INVESTIGATION AND SUSPENSION DOCKET No. M-2726 1

CENTRAL TERRITORY GENERAL INCREASES

Submitted June 1, 1948. Decided December 1, 1948

1. In No. MC-C-496 and No. MC-C-518, increased rates and charges of respondent common carriers by motor vehicle, for the most part within central territory, found not unjust and unreasonable or otherwise unlawful.

2. In Investigation and Suspension Docket No. M-2726, proposed increased rates and charges of respondent common carriers by motor vehicle in central territory found just and reasonable in certain respects, and not shown to be just and reasonable in other respects.

3. Order entered requiring cancellation of proposed schedules to the extent found unlawful, and discontinuing the proceedings.

John R. Turney, Chester G. Moore, C. M. Myers, J. E. Haydon, Ferdinand Born, G. A. Henderson, William F. Price, A. R. Sheff, H. J. Waples, Fred H. Mackensen, Charles F. Davis, J. A. Foster, Walter M. Nold, J. D. Lawson, G. H. Dilla, F. J. Stewart, Frank C. Hefferren, and Earl Girard for respondents.

A. H. Schwietert, Herschel A. Hollopeter, John S. Burchmore, James F. Dougherty, Grant Arnold, P. E. Johnson, George G. Miller, F. L. Partridge, Sidney G. Creswick, C. V. Curran, Andrew H. Brown, A. W. Dahlstrom, Philip H. Porter, John T. Porter, G. R. Armstrong, A. E. Hueneryager, A. R. Lillie, C. L. Fenstermaker, William H. Taylor, Jr., M. S. Proctor, C. E. Lumpp, T. W. Mackey, A. Stanley, William H. Ott, Jr., William A. Angus, E. F. Stecher, E. A. Gorges, Vern W. Porter, Wm. L. Fogleson, Charles T. Coy, Frank H. Luther, C. Kuhn, Peter W. Kroeker, H. T. Reed, O. B. Wynn, Arthur F. Manning, Jr., J. W. Deininger, H. K. Rogers, Paul A. Snyder, R. F. Hynds, I. L. O'Brien, J. T. Schatt, J. W. Deininger, S. Evans, Jr., Arthur F. Manning, J. P. Friel, Luther M. Walter, Nuel D. Belnap, Robert N. Burchmore, and R. K. Keas for protestants and others.

Harvey P. Schneiber for Price Administrator and Director of Economic Stabilization, and Walter D. Matson, Henry A. Cockrum, and Charles W. Bucy for Secretary of Agriculture, protestants.

This report also embraces No. MC-C-496, Central Territory-Emergency Charges; and No. MC-C-518, Central Territory-Less Than Truckload Class Rates.

A. O. Graves for Michigan Public Service Commission, William V. Blake for Public Utilities Commission of Ohio, and C. E. Schreiber, Judd H. Justeson, Ivan A. Sherman, John S. Cavanaugh, and A. Wilford Larson for Public Service Commission of Wisconsin, protestants.

REPORT OF THE COMMISSION

DIVISION 3, COMMISSIONERS MILLER, PATTERSON, AND BARNARD

BY DIVISION 3:

These proceedings present related issues regarding successive rate increases by motor common carriers in central territory,2 and will be considered together. Nos. MC-C-496 and MC-C-518 originally were heard together and were the subject of a recommended report and order by an examiner, but later were further heard on a consolidated record with the title proceeding. Thereafter, the issues in the three proceedings were considered in a single proposed report by an examiner, to which exceptions were filed by the Department of Agriculture, and the respondents replied.

3

Effective July 1, 1945, the motor common carriers of property which were parties to certain tariffs of the Central States Motor Freight Bureau, Inc., agent, hereinafter called the bureau, and certain other respondents, established general emergency increases of 1 cent in truckload rates and 2.5 cents in less-than-truckload rates, excluding minimum charges per shipment, applicable for the most part within central territory. Petitions for suspension and investigation of the increased rates were filed by numerous parties. The Commission, division 2, declined to suspend the operation of the schedules, but upon its own motion, by order entered June 30, 1945, instituted an investigation, No. MC-C-496, into and concerning the reasonableness and lawfulness otherwise of the rates and charges resulting from the said emergency increases.

