1 Rates subject to minimum weight of 25,000 pounds.

2Rates from New York to Cleveland and Solon were increased, effective April 15, 1963, or subsequent to the hearing, from 44, 40, 36, and 32 cents, minima 45,000, 60,000, 75,000, and 90,000 pounds, respectively.

3

Rates from Philadelphia to Cleveland and Solon were increased, effective April 15, 1963, or subsequent to the hearing, from 42, 38, 34, and 30 cents, minima 45,000, 60,000, 75,000, and 90,000 pounds, respectively.

from New York to Detroit reduced, effective September 7, 1963, to 110

Although the rates of Emery include refrigeration service, Emery assesses other charges for other services performed in moving the traffic. In addition to the rates, Emery assesses (1) a pier charge of 5 cents on shipments moving to certain destinations, and (2) a loading charge of 31/2 cents and 1 cent at New York and Philadelphia, respectively.6

In general, the assailed rates are not restricted to single-line rail movements. The rates assailed from Philadelphia, as is pertinent, also apply from Wilmington, Del., and those assailed from New York also apply from various other points in the port area, such as Brooklyn, N. Y., Port Newark, and Jersey City. However, the application of the rates from points in the port area of New York are restricted as follows: The rates maintained by the Pennsylvania Railroad Company only apply on traffic discharged from vessels at certain piers at Port Newark and Jersey City, and on traffic discharged from vessels at other points when handled in car float service; the rates maintained by the New York Central Railroad Company only apply on traffic discharged from vessels at Port Newark, and on traffic discharged from vessels at other points when handled in car float service; the rates maintained by the Central of New Jersey Railroad Company only apply from Port Newark; and the rates maintained by the Baltimore and Ohio Railroad Company apply only when the traffic is originated on the Central of New Jersey Railroad Company at Port Newark and is routed via a specified route.

In addition to the assailed rates, the defendants, on shipments of frozen meat from the origins to the destinations in issue, also assess the following charges: (1) a wharfage charge of 7 cents, and (2) a per-car refrigeration charge which, generally, is based on distance.

The assailed rates constitute a downward revision in the level of rates previously maintained by the defendants on this traffic. The rates from the five ports are related and reflect the normal relationship in rates maintained by the defendants among the various ports. For example, the assailed rate, minimum weight 45,000 pounds, from New York to Chicago is 70 cents, and the corresponding rates from Philadelphia, Baltimore, and Norfolk are 68, 67, and 67 cents.7 The assailed rates, minima 60,000, 75,000, and 90,000 pounds, are incentive rates, and are also related and also reflect the normal relationship in rates maintained by the defendants among the various ports. The

Under the provisions of the tariffs, stevedoring charges in excess of 13 cents incurred by Emery at New York and Philadelphia are assessed against the shipper, and at present, the corresponding charges are 161⁄2 and 14 cents. 7The rates assailed from Boston are not shown of record.

incentive rates are approximately 10 percent lower than the corresponding rates at the next lower minimum. As illustrative, the assailed rate, minimum 45,000 pounds, from New York to Chicago is 70 cents, and the assailed incentive rates, minima 60,000, 75,000, and 90,000 pounds, from and to the same points, are 63, 57, and 51 cents, respectively.

PART II-EVALUATION OF COST DATA

The complainant contends that the assailed rates are noncompensatory, and, therefore, unjust and unreasonable, and the defendants urge the contrary. The complainant and defendants submitted cost studies in support of their respective positions. The issue regarding the compensativeness of the assailed rates is categorized by the complainant as the primary issue presented for determination.

The complainant, at the hearing, introduced an exhibit showing that the assailed rates at the various minima are less, with certain minor exceptions, than the corresponding out-of-pocket rail costs for providing the service from New York, including Port Newark, and Philadelphia to 16 of the 27 destinations over the short-line rail routes. On brief, the complainant submitted an additional cost study wherein certain revisions in the original study were made based on certain evidence developed at the hearing, and, in addition, developed the out-of-pocket costs for movements from Port Newark to the same 16 destinations,8 which costs are shown as being higher than the corresponding assailed rates. In both instances, the studies are predicated substantially on eastern district data from public statement No. 3-61, “Rail Carload Cost Scales by Territories for the Year 1960," prepared by the Commission's cost finding section.

