Walter N. Bieneman for respondent.

Martin J. Leavitt, Ronald C. Nesmith, and Robert A. Sullivan for protestant.

By schedules which became effective December 11, 1973, respondent Automobile Transporters Tariff Bureau, Inc. (ATTB), published what it describes as a 5-percent increase in two tariffs. The increase in tariff No. 164-H, MF-I.C.C. No. 287 applies on imported automobiles transported from named ports and preparation centers along the Atlantic seaboard (from Baltimore, Md., to Boston, Mass.), to points in 25 States and the District of Columbia. Thirteen motor carriers participate in the tariff. The increase in tariff No. 165-1, MF-I.C.C. 288 applies on imported vehicles moving from various ex-water and ex-rail origins in the Great Lakes area of the Midwest to points in 31 States and the District of Columbia. Fourteen carriers join in the tariff. The increases were protested by Volkswagen of America, Inc., and its subsidiaries, and though not suspended were made the subject of an investigation.

The Commission directed that the proceeding be handled under the modified procedure which provides for the parties to submit their evidence in the form of verified statements. Statements were submitted by respondent tariff bureau and by a cost consultant whose study purports to show that the assailed rates do not exceed a reasonable level. A verified statement was submitted by an official of the named protestant and by two consultants, one of whom speaks mainly to the lawfulness of incorporating the toll charges into the line-haul rates, while the other offered a cost study designed to establish that the assailed rates are unreasonably high. Reply verified statements were filed by respondent tariff bureau and three of the carriers participating in the assailed publications, namely M & G Convoy, Inc., Nu-Car Carriers, Inc., and F. J. Boutell Driveaway, Co., Inc. and by the cost consultant. Argument memoranda were filed by counsel representing the parties. Protestants moved to strike portions of the original and reply statement filed by respondent tariff bureau, portions of the reply statement submitted by the cost consultant as well as the reply statements in their entirety offered by the three participating carriers. Respondent answered the motions to strike, and in turn moved to strike portions of the statements filed by protestant's official and by the consultant who testified regarding the lawfulness of incorporating the toll charges into the line-haul rates. Each of the assailed publications contain four different groups or columns of rates. The columns A and B rates apply on vehicles weighing under 2,500 pounds. The column A rates are higher and require a minimum load of six vehicles on a truck, while the column B rates require a minimum of seven vehicles. The column C rates apply on vehicles weighing between 2,500 and 3,000 pounds while those in column D extend to vehicles weighing over 3,000 pounds. Both the column C and D rates require minimum loads of six vehicles per truck. The column C rates are higher than either the column A or B rates while those in column D are higher than those in column C. Protestant's concern relates in the main to the rates in columns A and B inasmuch as these rates apply on vehicles weighing less than 2,500 pounds. Substantially all the Volkswagen traffic moves under the column B, seven-vehicle minimum rates.

RESPONDENT'S EVIDENCE

Respondent relies on rate comparisons and a cost study in support of its belief that the assailed increases are just and reasonable. This section of the report will in the

main discuss the rate comparisons and the incorporation of certain accessorial charges into the line-haul rates. The cost evidence will be treated in a separate section of the report.

For some years the predecessor publications of the assailed tariffs contained provisions described as "Toll Charges" whereby a designated charge was added to the line-haul rate. In the assailed publications these charges have been incorporated into the line-haul rates. Respondent submits that this does result in an increase in the total charge which the shipper must pay but merely alters the way the charge is computed. For example, the prior publication in the tariff No. 164 series carried a column A rate of $59.60 per vehicle, applicable to a load of six vehicles, from Baltimore and Dundalk, Md., to Hartford, Conn. The 5-percent increase is said to bring the charge to $62.10. The toll charge on a six-vehicle load to Connecticut is $28.20 or $4.70 per vehicle. Application of the latter charge to the rate of $62.10 produces a total figure of $66.80 which is the rate under investigation. With the publication of the assailed schedules the toll charges in both tariffs were canceled except as hereinafter noted. Respondent submits that toll charges at one time applied on the movement of domestic automobiles but were eliminated in the same fashion as was accomplished in the assailed schedules. The change will expedite the preparation and improve the accuracy of freight bills and will make it easier for the shipper to verify the bills. Respondent tariff bureau submits that automobile transporters depend mainly on the traffic tendered by the four major domestic producers to sustain their operations. The rates charged these accounts are watched closely and they are constantly being increased to reflect the increased cost of conducting business. In contrast, the transportation of imported automobiles represents only a small percentage of the domestic volume and the level of these rates has not been watched as closely with the result that rate increases on imported traffic have generally lagged in relation to the increases applied on movements of domestic automobiles. About the time the assailed publications were filed respondent tariff bureau received information from its member that labor costs increased about 7.2 percent effective September 1, 1973, and that there had been sharp increases in fuel, truck parts, pension and welfare payments, office salaries, and Social Security Taxes.

