NECESSITY AND JUSTIFICATION FOR THE RELIEF PRAYED

Generally speaking, the rates applicable on export and import traffic between the interior territory involved herein and north Atlantic ports are the same as those applicable on domestic traffic and as a rule conform to the provisions of section 4. They are considerably lower than the domestic rates applying between the same territory and southern ports. This may be illustrated by the following table showing the domestic class rates from Chicago and other representative interior points to New York and Baltimore in comparison with the corresponding rates to New Orleans, Savannah, and Galveston.

Domestic rates on classes 1 to 5 from representative interior points to north Atlantic, south Atlantic, and Gulf ports

The rates in the above table to the southern ports are those prescribed as reasonable in Southern Class Rate Investigation, supra, and Consolidated Southwestern Cases, 123 I. C. C. 203. Rates from intermediate points graded according to distance are constructed on the same basis. The applicants point out that they could not hope to secure the movement of export traffic from the interior territory to the southern ports on these rates in the face of the substantially lower rates available to the north Atlantic ports and state that they

must maintain a greatly reduced basis of rates to accomplish that purpose. Such reduced rates would be established where reductions would be necessary to enable them to secure the traffic for movement over their lines to southern ports in competition with carriers serving the north Atlantic ports and the present rates would be continued from and to intermediate points except in those instances referred to in the preceding section hereof where the reduced rates would be observed as maxima from intermediate points.

The above table reflects the situation with respect to the rates applicable on domestic traffic to the respective groups of ports. A similar situation exists with respect to the rates applicable on domestic traffic from the ports to the interior territory. It would also be necessary, therefore, for the applicants to establish substantially lower rates from southern ports to the interior territory to apply on import traffic in order to be in a position to handle traffic from those ports on rates comparable with those from the north Atlantic ports to the same destinations. The same general justification is offered for the establishment of the proposed bases of rates to apply on both export and import traffic. It should be understood, therefore, that unless otherwise stated our remarks concerning the necessity and justification for the proposed export rates will also apply to the import rates.

The necessity of establishing an adjustment of rates which will enable foreign commerce to move freely through southern ports as well as through the north Atlantic ports from and to the interior territory is offered as the general justification for the relief prayed herein by all the carriers serving the southern ports. Special justification offered by some of those carriers in individual situations will be discussed separately.

Except in the situations described above where the proposed export rates over direct routes will conform to section 4, the applicants desire fourth-section relief over all routes between southern ports and interior territory. Carriers whose routes are circuitous do not urge that circumstance as the ground for the relief sought by them, but base their claim upon the general ground that the proposed rates are necessary to place their routes on a substantial equality for the handling of foreign commerce with routes serving the north Atlantic ports. They urge therefore that if relief should be granted to maintain rates on export and import traffic that do not conform to section 4 it should not be subject to the equidistant clause or to the usual circuity limitations. Such limitations, they contend, would render the relief of little value and make impossible the maintenance of the same grouping of interior territory in connection with rates to and

from the southern ports as that in effect in connection with the rates to and from the north Atlantic ports.

As shown in the bases in Appendixes C and D hereto the proposed rates are lower in some instances than the rates on like traffic to and from the north Atlantic ports. The applicants contend, however, that the location of the north Atlantic ports on the direct routes for the movement of traffic between the interior territory and the principal foreign countries and more favorable commercial and other conditions prevailing at those ports, especially New York, make it more advantageous to shippers of foreign commerce to use those ports in preference to the southern ports even under an equal adjustment of rates, and that the rates proposed are no lower than necessary to equalize in part some of the advantages enjoyed by the northern ports as the result of these conditions.

Voluminous testimony in support of these contentions was introduced by applicants and interveners in which they described in detail disadvantages of the southern ports in comparison with the north Atlantic ports. It should be stated, however, that the port of New York was mainly used for the purpose of making these comparisons. Briefly summarized the disadvantages of the Gulf ports were stated to be as follows: That the distances between those ports and the principal foreign ports are greater than the distances to and from the north Atlantic ports and that in consequence the voyage time is longer; that steamship sailings are irregular and less frequent; that the vessels employed in the Gulf trade are smaller and otherwise inferior; that ocean rates on import traffic often are higher; that banking facilities are inferior; that marine insurance rates are higher; that relatively few export and import brokers are located at those ports; that there is only limited opportunity for effecting savings by the consolidation of ocean shipments at those ports; and that the difference between the domestic and export rates to those ports does not permit the consolidation of export and domestic shipments in carload lots as in the case of New York where export and domestic rates are on an equality.

