75.

In determining what are reasonable | Piece Goods in the South, 234 I. C. C. minimum rates, the commission must 525. keep in mind such opportunity as the shipper may have to furnish his own private transport, and the conditions under which he will resort to this opportunity.-Candy from Reading, Pa. to Baltimore, Md., 237 I. C. C. 89 (95).

In opposite direction.-It has been the policy of motor carriers to maintain lower rates on commodities northbound between Memphis and Chicago than are maintained southbound. -Refrigerator Material, Memphis, Tenn., to Dayton, Ohio, 4 M. C. C. 187. Rail lines have similar, perhaps bet

It cannot be said that one conducting a business as a carrier would be expected to operate his vehicles, collecting ter, opportunities to cut under the charges barely covering cost of opera-higher rates in the reverse direction tion, to meet costs of the shipper's pri- upon which respondent is dependent for vate operation. Such a principle would any profit.-Id., p. 189. disrupt and demoralize the entire trucking industry.-Draper Extension-Kansas City, 16 M. C. 13.

Charges under prescribed rates for common carriers are substantially higher than the expense of private operation by the packers, even after considering the instances where such vehicles would return without load. Proposed rates to meet privately operated competition would move considerable tonnage and would yield a reasonable margin of profit above operating expenses. Approved. Central Territory Motor Carrier Rates, 12 M. C. C. 153 (157)*.

Although it is represented that minimum prescribed rates will cause the shipper either to transport the traffic in its own trucks or discontinue shipments, proposed rates would not produce revenue equaling average costs of operation or return any profit. Reduction denied.-Id., p. 163.

Between Memphis and St. Louis preponderance of traffic moves southbound. Northbound rates have generally been made on a level lower than southbound rates. The same situation prevails, in large measure, in rate structures of rail carriers.-Proportional Rate Drugs-Memphis, St. Louis, 12 M. C. C. 447 (450).

on

Charges which admittedly yield revenues no greater than the cost of service, which must be supported by higher charges for hauls in the opposite direction to insure a profit on round trips, unlawful.-D & H Motor Freight, Commodities in N. J., N. Y., and Pa., 22 M. C. C. 389 (393).

Rates established to attract eastward movement, defendant's predominant movement being westward, on a less than minimum reasonable basis, condemned.-Mid-Western Motor Freight Tariff Bureau, Inc., v. Eichholz, 4 M. C. C. 755 (768).

A greater volume of traffic moves northward from the Chicago district to Minneapolis and St. Paul than southbound, and respondents have published lower rates southbound. Accordingly, they endeavored to establish rates on this basis in both directions, which on

Private carrier's 15 cents per mile, leased equipment, seems low, but rapid turn-over in use of equipment results in low costs; overhead, particularly solicitation, publication of tariffs, some supervision expenses, constituting about 8 percent of the total cost, or 2 cents per truck-mile, is avoided. Private operator might be willing to forego interest on investment.-Petroleum between Wash., Oreg., Ida., Mont., 234 I. C. C.waukee, 12 M. C. C. 453. 609 (626)*.

round-trip movements will return a reasonable profit on the operation as a whole. Proposed rate too low.-Paper Articles-Twin Cities-Chicago and Mil

76. In the same territory.-Before Effect of private trucking on cotton the commission approves establishment piece goods movement, see-Cotton of reduced motor-carrier rates which are

lower than rates maintained on the same | The 20,000 pound figure is used in contraffic generally by other motor carriers in the same territory, it should have convincing evidence such reduced rates will be reasonably compensatory.-Hosiery- ton and Providence, 2 M. C. C. 530 Loudon and Roane Counties, Tenn.-St. Louis, 17 M. C. C. 464.

It may ultimately be found that both rail and motor carrier rates should conform to cost of service principles, but at present motor rates cannot reasonably be constructed without regard to 100. Costs considered; truck-capac- competition of other carriers.-Central ity. - Assumption that cost of opera-Territory Motor Carrier Rates, 8 M. C. tion of a 6-ton capacity vehicle is only C. 233*. slightly less than one of 9-ton capacity is not borne out by the record.-MidWestern Motor Freight Tariff Bureau, Inc., v. Eichholz, 4 M. C. C. 755 (776).

Dock charges defined; storage of furniture, with dock-charge against the outgoing carrier, see-Practices of Motor Common Carriers of Household The most economical unit for trans- Goods, 17 M. C. C. 467 (475), (492). porting freight is the one capable of 102. Operating costs.-In figuring transporting the greatest pay loads. A the time element in each length of haul, 12-ton truck is capable of transporting a speed of 10 miles per hour was as20,000 pounds of pay load without ex-sumed, for the first 5 miles, 15 miles ceeding a gross weight of 40,000 pounds. for the last 5 miles, 25 for the interme

diate milage. Time estimated for the first and last 5 miles allow for operation through congested terminal areas, and the differences in assumed speeds of travel allow for operation in different sizes of areas.-Fifth Class Rates between Boston and Providence, 2 M. C. C. 530 (534).

terminals, while others attempt to give all points on their routes complete service, transporting in both interstate and intrastate commerce.-Id., p. 760.

