INVESTIGATION AND SUSPENSION DOCKET No. 4606 Submitted August 4, 1939. Decided December 11, 1939 Suspended schedules proposing reduced rate on printing paper, wrapping paper, and pulpboard, in carloads, from Canton, N. C., to Atlanta, Ga., found not justified. Suspended schedules ordered canceled, and the proceeding discontinued without prejudice to the filing of new schedules in conformity with the findings herein. W. N. McGehee and Charles Clark for respondent. Paul D. Cook for manufacturer supporting respondent. DIVISION 3, COMMISSIONERS MAHAFFIE, MILLER, AND ALLDREDGE BY DIVISION 3: Protestants excepted to the examiner's proposed report. Our conclusions differ somewhat from those recommended by him. By schedules filed to become effective March 29, 1939, respondent Southern Railway Company proposed to reduce its rates on printing paper, wrapping paper, and pulpboard, in carloads, from Canton, N. C., to Atlanta, Ga. On protest of the Southern Motor Carriers Rate Conference, of Atlanta, representing numerous southern motor carriers, operation of the schedules was suspended until October 29, 1939. Subsequently respondent voluntarily deferred the effective. date of the schedules pending determination of the proceeding. The Champion Paper & Fiber Company, of Hamilton, Ohio, has a plant at Canton, N. C. It was represented at the hearing and supported respondent. Rates will be stated in amounts per 100 pounds. Canton, 20 miles southwest of Asheville, N. C., is on respondent's Murphy branch. From Canton to Atlanta, over respondent's line, it is 270 miles. The short-line distance is about 236 miles. It is 188 miles by highway over which motortrucks operate. The paper company's plant at Canton is one of the largest industries on respondent's system. Its traffic is very important, respondent depending upon the revenue therefrom to maintain the Murphy branch. The traffic density on that branch in 1937 was slightly less than onehalf of that for the system. Atlanta is one of the largest cities served by respondent, and it is an important distributing and consuming point for printing paper, wrapping paper, and other paper articles, as well as for other commodities generally. Respondent proposed to establish a rate of 28 cents, minimum 15,000 pounds, on printing paper and wrapping paper, in carloads, and on pulpboard in mixed carloads with either printing or wrapping paper, or both. The present rates, effective March 28, 1938, following the general rate increases of 1938 authorized by the Commission, are 33 cents on printing paper, minimum 12,000 pounds; 33 cents on wrapping paper in mixed carloads with either printing paper or pulpboard, or both, minimum 12,000 pounds; 33 cents on pulpboard in mixed carloads with either printing or wrapping paper, or both, minimum 12,000 pounds; and 31 cents on wrapping paper, minimum 36,000 pounds. The record contains a chronological statement of the rates on these commodities in effect from Canton to Atlanta during the past decade. It is sufficient to say that during 1933 the then-existing rate of 28 cents, minimum 12,000 pounds, on printing paper, was increased to 30 cents and remained unchanged until March 28, 1938. A rate of 22.5 cents, minimum 36,000 pounds, applied on wrapping paper for years prior to 1937, when it was increased to 31 cents. Subsequent changes resulted in the afore-mentioned present rates. The rate of 28 cents, minimum 12,000 pounds, in effect in 1933 on pulpboard in mixed carloads with either printing or wrapping paper was increased to 30 cents and remained unchanged until March 28, 1938. Protestants publish motortruck rates for the member carriers operating in the area here being considered. Other operators publish and file their own tariffs. Protestants' rate from Canton to Atlanta, effective June 12, 1938, of 28 cents is a "volume" rate, subject to a minimum weight of 5,000 pounds and applicable on printing paper, other than newsprint, wrapping paper, and pressboard paper in either straight or mixed shipments. The first tariff applicable in connection with protestants' members became effective April 1, 1936. It contained rates applicable from Canton to Atlanta of 30 cents, minimum 5,000 pounds, on printing paper, 40 cents on wrapping paper, minimum 36,000 pounds, and 40 cents on pulpboard in mixed truckloads with either printing or wrapping paper, or both, minimum 36,000 pounds. Effective June 1, 1936, the 40-cent rate on the mixed shipments was reduced to 27 cents, minimum 10,000 pounds. On August 20, 1936, the 27-cent rate was made applicable on all three descriptions, in any quantity. Effective March 30, 1938, the 27-cent rate was made 30 cents. From August 16, 1937, to August 14, 1938, inclusive, the movement of these three commodities from Canton to Atlanta amounted to 4,707 tons, of which 2,390 tons, or 50.8 percent, were moved over respondent's line; the remainder was moved by truck. During 1938, 4,643 tons were moved, of which 1,685 tons, or 36.3 percent, were moved by respondent; the remainder was moved by truck. During the first 3 months of 1939, the movement by respondent from Canton to Atlanta amounted to 1,252 tons. The truck movement for the same period was 626 tons. There are seven principal dealers in Atlanta receiving shipments of paper from Canton. Five of them have rail sidings adjacent to their warehouses. Only one of the five receives carload shipments from Canton by rail, and the cars are unloaded from the rail siding to the storage place on the second floor of its warehouse. The other four receive their shipments by truck. Two of the seven do not have their own rail sidings, and they must therefore take rail delivery from respondent's team tracks. Respondent does not furnish pick-up and delivery service on this traffic, and drayage service must be provided by the shippers at an estimated cost of 5 cents per 100 pounds. One of the largest of the dealers in paper, in addition to the seven referred to, uses its own trucks in moving its paper traffic to Atlanta and other commodities