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protecting and fostering the commerce of the ports of the State of which Baltimore is the most important. In the effectuation of our statutory mandate to promote the port, the Maryland Port Authority owns and operates marine terminals and maintains field offices, both in this country and abroad.

During the past decade, the port authority and private industry have expended more than $50 million in port improvements to maintain present business and to make it possible to compete for new business.

Recently the port authority completed a detailed analysis and study of the traffic handled through the port of Baltimore over the past decade and the projected needs of the port in the foreseeable future. This staff study is very comprehensive setting forth a 10-year program for the continuing development and modernization of the port of Baltimore to which the port authority has committed itself.

Included in this program is the expenditure of an estimated $1 million for a bridge crane for the efficient handling of containers and approximately $10,730,000 for the construction of three new berths at the Dundalk Marine Terminal between 1968 and 1971, two of which would be adaptable for use as public container berths and would have equipment capable of handling railroad piggyback service.

As this study evolved, it became increasingly apparent that as a result of the so-called container revolution, more and more freight would be moved via this method. It has been estimated that eventually approximately 80 percent of the general cargo will move in containers. To keep pace with this change, all phases of transportation will be subject, in varying degrees, to new methods of operations. Perhaps the biggest change will occur in the inland transportation because the economies to be realized will result from door-to-door operation.

To perfect door-to-door operation will require, in effect, a new concept under which the inland point of origin or destination will become the export or import origin or destination for billing, customs clearance, et cetera. Shippers and receivers will, in our opinion, demand such service. This demand is already being satisfied through the movement inland of containers and trailers, or bogies, owned by various steamship lines.

This in and of itself has created great problems because steamship lines have traditionally never moved beyond the port terminal and therefore have now entered the field of inland transportation, which is an area unfamiliar to them.

The area of billing, rating as well as operational problems are far from resolved and various groups, including the Federal Government, are actively studying the problem, seeking as an ultimate a new and streamlined system which is adaptable to this mode of transportation. The most serious problem in this door-to-door operation exists in the area of small shipments which because of their size do not fill a container.

This requires consolidation which can, in our opinion, be most economically done at the inland point of origin. This has been the area of activity of the freight forwarders, some of whom have adopted their domestic methods into the international field.

I think, for example, of Universal Carloading, D. C. Andrews, and others who have published special tariffs and hold themselves out to

provide a through bill of lading and a through service from inland origin to foreign inland destinations. Perfecting of such a system requires a clear-cut definition of the status of freight forwarders as well as delineation of their rights and obligations with respect to other common carriers which must be employed to do the physical handling and movement of the freight.

The freight forwarders position has been recognized by the Federal Maritime Commission in docket 815, “Common Carriers by Water, Status of Express Companies, Truck Lines and Other NonVessel Carriers" (6 FMB-245).

With regard to water transportation this decision made the following finding:

We conclude that a person or business association may be classified as a common carrier by water who holds himself out by the establishment and maintenance of tariffs, by advertisement and solicitation, and otherwise to provide transportation for hire by water in interstate or foreign commerce, as defined in the Shipping Act, 1916: assumes responsibility or has liability imposed by law for the safe transportation of the shipments; and arrange in his own name with underlying water carriers for the performance of such transportation, whether or not owning or controlling the means by which such transportation is effected, is a common carrier by water as defined in the Shipping Act, 1916.

Perhaps the most significant factor in this finding is the determination that the forwarder, in accepting the through-transportation liability, has the status of a common carrier. Insofar as the inland transportation is concerned, the freight forwarder, although regulated, is not given true carrier status, particularly insofar as railroad transportation is concerned.

We therefore feel that it is imperative that if the transportation system of the United States is to be responsive to the changing needs, that the freight forwarder be permitted to negotiate with other common carriers for the transportation of his commodities. Essentially, he is negotiating for transportation as a carrier in furtherance of a shipping contract and we feel he should be in no different position than any other transportation mode.