Although the study submitted on brief shows that the out-of-pocket costs of providing the service in issue are somewhat less than those originally shown from New York, including Port Newark, and Philadelphia, the complainant does not recede from its position that the costs originally developed by it represent the costs of providing the service from New York, including Port Newark, and Philadelphia. However, the latest study is intended to show that if certain of the evidence of record, including some introduced by the defendants, were substituted for the data originally utilized by the complainant, the assailed rates at the various minima, nevertheless, are less, with certain minor exceptions, than the costs for moving the traffic via the short-line rail routes from New York, Port Newark, and Philadelphia to the same 16 destinations. As illustrative of the different results reached in the original and revised studies, the assailed rate on a shipment weighing 45,000 pounds from Philadelphia to Chicago, a short-line distance of 814 miles, is 75 cents, including wharfage charge of 7 cents, and the out-of-pocket costs on the movement are shown by the complainant as 125.3 cents in its original study, and 113.9 cents in revised one.

The defendants also submitted a cost study wherein the out-of-pocket costs for providing the service on certain specific shipments moving from points in

8 No

No costs are shown in either study of the complainant for movements from New York, Port Newark, and Philadelphia to Davenport, Milwaukee, Akron, Columbus Grove, Marion, Huntington, McKeesport, and Saginaw.

New York, namely, Brooklyn, Jersey City and Port Newark, Philadelphia, and Wilmington to certain destinations here in issue are shown. The study is also predicated principally on eastern district data from public statement No. 3-61, as adjusted, based on the results of a traffic study, to reflect the alleged characteristics of the movement of the instant traffic.

The traffic study embraced all of the shipments of frozen meats transported by the defendants from the North Atlantic ports to the destinations in issue during the period June 8, 1962, to October 31, 1962. A total of 161 shipments moved over the lines of the defendants from Brooklyn, Jersey City, Port Newark, Philadelphia, and Wilmington to several of the destinations in issue.

From Brooklyn, Jersey City, and Port Newark a total of 105 shipments moved to 11 of the destinations. The movements follow: Six shipments, ranging in weight from 81,200 to 110,000 pounds, moved from Brooklyn to Cincinnati, Cleveland, Columbus, and St. Louis; 42 shipments, ranging in weight from 62,080 to 106,272 pounds, moved from Jersey City to Chicago, Cincinnati, Cleveland, Detroit, Indianapolis, St. Louis, Solon, and Toledo; and, 57 shipments, ranging in weight from 52,400 to 111,424 pounds, moved from Port Newark to Chicago, Cincinnati, Cleveland, Columbus, Detroit, Louisville, Pittsburgh, Solon, and St. Louis. From Philadelphia, a total of 51 shipments, ranging in weight from 49,604 to 108,841 pounds, moved to eight destinations, namely, Chicago, Cincinnati, Cleveland, Columbus, Detroit, Napoleon, Pittsburgh, and St. Louis. From Wilmington, a total of five shipments, ranging in weight from 51,000 to 98,575 pounds, moved to four destinations, namely, Chicago, Cincinnati, Columbus, and Pittsburgh. There were no movements of frozen meats from the North Atlantic ports of Boston, Baltimore, and Norfolk to any of the destinations in issue, and there were no movements from New York and Philadelphia to destinations in the States of Iowa, Wisconsin, or West Virginia.

The cost study of the defendants shows that the out-of-pocket costs for performing the service on each of the specific shipments moving in their service during the period June 8, 1962, through October 31, 1962, were less than the corresponding assailed rates.

The differences in the out-of-pocket costs as developed by the respective parties are due to the utilization of different factors to reflect the alleged characteristics of the movement of the instant traffic. The issues relating to the method of developing the line-haul and terminal out-of-pocket costs will be considered and disposed of in the order named.

