INVESTIGATION AND SUSPENSION DOCKET No. 3903 ROPE AND TWINE IN THE SOUTH Submitted November 20, 1983. Decided December 29, 1933 Proposed cancelation of commodity rates on rope and twine (made from sisal, istle, jute, and manila), in less than carloads, within the South and between eastern port cities and points in the South via rail-and-water routes, and substitution of third-class rates in lieu thereof found justified. Order vacated and proceedings discontinued. Charles Clark for southern carriers generally, respondents. Alfred S. Knowlton for carriers in official territory, in support of respondents. Earl E. Bockstedt, William P. Libby, L. C. Landaker, J. S. McDaniel, and Bon Geaslin for a trade association in support of the position of northern and southern carriers. REPORT OF THE COMMISSION DIVISION 3, COMMISSIONERS MCMANAMY, LEE, AND MILLER BY DIVISION 3: By schedules filed to become effective August 15, 1933, and later dates, respondents proposed to cancel less-than-carload commodity rates on rope and twine (made from sisal, istle, jute, and manila) between points in southern territory, except in certain instances, and between southern points on the one hand and eastern port cities on the other, via rail-and-water routes. Upon protests of various concerns at Richmond, Va., a concern at Mobile, Ala., and the Mobile Chamber of Commerce operation of the proposed schedules was suspended until March 15, 1934. The rope and twine here under consideration are commonly known as cordage or hard fibers, as distinguished from rope and twine of cotton texture, a type not embraced in the general term "cordage," and not here involved. Technically, the difference between cordage and twines is that the former is generally understood by manufacturers thereof to be rope three sixteenth inch or over in diameter, and made of three or more strands, each strand containing two or more yarns. Twine is a yarn product and may either consist of a single yarn or be 2-ply or more. The chief market for cordage is in the marine field. Distribution is effected through the hardware trade and marine-supply houses. Wrapping twine is sold direct to consumers, i.e., large boxwood manufacturers, and also to merchants in industrial centers. Binder twine is distributed in various ways. One of the larger manufacturers distributes throughout the country through its own agents; another sells through a small number of distributors who in turn sell to retailers. Prices at point of manufacture, those of a producer at Auburn, N.Y., being offered in evidence as illustrative, range from 6 cents per pound for binder twine, to 16.25 cents for jute twines, intermediate prices being those for yarn and rope and also jute twines. Generally the rope and yarn are shipped in coils and the twine in bales. The weight densities of the various articles range from 17 to 40 pounds per cubic foot, the prices per cubic foot ranging from $1.40 to $4.71. For convenience, the various articles will hereinafter be referred to as cordage, unless otherwise indicated. Cordage, in less than carloads, is rated third class (70 percent of first class) in the three major classifications. On traffic between points in the South, however, and also between the South and eastern port cities, via rail-water routes, the prevailing basis since August 1932 has been and is column 50 rates (50 percent of first class) by means of exceptions to the southern classification governing rates generally in southern territory and between that territory and the port cities. Joint commodity rates on rope, n.o.i.b.n., in less than carloads, on a basis generally lower than 50 percent of first class are in effect from Baltimore, Md., and other eastern port cities to points in North Carolina for movement by water from the ports to Norfolk, Va., thence over the line of the Norfolk Southern Railroad Company. Those rates are not here involved. In lieu of the present basis the suspended schedules proposed to establish the classification basis, except that from New Orleans, La., to points on the line of the Illinois Central Railroad Company in Louisiana east of the Mississippi River. To points on that line in the State of Mississippi and to Ripley, Memphis, Jackson, Dyersburg, and Covington, Tenn., it is proposed to continue the present basis. The record details the circumstances responsible for the establishment of a basis lower than the classification basis, which for many years prior to August 1932 was generally maintained throughout the country. Briefly stated, the evidence discloses, that during 1932 the Illinois Central, a respondent herein, was faced with an inevitable loss of tonnage of these commodities from New Orleans to destinations in the South reached by its rails. The situation was mainly the result of truck competition, a competing form of transportation available to a producer at New Orleans, the only point in the South at which manila or sisal cordage is produced. On August 6, 1932, the Illinois Central established the reduced basis, column 50 rates, for application from New Orleans to destinations on its lines in the South, including St. Louis, Mo., and Ohio River crossings. Meanwhile, other southern carriers were giving consideration to various proposals to extend application of the reduced basis not only to such of the Illinois Central stations that are common to other carriers' lines but throughout the South generally, and this was effected August 10, 1932, notwithstanding there did not exist at the other stations in southern territory like conditions compelling the reduction by the Illinois Central from New Orleans. Later, the reduced basis again spread when, on December 3, 1932, by joint action of southern carriers and coastwise steamship lines it was established for application from north Atlantic ports to destinations in southern territory, although no controlling truck competition was or is at present from the north Atlantic ports to the South. It is for the purpose of restoring rates on cordage to their normal third-class basis, confining the reduced basis to the points from and to which truck competition is actually encountered, that the schedules under suspension were filed. Neither of the protestants at Mobile appeared at the hearing. The remaining protestants are seven jobbers at Richmond and the Richmond Chamber of Commerce. The Cordage Institute, appearing at the hearing in support of the suspended schedules, is a trade association of fiber, cordage, and twine manufacturers, ordinarily representing 85 percent of the total production in the United States. Due to the National Industrial