from Atlanta. One of the principal consumers of paper which still uses respondent's rail service from Canton to Atlanta uses truck service occasionally to obtain overnight deliveries. It requires 8 hours to drive a truck from Canton to Atlanta. Respondent furnishes only second-morning delivery of carload shipments from and to those points. The average weight of 32 carloads of printing paper that moved from Canton to Atlanta during the first 8 months of 1939 was 48,153 pounds. Respondent does not expect many shipments to move at the proposed minimum of 15,000 pounds, but believes that it will afford it a better opportunity to compete with the truck lines. The weight of 48,153 pounds is used in respondent's computations of revenue under the proposed rate and in comparison with that on other commodities moving by rail as proof that the proposed rate will be compensatory. The rate of 28 cents at 48,153 pounds would yield $134.83 per car and 50 cents per car-mile, which are in excess of revenue for the same distance from the present carload rates on sulphate of alumina, new cotton bale covering bagging, cement, cullet, wood excelsior, linseed oil, coaltar pitch, rosin, fertilizer, broom splints, Amiesite, fresh apples, potatoes, and cabbage. Based on the 15,000-pound minimum, the 28-cent rate would produce $42 per car, about 15.6 cents per car-mile, and 21 mills per ton-mile. Protestants argue that the proposed rate is lower than necessary to enable respondent to compete with the motor carriers operating between Canton and Atlanta. In the handling of this traffic respondent 216338m-40—vol. 235- -36 is at some disadvantage. For example, the truck lines deliver the paper direct to the consignee's warehouse; shipments moving to respondent's team tracks must be drayed or trucked to consignee's warehouse; and the truck lines can give quicker service, which is often a controlling factor in the movement of the traffic. However, as hereinbefore pointed out, five of the principal dealers in Atlanta have rail sidings to their warehouses, doubtless a benefit to respondent. In substance the testimony of the witness for the Champion Paper and Fiber Company was that formerly it cost his company more to load trucks than to load freight cars, but that owing to changed conditions there is practically no difference now in loading costs, trucks versus cars; that his company wishes to retain both the truck and rail service from Canton to Atlanta; and that if the suspended schedules go into effect the motor carriers could expect to share in the traffic because of the better transit time and their lower minimum, as the jobbers are buying in smaller quantities than formerly, with the result that the longer a customer waits to place his order, the quicker he must have it, and by buying in smaller lots his purchases are more flexible. As stated by the Commission in Middle Atlantic States M. C. Conf., Inc., v. C. R. Co. of N. J., 232 I. C. C. 381, 385, the trend in merchandising in recent years has been strongly toward sale and distribution in smaller lots frequently replenished. Based on a 20,000-pound minimum, the proposed rate of 28 cents would yield respondent about 20.8 cents per car-mile. A minimum of less than 20,000 pounds, as to this traffic, would result in wasteful transportation and an unnecessary lessening of respondent's revenues. Under these circumstances, we conclude that the proposed basis is unreasonably low. We find the suspended schedules not justified. This finding is without prejudice to the filing of new schedules publishing a rate of 28 cents, minimum 20,000 pounds, on the traffic here under consideration. An order will be entered directing cancelation of the suspended schedules and discontinuing the proceeding. 235 I. C. C. NATIONAL MORTAR & SUPPLY COMPANY v. ANN ARBOR RAILROAD COMPANY ET AL. Submitted September 29, 1939. Decided December 11, 1939 1. Upon rehearing, findings in prior report, 225 I. C. C. 663, prescribing reasonable rates on agricultural or ground limestone, in carloads, from Gibsonburg and Woodville, Ohio, to destinations in Indiana affirmed. 2. Upon rehearing, findings in prior report, 191 I. C. C. 188, as to rates on agricultural limestone, in carloads, from Gibsonburg to destinations in the Lower Peninsula of Michigan, modified as to rates for future application. W. W. Sprague for complainant. Arthur Van Meter and Richard L. Barnes for defendants. REPORT OF THE COMMISSION ON REHEARING BY THE COMMISSION: Complainant National Mortar & Supply Company filed exceptions to the report proposed by the examiner, to which defendants replied. In the original report in No. 20039, 152 I. C. C. 429, decided March 1, 1929, division 3 found the rates on agricultural limestone, in carloads, from Gibsonburg, Ohio, to certain destinations in the Lower Peninsula of Michigan unreasonable to the extent that they exceeded rates established to such destinations on August 26, 1926, and, further, that the rates to certain other destinations in the Lower Peninsula of Michigan which were not reduced on that date were unreasonable for the past and future to the extent that they exceeded the Michigan intrastate commodity-rate scale, with the addition of arbitraries for joint-line movements as provided under that scale. Upon further hearing, 191 I. C. C. 188, division 2 affirmed the prior findings with respect to the rates on past shipments, except that certain new requirements for computing distances in determining reasonable rates for the past and future were made. It modified the findings as to the future by prescribing generally lower rates. The rates prescribed in that proceeding were based on the so-called Barber scale prescribed in North American Cement Corp. v. Aberdeen & R. R. Co., 163 I. C. C. 701, from Martinsburg and Berkeley, 1 This report embraces also No. 27472 (Sub-No. 1), National Mortar & Supply Company v. Pennsylvania Railroad Company et al.; and No. 27472 (Sub-No. 3), Ohio Hydrate & Supply Company v. Pennsylvania Railroad Company et al. |