of Granville Summit, Pa., a contract motor carrier, proposed to establish reduced minimum rates on glass bottles and cartons, in less than truckloads, from Elmira, N. Y., to points in Maryland, Pennsylvania, and West Virginia. By other schedules filed to become effective June 11, 1940, respondent proposed to restrict the application of such rates to milk bottles only. Upon protest of the rail carriers in trunkline territory, the operation of the schedules was suspended until November 16, 1940, when they became effective. The Thatcher Manufacturing Company, which manufactures glass bottles at Elmira, appeared in support of the suspended schedules. Rates and charges will be stated in cents per 100 pounds. Respondent, who has operated as a motor carrier for over 5 years, was authorized by division 5, under date of February 26, 1938, to continue operation as a contract carrier of milk bottles, from Elmira to points and places in Pennsylvania, New Jersey, and Maryland, over irregular routes, with no transportation for compensation in the reverse direction. Since no authority has been granted to respondent to perform transportation from Elmira to any point in West Virginia, the rates proposed to Keyser, W. Va., are manifestly unlawful and will be ordered canceled. The suspended schedules propose rates on two bases, one applicable on shipments of 5,000 pounds and less, and a lower basis on shipments over 5,000 but less than 11,000 pounds. They would apply from Elmira to 113 points in Pennsylvania, to 5 points in Maryland, and to Keyser. The present rates of the respondent, minimum 11,000 pounds, are, with few exceptions, the same as the carload rates of the rail carriers, minimum 30,000 pounds. The rates proposed, except to Waverly, Pa., and to points in Maryland, are, on shipments of 5,000 pounds and less, 12 cents, and, on shipments over 5,000 and less than 11,000 pounds, 8 cents higher than the rail carload rates from and to the same points. The rates proposed to points in Maryland are the same as the rail less-than-carload rates from Elmira to the same points. The respondent contends that the proposed rates are based on the sales policy of the Thatcher Manufacturing Company, and are necessary to meet the competition of the Rexford Trucking Company, a motor contract carrier and also a subsidiary of the Thatcher Company, which serves most of the points to which the proposed rates would apply. The Thatcher Company sells its bottles f. o. b. destination, on the basis of the rail carload rates. It does not provide truck transportation except on shipments of 15,000 pounds or over, and where the purchasers of the bottles prefer truck delivery they must pay 12 cents more than the rail rate on shipments of 5,000 pounds and less, and 8 cents more than the rail rate on shipments over 5,000 pounds and less than 15,000 pounds. It has been noted that to most points the proposed rates reflect these differentials over the rail carload rates. It appears that respondent would collect the differences between the proposed rates and the rail rates from the consignees or receivers of the shipments at the points of delivery. Respondent has no contract with the Thatcher Company covering the transportation to be performed under the proposed rates. His contract is with the Cherry-Burrell Corporation, a jobber of glass bottles at Elmira. In its schedule on file with us the minimum rates of the Rexford Trucking Company are shown as 15 cents a loaded truck-mile. This schedule, however, differs considerably from the carrier's contract with the Thatcher Company on file with this Commission. Under the circumstances we consider it in the public interest to disclose these differences. According to the contract, the actual rate is 35 cents, with guaranteed minimum loads of 10,000 pounds for dis tances not exceeding 100 miles; 15,000 pounds for distances over 100 and not over 150 miles; 16,000 pounds for distances over 150 miles and not over 175 miles, and 18,000 pounds for distances over 175 miles. The rates proposed on shipments of 5,000 pounds and less exceed 35 cents only to points in Maryland and to 13 points in Pennsylvania. To all points, except those in Maryland, rates proposed on shipments of 5,000 to 11,000 pounds are less than 35 cents. Except to points in Maryland, the rates proposed on shipments of 5,000 pounds and less are from 1 to 11 cents lower, and on shipments over 5,000 and less than 11,000 pounds, from 5 to 17 cents lower, than the rates prescribed as reasonable minima on glass milk bottles of 1 quart or less, in cartons, in less than truckloads, for application by motor common carriers in this territory, in Trunk Line Territory Motor Carrier Rates, 24 M. C. C. 501. The rates