was handled by private carriage. Members of CSA carried only 14.1 percent and 12.3 percent of this traffic during these years. Clearly the dominant competition faced by respondents here is that of private carriage.

Another factor sometimes considered in permitting one-way costing is the existence of a heavy and chronic imbalance of traffic. Carbon Blacks from the Southwest to Ind., Ohio & Mo., 325 I.C.C. 138 (1965); Paper and Paper Articles, Washington to California, 351 I.C.C. 737 (1976). Although respondents here have not submitted convincing evidence of a heavy and chronic traffic imbalance, all parties admit that some imbalance exists and the Commission has long been aware that a substantially greater number of carloads are terminated in Florida than originate in Florida, Incentive Per Diem-1968, 337 I.C.C. 217, 232 (1970), United States v. Florida East Coast R. Co., 410 U.S. 224 (1973).

The proposed rates are experimental. It is the duty of the Commission to promote adequate and economical service while fostering sound economic conditions in transportation. If management, through experimentation is able to reduce empty mileage while increasing economic benefits, then, in the absence of other factors, management should be allowed to exercise its discretion. Paper and Paper Articles, Washington to California, supra at page 743.

Under the circumstances of this case, then, we consider one-way costing appropriate.

We have restated respondents' costs as explained in the appendix. Our restatement reflects one rail movement (Orlando to Cincinnati) and six motor carrier segments (Cincinnati to Columbus, Toledo, Cleveland, Youngstown, Akron, and Massillon). The results of our restatement follows:

The restatement shows that the proposed rates, ranging from 97 to 119 percent of variable cost, exceed variable costs for four of the six

destinations. The costs themselves are somewhat overstated since costs for the motor portion are based upon joint rather than one-way

costs.

We find the proposed reduced experimental TOFC Plan V joint rail-motor carrier rates on foodstuffs, beverages, or beverage preparations from origins in Florida to destinations in Ohio to be just, reasonable, and otherwise lawful.

And we further find that this decision is not a major Federal action significantly affecting the quality of the human environment within the meaning of the National Environmental Policy Act of 1969.

COMMISSIONER MURPHY did not participate.

It is ordered, that this proceeding be, and it is hereby, discontinued.

APPENDIX

Respondent's cost evidence

Respondents' cost evidence is divided into two parts, one for the rail portion and one for the motor portion of the movement. For costing of the rail portion, as shown in table 1 below, respondents selected movements from the 30 Florida origins to Cincinnati. Ten of the origins have TOFC ramp facilities. Twenty of the origins or socalled "satellite points" are served by substituted highway service.

Rail unit costs for the issue traffic were developed by applying Rail Form A, Formula for Use in Determining Rail Freight Service Costs' to the 1974 combined annual report expenses and statistics of the SCL and L&N. Respondents updated unit costs to the November 1, 1975 wage and price level by means of an in-house computer program. This program applies separate indices for wages, health and welfare, payroll taxes, fuel and materials to respective expenses by accounts or portions of accounts. These accounts were used as Rail Form A inputs. The materials price index was from the Association of American Railroads' Indexes of Railroad Material and Wage Rates, QMPW series. The other indexes were based on actual expense increases experienced by the SCL and L&N from the averages of the year 1974 to October 1, 1975. The percent values for these indices are:

'Prepared by the Commission's Bureau of Accounts.

355 I.C.C.

Line-haul costs were based on actual miles of haul. Where cars moved in both way train and through train service, costs were developed to reflect the different classes of trains. The revenue trailer-mile costs were computed using a factor of 1.00 to reflect no empty return for trailers and flatcars. In addition, respondents made certain adjustments to the costs in order to reflect actual operating conditions at the Florida origin points. The adjustments are as follows:

1. TOFC ramp switching minutes per car switched (loaded or empty) and TOFC ramp switching, ratio of total to loaded cars. Actual ramp origins were developed from on-the-ground switching studies conducted during June and July, 1975. Rail Form F, Formula for Use in Determining Rail Terminal Freight Service Costs, was used to conduct a 7 day switching study at 9 of the 10 ramp points. A 3 day switching study was made at Tampa because of high volume traffic and lack of variance in Tampa ramp switching.

2. Ramp cost per revenue trailer, trailer pickup costs and substituted service costs are at the January 1976 cost level rather than October 1, 1975 levels, as were the other costs.

3. Miscellaneous cost adjustment. From the origin points, the SCL hauls the TOFC trailers to Atlanta for interchange with the L&N. The L&N then hauls the trailers to Cincinnati where the trailers are deramped and interchanged with a connecting motor carrier for delivery to the Ohio points. The costs for service performed at Cincinnati were calculated to be $35.13. These costs include the following:

a. Cincinnati ramp switching. The data is from Family Lines October 1, 1975, Rail Form A. TOFC switching origin and destination costs of $35.58 reduced to one terminal and divided by the Family Line's average trailers per flatcar of 1.54 $11.88 b. Cincinnati terminal trailer cost, 3.21 trailer days. The data is developed from ICC Statement No. 1C1-73, Rail Carload Cost Scales by Territories, 1973, table 15, line 24, Region IV, times Family Line's cost per day for nonrefrigerated trailers of $4.3282--$13.90

c. Loss and damage. This item comes from ICC Statement No. IC1-73, supra, appendix A, line 21, Canned Fruits or Vegetables times 420 hundredweight ($10.53), minus an unexplained loss and damage adjustment of $1.18 shown on respondent's appendix B, sheet 1

Total

-$9.35 -$35.13

Costs for the motor portion of the movement were supplied by Express Transportation Company (Express). Although a member of CSA, Express desires to participate in the proposed rates. Express introduced its costs for transporting the issue traffic from Cincinnati to the various Ohio destinations as shown in table 2

below. Respondents' motor cost evidence appears to have been developed from 1971 operating expenses with the line-haul portion adjusted to the December 31, 1975 level of wages and material expenses. Respondents have used what they term "approximate system average" return load in developing round trip lading weight.