Substantial increases, last half of 1937 and first half of 1938, have accrued in prices of tires, gasoline, oil, motor vehicles, cost of labor. Regulation has added to traffic and tariff expenses. Average expense per ton of 121 car

months in 1938 it was $7.54, increase of 16 percent.-Central Territory Motor Carrier Rates, 8 M. C. C. 233*.

Rates prescribed are affected by cost and must be based upon average cost of all carriers handling the various kinds of traffic. In central territory, at least for the time being, considerations other than cost must influence the level of rates.-Id.

Estimate for pick-up of freight does not take into account possible delays in securing signatures to bills of lad-riers in 1936 was $6.50 while for two ing. State restriction against driving a truck more than a given number of hours per day and the fact that pick-up and deliveries must be made during business hours, considered.-Id., p. 545. Costs of operation in 1936 increased substantially over 1935.-Id., p. 545. A much more accurate method of estimating overhead expense, including traffic solicitation, general administration, and rents, would have been to It has not been shown that costs of obtain the ratio of such expenses to the operation of small carriers are lower other operating expenses of highway than those of their competitors; differcarriers, instead of relating their over-ential not justified.-New England Mohead expenses to their revenues.-Rates tor Carrier Rates, 8 M. C. C. 287*. between Arizona, Calif., New Mex., Texas, 3 M. C. C. 505 (522).

A more accurate method of estimating cargo insurance, road taxes, and return on investment, would have been to develop the ratio of those items to the actual direct and overhead operating expenses.-Id., p. 522.

That for mountainous sections actual distance was increased by 50 percent to compute constructive distances for rate-making purposes, noted.-Id., p. 519.

Operating cost per truck-mile of 21.16 is about the same as average cost of operation in western district in 1932, of 21.96 cents per truck-mile, as determined by the Federal Coordinator. Neither of these costs include any amount representing a return on the carriers' capital investment. - Mid-| Western Motor Freight Bureau, Inc., v. Eichholz, 4 M. C. C. 755 (761).

The extent to which a carrier serves the routes over which it operates greatly affects cost of the service. Some carriers transport only between their

That costs of individual carriers differ from costs of common carriers as a whole does not warrant condemnation of a class-rate structure based on the latter costs, nor of commodity rates related to these class rates.-Id.

There is no evidence of increases in costs of service since the class rates were constructed sufficient to warrant an addition of 10 percent from the standpoint of minimum reasonableness.-Id.

By equating to a 12-month period the gross revenues and total expenses for the first nine months of 1937, gross revenues of motor common carriers are shown to have been 14.72 percent in excess of gross revenues in 1936, while total expenses were 17.24 percent in excess of those for 1936.-Fifteen Percent Case, 1937-1938, 226 I. C. C. 41 (73)*.

Additional costs of transporting livestock such as greater costs of specially constructed equipment, cleaning and painting of trucks, cargo insurance, service incidental to equipment failures, heavier loss and damage claims, are not

substantial in the aggregate.-Classes and Commodities in the Southwest, 8 M. C. C. 539 (541).

Combined average operating cost for 1936 was 23.61 cents per truck-mile; for first nine months of 1937, 25.3 cents per truck-mile, not including interest on investment. Although there was an increase in 1937 in operating expenses, protestants' operating revenues remained practically the same as in 1936. Lubricating Oil and Greases from Okla. to Mo., 9 M. C. C. 465 (467). If as testified, costs of operation have increased since 1932 by 30 percent, that fact alone is indicative that rates proposed to be increased should be readjusted to reflect that change in condi. tions.-Cotton Clothing and Underwear in the South, 10 M. C. C. 691 (699).

Cost statement showing operating cost of 13.9 cents per truck-mile, criticised as not making allowance for a reasonable return on investment.-Cotton Fabrics and Cotton Piece Goods, 10 M. C. C. 275 (279).

Average cost per truck-mile of 21.96 cents is the average cost of operation of motor carriers in western district in 1933 as determined by the Federal Coordinator. - Western Territory Commodity Rates and Ratings, 17 M. C. C. 511 (521).

For 3 months ended June 30, 1939, operating costs of 56 carriers in southern territory averaged 18.7 cents per truck-mile. During 1937 and 1938 average truck-mile costs of 44 carriers in the south were 17.5 and 18.4 cents respectively.-Canned Goods from Eastern States to Ga., N. C., and S. C., 22 M. C. C. 379 (381).

103. Depreciation of equipment.Cost of round trip, 600 miles, estimated by respondent to be $30, without considering depreciation; $10 is added when depreciation is included. This represents operating cost at slightly less than 7 cents per truck-and-trailer mile, no more than the absolute minimum of out-of-pocket cost, so that it offers little assistance in determining a reasonable rate.-Minimum Weights of Coffman Bros., 9 M. C. C. 619 (624).