therein prescribed, except in a very few instances, are the same as the less-than-carload rail rates for the same distances. The rates proposed to representative points, the carload rates, those prescribed in Trunk Line Territory Motor Carrier Rates, supra, and other pertinent data are shown in the appendix hereto. Respondent has generally transported a full load of about 11,000 pounds of bottles from Elmira. The manufacturer always notifies the respondent whenever 9,000 pounds or more of bottles are ready for shipment. Respondent is not authorized to transport any freight on return trips, and the revenue from the out-bound hauls must support the round-trip operation. He has occasionally delivered part loads, apparently without additional charge. On rare occasions he has transported a single shipment of 1,000 pounds or less. There is no evidence of unlawfulness of the rates proposed to Maryland, which are the same as the rail less-than-carload rates. The protestants contend that the rates proposed to most of the points in Pennsylvania are less than reasonably compensatory and would be followed by reductions from other glass-producing points in official territory, resulting in a disruption of the entire motor and rail rate structures on glass bottles with attendant losses of revenue by both forms of transportation. Some of the rates proposed appear unduly low for the service performed and are not warranted by competitive conditions. On the assumption that the respondent would transport not less than 10,000 pounds, the proposed rate to Scranton, Pa., applicable on shipments over 5,000 and less than 11,000 pounds, 26 cents, for the round-trip distance of 204 miles would yield about 13 cents a truck-mile. The proposed rate on these quantities to Johnstown, Pa., 31 cents, for the round-trip distance of 444 miles would yield 7 cents a truck-mile on a shipment weighing 10,000 pounds. There is apparently no competition for this traffic by motor common carriers. The rail protestants take the position that motor contract carrier rates should be on the same level as motor common carrier rates. Their evidence, however, is confined to comparisons of the suspended rates and revenues thereunder with the rail rates and with those prescribed in Trunk Line Territory Motor Carrier Rates, supra, and the revenues thereunder. The volume of glass bottles transported in the past from Elmira by rail or motor common carriers is not shown. To a very few points in Pennsylvania the rates proposed equal or exceed the less-than-truckload rates on glass bottles prescribed in Trunk Line Territory Motor Carrier Rates, supra. Such rates appear to be reasonable for application by respondent as less-than-truckload rates. The necessity for the two minima proposed on what are essentially less-than-truckload quantities is not apparent. In other respects, respondent, apparently under a misapprehension as to the rates of the competing contract carrier, has gone further than is reasonably necessary to meet that competition. The 35-cent rate maintained by the competing carrier to the points under consideration herein is substantially higher than the rail carload rates from Elmira to the same destinations. The competitive rate, however, is subject to minimum loads which increase with distance. As a result, the revenues under the rate of the competing carrier are substantially higher than respondent would receive under the proposed rates, particularly for the longer hauls. For example, the revenues under the competing carrier's 35-cent rate for distances of 150, 160, and 180 miles, based on minimum shipments of 15,000, 16,000, and 18,000 pounds, respectively, would be $52.50, $56, and $63 a truck, respectively, or 35 cents a truckmile. For round trips of twice the distances shown, the truck-mile earnings would be 17.5 cents. In the absence of a showing that the competitive rates are less than reasonable for the service, respondent should not be precluded from meeting them, provided that he also is guaranteed the transportation of adequate minimum loads. We find that the maintenance of the rate proposed from Elmira to Keyser would be unlawful because respondent is not authorized to transport from and to those points. We further find that the other rates proposed, except those which are not less than the less-than-truckload rates from and to the same points prescribed in Trunk Line Territory Motor Carrier Rates, supra, and those proposed to points in Maryland are unreasonably low, and that the schedules under consideration, to the extent found unlawful, should be ordered canceled, without prejudice to the filing of new schedules in conformity with the views expressed herein. An appropriate order will be entered. |