Nu-Car Carriers, Inc., in its tariff series 40 publishes rates on automobiles from Edison Township, Middlesex County, N.J. There is no provision specifying a minimum number of vehicles to be loaded on a truck, nor is there a charge for drop-off service or circuity. The cost of these services was taken into account in establishing the rate level. A single per vehicle rate applies from origin to destination regardless of the circuity entailed by the truck in making delivery. Such a method of publication affords the shipper a ready means of checking the correctness of the charge being assessed. The only vehicles transported under this tariff are Pinto automobiles produced by the Ford Motor Company at or near Edison. The vehicles weigh between 2,344 and 2,554 pounds and about 2,400 units move South each month. During the first 9 months of 1973, the average load was 7.4 vehicles per truck. Within recent months the average increased to 7.9 per truck. Respondent participates in the movement of Volkswagens pursuant to the column B rates in tariff 164-H. An average load is comprised of seven vehicles. The volume of import traffic moving north from Baltimore is much less than the southbound movement out of Edison. About 100 imported vehicles move from Baltimore north to New Jersey each month.

Comparison is made of the tariff 40 rates from Edison, as of June 5, 1974, including a fuel surcharge of 2 percent, to 12 points in Maryland, Delaware, and Virginia with the assailed rates including a 4-percent fuel surcharge from Baltimore to 12 points in

New Jersey, Pennsylvania, and New York for comparable distances. The Edison rates for trips ranging from 109 to 226 miles produce from $286 to $481 per truckload and from $2.13 to $2.62 per mile. For the 158-mile trip from Edison to Baltimore the revenues are $368 per truck and $2.33 per mile. The assailed rates for approximately the same distances generate truckload revenue ranging from $169 to $378, and revenue per mile of from $1.57 to $1.91. Thus on the 157-mile trip from Baltimore to Sommerville, N.J., the revenues are $264 per truck and $1.68 per mile. The advantage the assailed tariff affords shippers persists even when the $5.25 per vehicle charge for split delivery is added to the line-haul rate.

The above comparisons are predicated on the assumption that seven vehicles comprise a truckload. To the extent the load factor on movements from Edison exceeds seven vehicles the earnings are greater than those depicted. Though tariff series 40 does not require a minimum number of vehicles be loaded on a truck, the great volume of traffic handled out of Edison enables respondent to load its vehicles in the manner deemed most efficient.

Respondent M & G Convoy, Inc., participates in the movement of domestic automobile traffic from the Chrysler plant at Newark, Del., pursuant to the terms of ATTB Tariff No. 134. This tariff contains a five-vehicle truckload minimum. During the second quarter of 1974, 29,828 vehicles were moved from Newark. Import tarffic is handled pursuant to the terms of E. J. Bannon's Tariff No. 4 and during the second quarter of 1974, 871 imported Chrysler vehicles with an average weight of 2,478 pounds and a load ratio of 6.93 vehicles per truck were handled. A minimum of six vehicles is required to comprise a truckload and each vehicle is subject to a toll charge in addition to the line-haul rate. Because of the large volume of traffic handled for Chrysler no problem is experienced in making up full truckloads to one destination or several closely grouped destinations. In such circumstances respondent submits there is no need for a truckload minimum. The cost of providing split delivery service is one of the elements taken into account in setting the level of the rates. Under Bannon Tariff No. 4, which covers imported Chrysler vehicles from Japan received at Baltimore, respondent is securing about $9 per vehicle more revenue than it does on Volkswagen traffic handled under tariff No. 164-H at the seven-vehicle rate. An average of 3.5 drops per truckload are extended to the Chrysler imported traffic. Assuming the Volkswagen traffic required similar drop-off delivery service, the $5.25 charge per drop-off in the assailed publication would generate additional revenue of $18.37 per load or $2.65 per vehicle based on an average load of 6.93 vehicles. Thus even when the tariff No. 164-H, drop-off charge is taken into account, shippers using the aforementioned tariff enjoy an advantage of more than $6 per vehicle.