It would appear to us that unless this is accomplished the economies and the full use of true intermodal transportation will not be achieved. There is a definite need for organiaztions such as freight forwarders who operate in an area; namely, the handling of small shipments which are not either attractive or remunerative to either railroads or trucklines.

This is evidenced by various prohibitions and methods by which both railroads and trucks attempt to discourage this type of freight in their respective services.

This however, is a very important segment of our export and import business, and in many cases, if not all cases, involves the highpriced goods moving in international trade.

Much will be said about the ability of other forms of transportation to handle this business. Our investigations have developed that the consolidation and handling of through export shipments is a specialty and cannot be handled by mixing the export or import shipments with domestic shipments.

It is for this reason that we have in the past supported freight forwarders such as D. C. Andrews who have secured authority to specifi

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cally handle export and import consolidated shipments from inland points to foreign destinations.

Additionally, such movements not only expedite the flow of export and import business but minimize the handling at seaboard ports which in turn reflects itself in the economies of more efficient terminal facilities.

In view of this growing need for new concepts in true intermodal transportation, we support this bill which, in our opinion, will perfect one of the missing links in the new and approved methods of handling foreign commerce and therefore urge the early adoption of this proposed legislation.

Mr. FRIEDEL. I want to thank you, Mr. Kraemer. It is always a pleasure to have anyone from the Maryland Port Authority. I think you have done a wonderful job. Your statement has brought in a new aspect entirely. I think it is worth consideration. I want to thank you. Are there any questions, Mr. Adams?

Mr. ADAMS. Yes.
Mr. Kraemer, I take it your position is that you should have a series

I or the ability to have a series of negotiated contract rates as opposed to published rates in order to save a particular segment of shippers traffic that is not being handled by motor carriers or by railroads or is being discouraged by them.

My question to you is this: Do you think we should handle this by establishing special categories of rates through contracts that are not known or not published or should we try to do something with the published rates; for example, increase the differential between the 1.c.l. and the regular rate to give these people a margin within which to operate?

At least, then, everybody would know what the rate was.

Mr. KRAEMER. In this whole picture the shipper will always know the rate, it will be a published rate. The savings will come in the method of handling, the method of interchange, and the ability to negotiate a contract.

In other words, what I am saying is that this is a new idea, a through movement idea I think we are getting closer and closer on the part of the physical transportation of transporting units rather than worrying about whether this is this commodity, that commodity, and so forth.

In other words, the transportation will be of a unit or box.

Mr. Adams. I don't understand when you say "everybody will know the rate.” That is why I asked the question. We have had several people allude to the fact that when you get into the area of special shippers making special contracts for transportation with the carriers, then other competitors in the field simply don't know what the other shipper is obtaining for a rate.

If I am wrong about that I would like to know.

Mr. KRAEMER. They don't know what arrangements have been made between one carrier and/or another. Assuming now that the forwarder is considered a full carrier he makes his contracts for whatever underlying transportation he needs.

However, insofar as the shipping public is concerned they will be able to go to his tariff and find out that then it cost so much to ship from one point to another. In other words, the trend is, for example, there is a tariff now on file with the FMC, it has not been approved yet which a steamship line is publishing from anywhere in England via Felixstowe to anywhere in the United States via New York. The price there is what the shipper will pay. What he does not know is who will do part of it except the water part.

They reserve the right to use any and all means of inland transportation. This now has been filed and is under consideration. The problem is who is responsible, who is going to do what, and how is it going to operate?

The shipper does not know this. All he will know is that he will have a bill of lading from a steamship line. The inland transportation, he just sits and waits until he gets it because he won't know how it will be carried.

In the ultimate the bill of lading would be given by the forwarder and he would be the one whom they would look to for this whole movement.

Mr. Adams. We will get into a situation then between the shippers by common carriers, the freight forwarder, the trucker, and others vying to see who can make the best deal with the railroad.

