The apparel industry, which next to food stuffs is one of the largest industries in the world, secures their fabrics from mills which for the most part are located in rural areas in the southern states. It certainly seems to our company that the railroads should have available to them the right to deal with freight forwarders on at least as flexible and favorable a basis as they deal with motor carriers. The railroads will still have control of the arrangements based on contracts to the same degree-indeed to a greater degree than under published rates. The railroads as well as the freight forwarders would therefore benefit themselves and their customers.

In summation, we feel that it is only healthy for the economy of the nation to have all modes of transportation working under similar regulations. My company is opposed to one form of transportation having an advantage over another form offering similar services.

In closing, permit me to again thank the Committee for permitting me to testify in favor of House bill 10831.

Mr. FRIEDEL. Thank you, Mr. Cohn. Are there any questions?

Mr. KUYKENDALL. Mr. Cohn, what percent of the mileage is used by your firm for delivering to wholesalers and retailers?

Mr. COHN. I am concerned with in-bound freight from the East, in other words, the raw materials, trimmings, fabric.

Mr. KUYKENDALL. What percentage of that freight in tonnage would you say, that arrives at your plant, has had piggyback service during its trip?

Mr. COHN. Straight rail cars to my knowledge; none.

Mr. KUYKENDALL. Either a rail car without being trucked or on piggyback.

Mr. COHN. A piggyback load, it could have been consolidated in a piggyback load.

Mr. KUYKENDALL. In other words, how much of your stuff goes over rails as compared to highways?

Mr. COIN. Probably 90 percent of it.

Mr. FRIEDEL. Over the rails?

Mr. COHN. Over the rails because it is picked up and consolidated at consolidation points and then moved by rail.

Mr. KUYKENDALL. I can't get it here. All the manufacturers say 75 to 90 percent of their stuff come by rail and then they turn around and say it can't come by rail because of the small lots.

Mr. COHN. The rail does not go into the origin points. It has to go by truck from the origin points to the railhead somewhere.

Mr. KUYKENDALL. It is going to have to do that anyway.

Mr. CоHN. No.

Mr. KUYKENDALL. Doesn't the freight forwarder take the shipment from the origin point to the railhead?

Mr. COHN. Yes. But it is possible also for a trucker to run it across country if he wants to on a direct route.

Mr. FRIEDEL. In other words you have less-than-carload lots.

Mr. COHN. That is correct. We have less-than-carload lots. Truckers will also on less-than-carload lots wait until they can consolidate, until they get a full load. This will take 2, 3, 4, 5 days, whereas, with freight forwarders, they can do it overnight.

Mr. KUYKENDALL. You are about the fifth or sixth similar witness that we have had, and, without exception, each of you has said that you are very happy with the rail forwarder service. Each of you has said you are operating profitably or you would not have enough money to pay your way up here and you have reasonable freight forwarders operating at a profit.

Mr. CонN. Yes.

Mr. KUYKENDALL. You want to be allowed to use freight forwarders, yet you turn around and say that 90 percent of your stuff uses rail now. What I am saying is this: There are just so many eggs in this basket, just so much profit to be had in the overall picture, moving an object from one point to another. It is either going to be made by a freight forwarder, a truck line, or a railroad, one or the other or a combination of all three, we hope.

Now, somebody in this basket has offered you one of the eggs to come up here; is that right?

Mr. CонN. Answer me this, because now you are getting me confused. If a trucker can contract with a railroad on a rate, why can't a freight forwarder contract with the railroad for the same type of setup?

Mr. KUYKENDALL. We are discussing here now the matter of law as it is now written. A freight forwarder may contract with the railroad if he can show that his cost of operating under section 408—are you familiar with it?

Mr. CоHN. No.

Mr. KUYKENDALL. What I am getting at here is, I would like to know if you have been promised by the freight forwarders that you will get so much of a rate cut if they get a cut.

Mr. COHN. Negative. I would think it would be possible that if they got a rate cut, it could be passed on to us but no one has ever promised Koret of California or myself that we will get any kind of rate cut due to the fact that the freight forwarder will get a lesser rate.

Mr. KUYKENDALL. You have reason to believe you might get one? Mr. COHN. I have reason to believe we might get part of it or at least it will stave off a future raise in the rates at some future time. Mr. KUYKENDALL. Thank you, Mr. Cohn.

Mr. FRIEDEL. Thank you, Mr. Cohn.

Mr. Robert Minardi, president, Garden City Transportation Co. STATEMENT OF ROBERT MINARDI, PRESIDENT, GARDEN CITY TRANSPORTATION CO., LTD., SAN JOSE, CALIF.

Mr. MINARDI. Thank you very much, Mr. Chairman, for allowing me to give my brief statement a little earlier.

My name is Robert A. Minardi and I am the president of Garden City Transportation Co., Ltd., 1720 Bayshore Highway, San Jose, Calif.

Garden City Transportation Co., Ltd. is a class 1 motor common carrier of general commodities operating under authority issued by the Interstate Commerce Commission, and Public Utilities Commission of California. Our scope of operation is entirely within the State of California, and covers an area generally described as the central coast area of California.