On February 28, 1946, and later dates, the motor common carriers of property which were parties to tariffs of the bureau, and certain other respondents, established a further general emergency increase of 20 cents on less-than-truckload shipments under 5,000 pounds, other than minimum charge shipments, also applicable for the most part within central territory. Division 2 also declined to suspend the operation of these schedules, but upon its own motion, by orders

'Central territory may generally be described as including all points in Illinois, Indiana, Michigan, Ohio, and Wisconsin; points located in small adjacent portions of Kentucky, New York, Pennsylvania, and West Virginia, and the west-bank Mississippi River crossings in Iowa and Missouri. Central Territory Motor Carrier Rates, 8 M. C. 233. 'Rates herein are stated in amounts per 100 pounds.

entered February 25, 1946, and later, entered upon an investigation, No. MC-C-518, into and concerning the reasonableness and lawfulness otherwise of these increased rates and charges, and the rules, regulations, and practices affecting such rates and charges.

After the hearing in the foregoing proceedings, but before the expiration of the time for filing briefs therein, most of the respondents filed tariff schedules proposing further increases and changes in rates. As indicated in the following paragraph, these latter schedules were suspended for investigation in the title proceeding. Because of these further proposals, and because of certain deficiencies in the evidence in the two foregoing proceedings, an examiner in his report and recommended order therein made no definite findings, but suggested that they be reopened for further hearing in conjunction with the title proceeding. Thereafter, Nos. MC-C-496 and MC-C-518 were reopened for further hearing and the three proceedings were consolidated.

The schedules under investigation in the title proceeding were indicated to become effective February 28, 1947, and later dates, and were filed by the motor common carriers parties to certain tariffs of the bureau and those of Transamerican Freight Lines, Inc., Germann Bros. Motor Transportation, Inc., and Merchants Freight System, Inc. Therein, the respondents proposed general increases of 14 percent in their rates in central territory, of 14 to 25 percent in various accessorial charges, and of about 24 percent, from $1.05 to $1.30, in the minimum charge per shipment. Upon protest, operation of these schedules was suspended until September 27, 1947, and the effective date thereof has been postponed indefinitely by the respondents. At the consolidated hearing and further hearing in the proceedings under consideration, evidence was presented by or in behalf of respondents, shippers, shippers' associations, chambers of commerce, the Secretary of Agriculture and the Public Service Commission of Wisconsin.

Primarily, these proceedings deal with the adequacy of the revenues of the respondents, and with the question whether particular classes of traffic have been or will be unduly burdened with respect to other classes. Individual rates are not under consideration.

The respondents' rates, as initially filed with this Commission, effective April 1, 1936, were generally on the same level as the rates of the railroads. When the railroad rates were increased generally 10 percent on March 28, 1938, pursuant to Ex Parte No. 123, Fifteen Percent Case, 1937-1938, 226 I. C. C. 41, the respondents increased their rates in like amount. On March 18, 1942, the respondents increased their rates generally by 6 percent following corresponding increases

authorized for the railroads in Ex Parte No. 148, Increased Railway Rates, Fares, and Charges, 1942, 248 I. C. C. 545, but when the latter increases in railroad rates were suspended by order of the Commission, effective May 15, 1943, the respondents did not make a corresponding reduction, and their rates thereupon became generally 6 percent higher than the railroad rates. The rates which were in effect on March 17, 1942, just prior to the Ex Parte 148 increases, are referred to herein as the base rates.

On March 6, 1944, the respondents' rates were increased by 4 percent. On July 1, 1945, they established emergency charges of 1 cent on truckloads and 2.5 cents on less than truckloads, the lawfulness of which is in issue herein in No. MC-C-496, and, on February 28, 1946, a flat increase of 20 cents on less-than-truckload shipments under 5,000 pounds, in issue in No. MC-C-518, was established.