Mr. KRAEMER. The best deal, assuming of course that everybody is making money at it. I am not trying to suggest that we are going to get in a problem where somebody is going to do it for nothing or lose money.

Everybody will but there will be different arrangements, different through routes, in other words, we are getting back to what we used to have as the old dispatchers where you did not talk about railroads, you used a certin dispatch route which was a combination of railroads and you shipped via that dispatch route, the underlying transportation was all worked out between the parties to the route.

Mr. ADAMS. Thank you.
Mr. FRIEDEL. Mr. Devine.
Mr. DEVINE. I have no questions.
Mr. FRIEDEL. Mr. Kuykendall.

Mr. KUYKENDALL. My understanding is that our function on this committee in a case like this is twofold. One is to do the best we can to insure fairness between the parties here.

To that extent we are kind of referees. The other is overriding benefit to this shipping public. Some of the testimony of this last element that we are primarily responsible for seems to have been left out.

Now as to the ignorance of the rate that is charged to a forwarder or to a trucker by a railroad, I believe you said in your testimony in answer to Mr. Adams' question that the shipper will always know.

Actually as far as I am concerned the private citizen or the company that pays the freight is the shipper. Everybody between him and the other end is just part of the chain.

He is the guy that keeps us all. He pays my salary and yours, too. So let us talk about him when we consider as to who really knows the rate.

That man does not really know the rate. Now we have had representatives of industry groups here testify in favor of this legislation with the assumption that they would benefit directly from this reduced cost.

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And let us say that if this were a known and provable fact, any assurance that this would happen, why then it certainly would be a point on this side of the argument.

We have no way of knowing this at all. You made another assumption that along the lines of ordinary good business practices that would be true, that nobody would be losing money. But we have this thing called predatory competition hanging over these types of hearings.

Whether this big concern says I am not foolish enough to get involved in there or this other one says that, we know it has happened if you allow predatory competition to take place.

One of the things that I fear in fairness here is the idea that the railroad may actually be able to play the forwarder against the truckline and indirectly damage the truckline through an indirect form of predatory competition.

Mr. KRAEMER. I think there is always this possibility. I think the possibility is starting to level out with the new establishment of marketing sections in railroads and why I say that is that I had occasion to work on a piece of business last week and the railroads said that they could not put in the rates competitive with another carrier because their marketing people said there just was no money in it.

Now on the other side of the coin we have established in the Port of Baltimore a system where on container freight the shipper will have to worry only about three possible things.

The inland transportation, the ocean transportation and possible transportation in the foreign country. This means that for the first time the steamship line is taking care of the terminal charges.

This was always a great bugaboo, particularly when you got charged one thing one time and another thing another time. This now we have worked out so that a shipper on container coming through our port has no terminal charges. The steamship line pays it.

He just delivers it. This we feel is a step along the line in this type of operation. But there still remains the problem on the small shipments; in fact, one answer to this is the establishment of consolidation firms, and another is in the process of being established, a second concern which is located on the field which will accept these small shipments and do what they call stuffing into containers and then give them to the steamship line?

The question here though is that the savings cannot be always achieved. The steamship lines are not set on this because they give normally a 10-percent discount on the door-to-door and only a 5-percent discount on terminal-to-door, so to speak.

Now the question is in this type of operation can the shipper realize the 10 percent or will he only give 5? Now if the forwarders can negotiate, these consolidation points will in effect more inland. When it comes to the port it will be a completely loaded box delivered to the steamship line and considered a door-to-door movement.

Mr. KUYKENDALL. Thank you.
Mr. FRIEDEL. Thank you very much, Mr. Kraemer.

Gentlemen, we have 20 witnesses and 16 more to be heard today. We are trying to get permission to sit while the House is in session. Are there any witnesses here today who would like to have their statements included in the record? If so, they may do so right now.

Our next witness will be Mr. Charles Washer, transportation counsel for the American Retail Federation.

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