Recently with the decline in sales volume, protestant is no longer always shipping in truckload quantities to single destinations. During the week ending May 31, 1974, on Volkswagen traffic moving through Port Newark, N.J., M & G handled 95 single destination loads, 41 two-destination loads. 4 three-destination loads. I fourdestination load, and two loads which entailed split pickups. For the week ended June 8, 1974, it handled 100 loads moving to single destinations, 35 going to two destinations. 7 three-destination loads, and I split pickup. Thus protestant is no longer consistently offering full trailerloads to single destinations.

Respondent also participates in the movement of Chrysler traffic from Detroit to the East pursuant to Bannon Tariff No. 2-L. During the first 6 months of 1974, a total of 46,146 vehicles were transported with an average of 6.95 units loaded on a truck. The tariff requires no truckload minimum and there is no charge for stop-off delivery

service. Reference is made to 11 typical movements during April and May 1974 where the same driver and equipment which moved a load from Detroit to the East returned from Baltimore with a load to the West, or vice versa. The 11 eastbound movements aggregated 75 vehicles which moved a total of 5,263 miles producing revenue of $7,737 or an average of $1.47 per mile. The companion westbound movements (handled under assailed tariff No. 164-H) comprised 76 vehicles which moved a total of 6,523 miles producing aggregate revenue of $8,392 or $1.28 per mile. During the period studied the 4-percent fuel surcharge was in effect in tariff No. 164-H on the westbound movement, but the corresponding 3-percent increase on the eastbound movement did not become effective until the end of April with the result that three of the eastbound moves which occurred in April, prior to the increase, were not subject to the surcharge.

Each of the 11 eastbound movements entailed one or more drop-off deliveries for a total of 28 drop-offs. All the westbound moves comprised full loads to single destinations. Respondent shows that had the westbound traffic require drop-off service corresponding to the eastbound, additional revenue of $147 would have been generated causing the average revenue per mile to increase to $1.30, but still 17 cents less than that realized from the eastbound movements under tariff No. 2-L. A comparison of 10 eastbound movements from Detroit under tariff No. 2-L and a corresponding number of westbound movements from Port Newark pursuant to tariff No. 164-H, during May and June 1974, for approximately equal distances, shows that the eastbound loads comprised a total of 72 vehicles which aggregated 2,393 miles producing revenue of $4,633, while the 10 westbound moves comprised 72 vehicles which moved an aggregate of 2,388 miles bringing in revenue of $3,946. The average revenue per eastbound move was $463 or $1.93 per loaded mile and $395 westbound or $1.65 per loaded mile. Five of the movements from Detroit entailed a total of 10 drop-off deliveries. Three of the movements from Port Newark entailed a total of six drop-off deliveries. Extending to the westbound movements the difference of four drop-offs at $5.25 each produces additional revenue of $21 which increases the revenue per mile to $1.66.

F. J. Boutell Driveway Co., Inc., publishes rates in its tariff No. 36 applicable at Baltimore on automobiles produced at named points in Belgium, Germany, and Japan where General Motors maintains plants. The principal import handled by respondent is the Opel which like the Volkswagen weighs less than 2,500 pounds. The rates in this tariff are not subject to a truckload minimum but respondent has no difficulty in forming loads of seven vehicles and it consistently handles such loads the same as it does on Volkswagen traffic moving pursuant to tariff No. 164-H. Respondent is tendered a substantial volume of General Motors domestic and import traffic and is free to assemble its loads in the way it deems to be most efficient with a given load going to one common destination or to several destinations where split delivery can be efficiently performed.