Another member of CSA, Schippers Express, Inc. (Schippers) introduced further motor cost evidence in support of respondents. Table 3 shows Schippers' costs for transporting the issue traffic to the same six destinations as shown by Express. Schippers used the same unit costs provided by Express except that line-haul costs were adjusted slightly upward without explanation.

Table 1 below shows respondents' variable costs for the through movements. Respondents' evidence indicates that the proposed rates exceed the variable costs by margins of 2 percent to 16 percent.

PROTESTANT'S COST EVIDENCE

Protestant criticizes several aspects of respondents' rail cost evidence. The first criticism is of respondents' showing of rail costs partly at the October 1, 1975 level and partly at the January 1976 level with no further adjustments to reflect respondents' cost experience over the last 8 or 10 months. Protestant adds that the Wholesale Price Index of Industrial Commodities rose 3 percent from October 1975 to May 1976.

Protestant also criticizes respondents' use of ICC studies because of deviations from standard Commission costing formula. In addition, protestant states that respondents have not provided testimony or statistical evidence to indicate the validity and accuracy of their own special studies.

Finally, protestant attacks respondent railroads' calculation of revenue trailer-mile costs. Protestant states that the railroads have not justified their contention that there is no empty-return for railroads and contends that there is no way that the railroads can be 100 percent free of empty miles.

In regard to respondents' motor costs, protestant states that the motor carrier costs submitted by both Express and Schippers are not identifiable since there is no indication of the source of the basic unit costs used in developing the costs. CSA contends that without substantiation, the costs shown by respondents are of no value. Protestant takes issue with respondents' showing of line-haul costs per vehicle-mile and per hundredweight-mile at the 1971 level while the line-haul cost per hundredweight is shown at the December 31, 1975 level. Protestant contends that even if the source and manner of respondents' updating were known, respondents have not shown costs at their current level. The April 1, 1976 labor cost increase of 9 percent has increased the carriers' cost by 6 percent. In addition, CSA criticizes respondents' cost update procedure since respondents have failed to explain why linehaul costs but not pickup and delivery, or billing and collecting costs were adjusted to the December 31, 1975 level.

Finally, protestant criticizes respondents' use of an “approximate system average” return-load figure because the figure varies between origin and destination pairings in respondents' exhibit, and respondents provide no explanation for the variance.

Protestant submitted its own costs data developed for the Orlando to Cincinnati rail movement. These costs are shown in table 5. The costs were developed at both the variable and fully allocated levels based on 1973, Region IV, Southern Region, costs taken from Commission Statement No. 1C1-73, supra. Costs were further indexed to the July 1, 1975 level.

Protestant's motor cost data was based upon four movements from the Cincinnati interchange point to four destinations in Ohio. The costs were developed from Commission Statement No. 2C9-71, Cost of Transporting Freight by Class I and Class II Motor Common Carriers of General Commodities-Central Region-1971. Costs were adjusted to the year 1973 wage and price level, then further indexed to the July 1, 1975 level.

Table 4 below shows the results of protestant's calculations for the through rail/motor movements. Protestant shows revenue/cost ratios for traffic moving to 4 of 10 destinations ranging from 73 percent to 89 percent at the variable cost level and from 65 percent to 77 percent at the fully allocated level.

RESPONDENTS' REPLY

In reply to protestant's criticism of the underlying special studies used in its cost computations, respondents state that protestant had the opportunity to inspect respondents' workpapers and underlying studies, but chose not to do so. Respondents point out also that protestant could have availed itself of the Commission's Discovery Rules, but chose not to do so.

Respondents also take issue with protestant's development of terminal costs at Cincinnati. Respondents argue that protestant has included terminal costs for both the rail origin and the rail termination when the Cincinnati services and related costs are provided by the motor carriers.

In regard to motor costing, respondents reply first to the criticism that its costs are not adjusted to the proper current levels. Respondents state that the costs shown are their actual costs. In addition, respondents contend that pickup and delivery, and billing costs are actual costs for terminal services at the December 31, 1975 level rather than at the 1971 level as contended by protestant. Consequently, these figures need no adjustment.

Express contends that since it is not signatory to the Teamster contract, it would not, of necessity, incur the alleged increased labor costs as claimed by protestant. Therefore, according to Express, the cost figures in its original statement accurately reflect operating costs.

In answer to protestant's criticism of the use of "approximate system average," respondents state that use of "approximate system average" return load weights results from adjusting their system average return load factor to exclude averages influenced by Express Transportation's Steel Division. Respondents maintain that the exclusion from their calculations of the operation for the Steel Division result in a lower return load factor and higher costs than would have been shown otherwise.

Finally, respondents explain that the variation in the return load factor applies to only one of the origin/destination pairs, i.e., the return haul from Columbus, Ohio. Respondents explain that Columbus has been a traditionally light return load point. Therefore, it was shown as being below the average of the other five considered Ohio destinations in order to accurately reflect weight factors.

OUR COMMENTS

We agree with protestant's argument that respondents should have shown the costs at a more recent level. Respondents have been inconsistent in the application of costs. Respondents have updated most of the costs to the October 1, 1975 level. However, costs for origin ramping, pickup, and substituted service are at the January 1976 level. We are unable to determine by what percentage the costs were updated inasmuch as