Recovery Act, it represents at the present time the entire industry. Most of the industries are in official territory. A few are in the West. There is a plant at Houston, Tex., and two at New Orleans, the production at those points, collectively, being considerably less than 3 percent of the country's production. Of the total amount of these commodities consumed in the South, from 90 to 95 percent comes from without, at points from which the third-class basis applies, not only to the South, but otherwise both interterritorially and intraterritorially. By far the greater movement of cordage and twine is in official territory, but shipments to points in southern territory of these commodities in less-than-carload quantities alone, are estimated as totaling about 6,000 tons annually. As before indicated, these commodities are not produced at Richmond. It was testified that all the cordage and twine shipped, not only to Richmond, but into the State of Virginia as a whole, would probably not exceed 1 percent of the total shipped to the South. The total volume of these commodities handled by the Richmond protestants does not appear. The only protesting jobber at the hearing testified, in substance, that the total annual sales of the commodities obtained from Philadelphia, Pa., and distributed chiefly to points in North Carolina, amounts to 60 to 70 tons. It is unnecessary to discuss in detail respondents' exhibits introduced for the purpose of showing numerous prejudicial situations affecting cordage and twine producers, chiefly in official territory, situations which, unless the suspended schedules are found justified, could only be relieved, respondents urge, by extending to other territories, both interterritorially and intraterritorially, the reduced basis which has, assertedly, been unwarrantedly maintained throughout the South since August 1932. This, respondents further urge, would cause a breakdown of the rate structure as to these commodities and result in loss in the carriers' revenue. A few illustrations of many outstanding situations instanced by respondents will suffice. At the several north Atlantic port cities are located either manufacturing plants or branch houses. As before observed, less-than-carload shipments from the port cities via water and rail to the South are accorded the reduced basis. Shipments all rail from manufacturing plants located inland are charged third-class rates to the same southern destinations. Some of the inland points are situated sufficiently near the port cities to warrant movement thereto by truck and thus make available the water-rail rates. Continuance of the existing basis from the port cities via water-rail routes will, it appears, force some of this traffic to move by truck from inland points to the ports. On brief the Cordage Institute points to a situation where a manufacturer at St. Louis is accorded the 50-percent basis on shipments to the South, while competitors at Xenia, Newark, and Miamisburg, Ohio, Jackson, Mich., and Peoria and Chicago, Ill., are charged third-class rates to the same destination territory. As an alternative, and if near enough to Cincinnati, those competitors may ship by truck to Cincinnati and obtain the 50-percent basis therefrom to the South. Protestants urge that in marketing their rope and twine, other than cotton, they meet severe competition, apparently from jobbers, throughout the State of North Carolina, to whom the 50-percent basis is available. Similar to respondents' proposal as it relates to interstate rates, action was taken by respondents to advance the 50-percent basis to third class for intrastate application in the various southern States. It was testified that the third-class basis has become effective in Tennessee and Kentucky, where it was only necessary, respondents state, to file new tariffs. It appears that in other States specific authority must be obtained from State regula tory bodies before such change may be made. Among the latter is North Carolina. It was further testified that appropriate petitions seeking authority to establish the third-class basis are now pending in such States. Asserting, in substance, that their inability to reestablish at once the third-class basis for intrastate application in North Carolina should not operate to defeat the readjustment here proposed, respondents point out that protestants have a remedy under section 13 of the Interstate Commerce Act should prejudicial situations arise if and after the suspended schedules are permitted to become effective. The record mentions competition as between this cordage and twine, and cotton goods, including rope, rates on which are now before us in Investigation and Suspension Docket No. 3636, Cotton, Woolen and Knitting Factory Products Between Interstate Points, wherein southern carriers are proposing on cotton goods, including rope, any quantity, a basis 50 percent of first class, such basis being lower than fourth class. The suggestion in the record that there is competition as between these hard-fiber products and cotton goods is foreign to the facts. Members of the Cordage Institute are not even interested in rates on cotton rope. It was testified that cotton binder twine has never been manufactured in this or any other country. The record also mentions competition between cotton rope and hard fiber, but only with respect to plow lines. Plow lines as such are not manufactured by hard-cordage manufacturers. Protestants instance the water-rail rates on rope, n.o.i.b.n., in less than carloads, from eastern port cities to destinations in North Carolina that are upon a basis lower than 50 percent of first class. For the most part the destinations are either reached direct by water or are adjacent to such points, and the rates are maintained to meet water competition. Respondents invite attention to the fact that, whereas foreign cordage imported through Virginia ports is accorded the 50-percent basis from those ports to destinations throughout the South, cordage imported through northern ports and destined to the South is charged third-class rates from those ports, and also from inland points, to the South, if shipped to that territory via all rail. Protestants' evidence falls short of overcoming the showing made by respondents. It clearly appears that the suspended schedules if permitted to become effective will remove many unduly prejudicial situations existing under the present adjustment. We find that the suspended schedules have been justified. An order will be entered vacating our order of suspension and discontinuing the proceeding. |