Comparison is made of the assailed seven-vehicle minimum rates with the tariff No. 36 rates including toll, from Baltimore, Md., to 14 points in Maryland, New Jersey, and Pennsylvania. The rates in the tariff under investigation range from $8.55 to $9.65 less per vehicle than do the compared rates. On a load of seven vehicles protestant's advantage ranges from $61.95 to $68.05. The compared rates are those in effect prior to December 21, 1973. Effective the latter date they were increased about 5 percent. The Boutell tariff unlike tariff No. 164-H does not impose a split delivery charge of $5.25 per vehicle. However even when this charge is taken into account shippers using the assailed tariff have a clear though less pronounced advantage.

Respondent tariff bureau publishes rates in tariff No. 176 on automobiles shipped from a railhead at Norristown, Pa. The tariff contains no truckload minimum. American Motors vehicles including the Gremlin are handled under this tariff. Comparison of these rates with the assailed seven-vehicle rates from Baltimore, for comparable distances, shows that the advantage enjoyed by users of the latter tariff range from $5.30 per vehicle for a trip of about 98 miles to $7.80 for one of 178 miles. On the basis of seven carload the advantage of the assailed tariff ranges from $37.10 to $54.60.

Tariff No. 176 also contains rates between Madison, Ill., and points in Illinois, Kentucky, and Missouri. American Motors vehicles including the Gremlin move under compared rates. There is no requirement for a minimum number of vehicles to be loaded on a truck. Comparison of the rates from Madison to four points in Illinois and Missouri with the assailed seven-vehicle rates in tariff No. 165-1 from Chicago, III., to four points in Illinois, Indiana, and Iowa, for comparable distances, shows that the tariff No. 165-1 rates have an advantage which depending on distance ranges from $2.05 to $6.80 per vehicle. Computed on a seven-vehicle truckload basis the difference ranges from $14.35 to $47.60.

Respondent tariff bureau publishes rates on domestic automobiles in tariff No. 116U, from Kenosha, Wis. Comparison of the assailed tariff No. 165-I seven-vehicle rates from Chicago to five points in Wisconsin, Indiana, and Ohio, with the rates in tariff No. 116-U from Kenosha, to five points in Illinois, for comparable distances, shows that the domestic traffic brings in revenue per trailer-mile ranging from a high of $3.38 for distances of about 56 miles to $1.57 for a journey of about 218 miles, whereas the assailed rates produce revenue in a range of from $2.86 to $1.55. Traffic moving from Kenosha consists of American Motors vehicles including Gremlins. The compared rates sustained a 3-percent increase effective April 4, 1974.

Respondent concludes on the basis of the above comparisons that the rates on Volkswagens as now published are substantially below the charges applicable on competitive domestic traffic. To bring the assailed rates to a level comparable to those prevailing on domestic vehicles would require an increase of between 10 and 25 percent. This is true even though the toll charge is incorporated into the line-haul rates. Respondent concedes that most of the compared tariffs contain no requirement that the shipper tender any given number of vehicles at one time whereas, in contrast, the assailed publications require that the shipper tender six or seven vehicles at one time, but it emphasizes that the compared rates, for the most part, cover domestic shipments and the volume of traffic tendered is so large that it is unnecessary to publish a minimum load restriction. Carriers are thereby free to make up truckloads and operate their vehicles in the way they deem to be most efficient.

PROTESTANT'S EVIDENCE

Volkswagen objects to incorporation of the "Toll Charge" into the line-haul rates. It traces the charge back several years when it appeared under other guises. Thus on August 1, 1970, the predecessor publications contained a charge captioned "Toll and Marshalling Charge" which by its terms applied on all vehicles transported by member carriers of respondent. The charge was $1.50 a vehicle and was in addition to certain specifically identified toll charges described in the publications. Protestant submits that no services justifying the charge were provided. On September 17, 1970, in supplement 3 to tariff No. 164-D, the aforementioned charge was canceled and an "Origin Terminal Handling Charge" of $1.50 per vehicle was published. The charge was designated as being imposed for "*** the preliminary preparation rendered at