The proposed general increases on all traffic which were suspended in the title proceeding were proposed for the purpose of meeting respondents' rising costs of operation estimated at 14 percent on January 1, 1947, over the second quarter of 1946, principally because of new labor contracts and rising cost of materials.

Interim rates.-Shortly after the suspension of the rates in issue in the title proceeding, and prior to the hearing therein, the respondents were authorized by the Commission to increase their rates and charges, except minimum charges per shipment, during the pendency of that proceeding, to a level not more than 25 percent higher than the base rates, but not exceeding the corresponding rates and charges under suspension in the title proceeding, and not exceeding, on shipments weighing 5,000 pounds or more, the increased rates and charges on shipments weighing less than 5,000 pounds. Such rates, hereinafter called the first interim basis, were established by respondents parties to the bureau and Transamerican tariffs, on April 18 or 24, 1947. As the rates then in effect already reflected increases, over the base rates, of 6 percent, plus 4 percent, plus 1 cent on truckloads and 2.5 cents on less than truckloads, plus 20 cents on less-than-truckload shipments weighing less than 5,000 pounds, the increases authorized by this first interim basis were, at best, something less than 15 percent above the then current rates, and on many shipments no increase at all applied. The latter circumstance resulted from the fact that the flat increase

'As already indicated, the base rates are those which were in effect on March 17, 1942, at which time the respondents' rates were substantially the same as the contemporaneous rail rates. The authorized basis of 25 percent above the level of rates in effect on the base date corresponded, in general, to the general increases authorized for rail carriers in related territory in Increased Railway Rates, Fares, and Charges, 1946, 266 I. C. C. 537, decided December 5, 1946.

of 20 cents on shipments under 5,000 pounds, already in effect but established subsequent to the base date, in most instances exceeded 25 percent of the base rate, and in that event no change was made in the existing rate on such quantities.

Subsequent to the hearing in the title proceeding, the Commission permitted respondents to establish still further general increases in their rates and charges, as hereinafter shown, of which official notice will be taken. In November 1947, under special permission of the Commission, respondents established a second interim basis of class rates on less-than-truckload shipments weighing less than 5,000 pounds which was differentially 20 cents higher than the corresponding rates on less than truckloads of greater weight established under the first interim basis. This did not result in a flat increase of 20 cents on the smaller shipments, for, as heretofore explained, the rates thereon were already substantially higher than those on the larger shipments.

In January and July 1948 successive general increases in rates or charges, each of approximately 10 percent, and preserving the 20-cent differential on shipments of 5,000 pounds or less, were permitted to become effective. These increases were effected to meet additional increases in the cost of operation which had actually been incurred or were impending. These general increases have resulted in a basis of rates which is generally above the level which would have become effective under the proposals in the title case. The approval of the proposals in the title proceeding would not, therefore, affect substantially the present general level of rates. In the circumstances, the proposals in the title case will be deemed to have been modified to the basis of the rates and charges established in the interim period.

It may be observed, also, that despite the foregoing increases, respondents' rates on less-than-truckload shipments of 5,000 pounds or more are lower than the corresponding railroad rates on less-thancarload shipments. Because of the respondents' differential of 20 cents on shipments weighing less than 5,000 pounds, these rates are somewhat higher than the corresponding rail rates.

Minimum charges per shipment.-These charges are in issue herein only in the title proceeding. The proposal therein is to increase the minimum charge of $1.05 per shipment to $1.30, and the proposed charge was not modified in the subsequent interim adjustments. On September 25, 1947, however, following the findings of division 2 after further hearing in Minimum Charges in Central Territory, 47 M. C. C. 259, the respondents increased their minimum charges per shipment, on traffic moving at class rates, from the general basis of the charge for 100 pounds at the applicable rate, but not higher than first class, and