With respect to the method of developing the line-haul costs for moving the instant traffic, the issues involve the following: (1) weights of shipments, (2) distances from and to points, (3) interchange expenses, (4) ratio of empty to loaded movement of the equipment used in the service, (5) train weights, (6) freight-train car expenses, (7) gross-ton mile expenses for tare weight, and (8) hundredweight-mile lading costs.

The defendants, in determining the line-haul costs for the specific shipments which moved during the period of the traffic study, utilized the average weight of the shipments moving from and to the same points at the same rate, and, the complainants used the weights at the various minima. Generally, of course, costs based on actual experience are more reliable. However, here, the method utilized by defendants, at best, reflects the costs incurred on such specific shipments moving in the past, and, does not show the costs incurred by the

defendants on the general movement of the instant traffic at the various minima. Therefore, in ascertaining the costs for the movements in issue, the costs should be based on the average weight of all shipments which moved at the same rate in order to provide a basis upon which to determine the out-of-pocket costs incurred generally by the defendants in moving the instant traffic at the various minima.

The defendants transported a total of 6 shipments, ranging in weight from approximately 51,000 to approximately 53,312 pounds, and averaging approximately 50,838 pounds, at the assailed 45,000-pound rates, from Port Newark to Cleveland, Detroit, and Louisville; from Philadelphia to Chicago and Columbus; and from Wilmington to Cincinnati; 14 shipments, ranging in weight from approximately 60,000 to approximately 67,136 pounds, and averaging approximately 63,232 pounds, at the assailed 60,000-pound rates from the port area of New York, except Port Newark, to Cincinnati, Indianapolis, and Toledo; from Port Newark to Chicago, Cincinnati, Cleveland, Louisville, and St. Louis; and from Philadelphia to Chicago, Cleveland, Columbus, and Napoleon; 27 shipments, ranging in weight from approximately 75,000 to approximately 81,200 pounds, and averaging approximately 76,830 pounds, at the assailed 75,000-pound rates, from the port area of New York, except Port Newark, to Chicago, Cleveland, and Detroit; from Port Newark to Chicago, Columbus, Cincinnati, and Louisville; from Philadelphia to Chicago, Cincinnati, Columbus, Napoleon, and St. Louis; and from Wilmington to Columbus; and 114 shipments, ranging in weight from approximately 90,000 to approximately 111,424 pounds, and averaging approximately 101,322 pounds, at the assailed 90,000-pound rates, from the port area of New York, except Port Newark, to Cincinnati, Cleveland, Columbus, St. Louis, Chicago, Indianapolis, and Solon; from Port Newark to Chicago, Cincinnati, Cleveland, Columbus, Detroit, Louisville, Pittsburgh, Solon, and St. Louis; from Philadelphia to Chicago, Cincinnati, Cleveland, Columbus, Detroit, Napoleon, and Pittsburgh; and from Wilmington to Chicago and Pittsburgh.

Although the defendants have not moved traffic from and to all points, the past experience of the defendants in moving the instant traffic is sufficiently extensive to warrant the conclusion that the average weights of the shipments which moved and will move in their service approximate or will approximate 50,838, 63,232, 76,830, and 101,322 pounds at the assailed 45,000, 60,000, 75,000, and 90,000-pound rates, respectively. Consequently, these average weights, rather than the average weights os specific shipments moving from and to the same points at the same rate or the various minima used by the defendants and complainant, respectively, should be utilized as the weights of the shipments for the purpose of determining the line-haul costs from and to each of the points in issue.

Generally, the average mileages and average number of interchanges experienced by the defendants in moving the traffic from the same origins to the same destinations, as developed by their traffic study, are more representative of the characteristics of the instant movements, since they reflect actual operating experience, than the corresponding short-line distances, as increased, in effect, 13 percent for circuity, and the territorial average number of interchanges on all traffic, utilized by the complainant, and, therefore, should be utilized to determine the line-haul costs. However, the latter factors should be used to represent the movement characteristics of the instant traffic from