Costs allowed for depreciation contemplate a maximum expectancy of 90,000 miles for a 4-ton truck; provides in case of operation of less than 22,000 miles annually, for apportioning depre

While earnings, in absence of average weight of loads or average truck-mile earnings, probably are not adequate to cover costs of operation plus a reasonable profit, wide disparity between the rates and normal class-rate basis casts doubt upon the propriety of the lat-ciation over 4 years, increasing the deter.-Interstate Freight Carriers' Conpreciation allowance per mile proporference, Inc., v. Denver-L. A. Trucking tionately; if a unit be not in operation

Co., 4 M. C. C. 89 (92).

It would be impossible and unlawful to transport 60,000 pounds of sugar on a single truck. This volume would require three trucks, and from the operating standpoint, no saving per unit of volume would result from use of three trucks on the highways instead of one.Middle Atlantic States Motor Carrier Rates, 12 M. C. C. 27*.

Analysis of operating expense of 13 typical carriers, central territory, for 14 months, showed expense per net-ton mile of all traffic to be 31.5 mills and of 1. t. 1. traffic to be 33.3 mills.—Rope and Sash Cord from Rockford, Tenn., 14 M. C. C. 437.

it loses value in obsolescence which must be reflected in the costs.-Fifth Class Rates between Boston and Providence, 2 M. C. C. 530 (544).

110. Loss and damage to shipments.-Loss and damage claims, other additional costs, livestock, not substantial in the aggregate.-Classes and Commodities in the Southwest, 8 M. C. C. 539 (541).

The rubber company's products usually are not susceptible to damage in transit but transfers between carriers result in damage to the package and decrease the sale value.—Cleveland, C. & C. Highway, Inc., Extension, 3 M. C. C. 295 (297).

111.-Wages; prices; taxes. As affecting railroads, sec. 1 (5), n. 81. The trend has been upward for several years, as to wages, supplies and materials, overhead expenses. A new item of overhead expense is the contribution for social security. Respondent has sustained heavy increases in operating expenses, but escaped some measure of the general rise through its use of owner-operator vehicles.-Rates over Freight Forwarders, Inc., 4 M. C. C. 68 | (75)*.

Dangers of out-of-pocket rate making The downward movement in the level are even greater for motor carriers than of rates coincided with a sharp up- for railroads, because of the larger numward trend in wages and prices paid ber of operators and the fact that an unby motor carriers, with financial re-balanced condition of traffic is apt to be sults which were very serious.-Id., p. somewhat an individual matter. The 71. commission ought not to permit rates to

Labor costs in the New York Metro-be established which can be defended politan area generally are higher than only on the out-of-pocket cost or addedin New England and this difference in traffic theory.-Rates over Carpet City costs appears to be reflected in class Trucking, 4 M. C. C. 589 (592); Refrigrates to and from the area.-New Eng-erator Material, Memphis to Dayton, land Motor Carrier Rates, 8 M. C. C. Ohio, 4 M. C. C. 187 (189); Iron and 287*. Steel Articles over T. C. Heffelfinger Increases in costs were occasioned Estate, 9 M. C. C. 611 (612); Lubricatlargely by social-security taxes, higher ing Oil and Greases from Okla. to Mo., cost of materials and labor, tariff-9 M. C. C. 465 (468); Candy and Conprinting expenses.-Lubricating Oil and fectionery-Hershey-Baltimore, 11 M. C. Greases from Okla. to Mo., 9 M. C. C. C. 657 (661); Paper Articles-Twin Cit465 (467).

ies-Chicago and Milwaukee, 12 M. C. C. Investment of a motor carrier in tan- 453; River Terms. Corp. Class and Comgible property is relatively small as modity Rates, 14 M. C. C. 542 (551); compared with the corresponding in- Sugar from Colo. to Kans. and Mo., 18 vestment of a railroad company, and M. C. C. 248; Leather from Middlesboro, this fact must be considered in deter- Ky., to Chicago, Ill., 18 M. C. C. 265; mining the return which a motor car- Frozen Fish from Twin Cities to Chirier may fairly be allowed to earn.-cago, 21 M. C. C. 86; Groceries from Union Bus Lines, Inc.-Purchase-Am- | Aberdeen, S. Dak., to Willmar, Minn., berson, 5 M. C. C. 201 (205).

One impetus for corporate simplification of the Greyhound Corp. is the Revenue Act, 1936. Under that law it is represented that out of dividends received by a parent company from its subsidiaries 15 percent is subject to normal corporation tax, and 100 percent to surtax on undistributed corporate earnings. Greyhound Mergers, 1936, 1 M. C. C. 342 (347).

Corporation surtax on undistributed profits considered in application for is

22 M. C. C. 261.

Out-of-pocket cost is an elusive and shifting thing. The method is not a one-way affair, competitors can use it as well, and when competition is widespread the result may be to beat down a very large part of the rate structure.— Refrigerator Material, Memphis to Dayton, Ohio, 4 M. C. C. 187 (189); Shellac, Liquid, Memphis-St. Louis, 17 M. C. C. 447; Butter from Okla. City to Chicago, 19 M. C. C. 53; Tallow from Tulsa, Okla. to Mo., Ill., Ind., Ky., 19 M. C. C. 751;