Witnesses for the applicants and the port of Savannah and other south Atlantic ports which intervened in support of the applicants enumerated somewhat similar disadvantages under which it was claimed those ports labor in their efforts to secure import and export traffic in competition with the north Atlantic ports, especially the port of New York. They also referred to the following conditions as contributing to the advantages of the latter port over the south Atlantic ports, viz, the established trend of cargo movement between the north Atlantic and foreign ports and the tendency of shippers to prefer routes they have been accustomed to use; the wide range of

foreign ports served by regular steamship lines; the facilities for supervision and inspection of cargo; the location at New York of the headquarters of the majority of the principal steamship lines; thus affording a meeting place where shippers may regularly and conveniently negotiate for adjustments of rates; the extensive local consumption at New York of commodities that are also exported, which makes it a large concentration point for storage of such commodities, readily available for export on short notice; the differential rates under the all-rail rates available between that port and the interior territory via rail-and-water routes, and the New York Barge Canal; the favorable location of that port with respect to the Dominion of Canada, from which commodities may move through and be manufactured in the United States and exported through New York without the payment of import duties to the United States. Applicants and interveners also refer to the densely populated and highly industrialized territory immediately adjacent to New York, which affords a market for a large volume of import traffic and produces great quantities of high-class export freight, and state that this and the other conditions referred to have made that the headquarters of most of the export and import brokers who control the movement of this commerce to a considerable extent. They state that no such conditions exist in the territory adjacent to the southern ports; that there is a relatively small quantity of imported commodities consumed in that territory and little high-class export freight produced therein; that there are few export and import brokers located at those ports; and that there is little prospect of securing high-class export freight for movement through those ports except from the interior territory involved herein.

In view of these conditions the applicants contend that rates to and from the southern ports on the same basis as rates to and from the north Atlantic ports would still leave them at a substantial disadvantage in competing with the carriers serving the latter ports for import and export traffic and that the differential adjustment they propose is required to enable them to successfully meet that competition.

In addition to the competition of the carriers serving the north Atlantic ports applicants emphasize the fact that they are also compelled to meet the competition of carriers serving the Canadian ports of St. Johns and Halifax for the movement of foreign commerce from and to the interior territory. They show that the rates applicable from and to those ports are generally on the same basis as the rates from or to one or the other of the north Atlantic ports; that the distances to and from the Canadian ports are generally greater than the distances from and to the southern ports; that the eastern carriers are parties to

those rates; and contend that they should be permitted to establish rates that will place the southern routes and ports in as favorable a position to handle the overseas commerce of the interior territory as the Canadian routes and ports. The present and proposed rates on export and import traffic and distances, as shown on applicants' exhibits, from and to representative southern and north Atlantic ports and the above Canadian ports to and from important points in the interior territory are shown in Appendix E.

The various grounds outlined above by applicants in support of the relief prayed in this proceeding were presented by the carriers operating east of the Mississippi River with respect to the proposed rates from and to the south Atlantic and central Gulf ports. Carriers operating west of the Mississippi River, hereinafter referred to as the southwestern carriers, participate at present in export and import rates from and to the central Gulf ports and the Gulf ports west thereof referred to as the Texas ports. They concur generally in the testimony offered by the carriers operating east of the river with respect to the necessity and justification for the proposed adjustment of rates from and to the central Gulf ports and state that it applies with equal force to their routes and the Texas ports.

They contend that the Texas ports labor under the same disadvantages as other Gulf ports in comparison with north Atlantic ports and that it is necessary for carriers serving those ports to establish the proposed rates in order to overcome in part those disadvantages. In addition they point to the fact that it has been their policy to keep the Texas ports on a rate equality with the central Gulf ports and assert that it is necessary for them to continue that policy in order that traffic may continue to move through all Gulf ports on an equal basis.

The class rates prescribed between the interior territory and Gulf ports in Consolidated Southwestern Cases, supra, are higher than the rates prescribed for like distances in Southern Class Rate Investigation, supra. The commodity rates prescribed in the former proceeding are also higher than rates between the interior territory and southern ports would be if constructed on the same basis with relation to the class rates prescribed in Southern Class Rate Investigation. The proposed rates via southwestern lines therefore will be greater differentials under rates prescribed or approved as reasonable rates on domestic traffic than the rates proposed by the east-side carriers. The relief required by the above carriers to establish the proposed adjustment therefore would be greater than the relief required by the carriers operating east of the Mississippi River.

Southwestern lines participating in traffic from and to the central Gulf ports also point out that in Memphis-Southwestern Investigation,