I have been associated with our company, excepting a 3-year tenure in the Armed Forces, since 1938.

As a motor common carrier we transport substantial tonnage for various freight forwarders under contracts as authorized in section 409 (a) of part IV of the Interstate Commerce Act.

I felt that my experience in negotiating these contracts with the freight forwarders, as well as the company's experience in handling and distributing their freight, warranted my appearing before you today to relate to you personally my feeling regarding H. R. 10831.

My experience in negotiating these contracts with freight forwarders for over 20 years leads me to believe that if this same privilege was allowed the railroads, all parties concerned, including the general public, would receive benefits not now available.

I know that in negotiating these contracts we must consider many factors that are peculiar to freight forwarder traffic only, and are not applicable to the general shipping public. In most instances, these factors allow us to handle freight forwarder shipments at lower rates than those named in our common carrier tariffs. These lower rates then enable the forwarder certain savings which reflect greatly in their rate structure for the shippers of our Nation.

It would appear to me that the railroads, if allowed to sign contracts with the freight forwarders would be able to consider similar factors inherent only in their movement of forwarder traffic, thus enabling them to offer certain savings to the forwarders, and at the same time. not jeopardize their position by making these same rates available through tariff publication to shippers of similar traffic, but factors different from those found in moving freight forwarder traffic.

The freight forwarders then would have not only the savings presently available from their truck carriers, but also savings from their present costs of the rail services they utilize, to pass on to their customers, who span practically the entire shipping public in the United States.

A portion of that shipping public has the problem of service on small shipments that is prevalent today. Many articles have appeared in various publications recently, outlining the difficulties that shippers of small shipments are encountering in obtaining satisfactory or reasonable service for their transportation needs. The railroads are no longer active in this field, and the only service via railroad that is available to these shippers is the freight forwarder. They in conjunction with their motor carriers on each end for door-to-door pickup and delivery, and railroads for the line haul, are most active in the transporting of small shipments. Thus their rate structure and service is vitally important to the shipper of single or small lots, and the railroads line haul is an important factor in the rates assessed by the freight forwarders.

Regarding the contracts themselves, I have found, through the long period of negotiating these contracts, that the freight forwarders have been just and reasonable with my company. At times, differences have arisen, but the fact that I have transported their traffic for over 20 years, proves that we have always overcome the trials and tribulations present in most any negotiation, and benefits and accrued to both sides. I have always had the best of relationships with all the freight forwarders we service.

In closing let me state that I am not qualified to tell you the degree of savings that would accrue to the freight forwarders by contracting with the railroads, nor how soon these savings would benefit the public, but I am sure the ultimate result of the passage of this bill

would be beneficial to all concerned with transportation costs and service in our country. Thank you.

Mr. FRIEDEL. Thank you, Mr. Minardi. I have no questions. Thank you for a very fine statement. Mr. Kuykendall.

Mr. KUYKENDALL. Do you belong to a shippers association?
Mr. MINARDI. No, sir.

Mr. KUYKENDALL. Would you have any objections to the shippers association being given the same privilege that you are asking the freight forwarders be granted under this particular legislation? 1 believe there was an amendment proposed by one witness this morning in this light.

Mr. MINARDI. I have had very little to do with shippers associations. Realizing that they are not common carriers and do not, as I understand it, hold themselves out to the entire public and are actually not a part of the act at the present time, I wonder whether it would actually be feasible for this same rule to apply to them.

Mr. KUYKENDALL. You seem to be quite interested in the overall welfare of the public.

Mr. MINARDI. Yes, sir.

Mr. KUYKENDALL. From the appearance of some of the members of the shippers association represented by just one witness yesterday, I think there was a lot more public involved there than several freight forwarders combined might be.

Mr. MINARDI. Let me answer your question this way, sir. If a shipper association had the same inherent benefits or volume or makeup of freight that a freight forwarder would furnish to the railroads, I certainly, as a small trucker, would have no objection; no, sir.

Mr. KUYKENDALL. Let me ask you this now.

In dealing with freight forwarders, and goodness knows, they serve a proper purpose in the transportation system of our country, do you get any different rate from where are your headquarters?

Mr. MINARDI. San Jose, Calif.

Mr. KUYKENDALL. How far is San Jose from Los Angeles?

Mr. MINARDI. Just about 400 miles.

Mr. KUYKENDALL. Do you get any different consideration, bargainwise, from San Jose to Los Angeles than you do from San Jose to Denver from a freight forwarder?

Mr. MINARDI. I serve neither one of those points.

Mr. KUYKENDALL. You don't ship outside the State?

Mr. MINARDI. No, sir. I operate strictly within the central coast section of California.

Mr. KUYKENDALL. How far is it from your place to San Francisco? Mr. MINARDI. Fifty miles.

Mr. KUYKENDALL. How far to Sacramento?

Mr. MINARDI. Ninety-five.

Mr. KUYKENDALL. What percent of the State of California is within 450 miles of you?

Mr. MINARDI. Fifty percent.

Mr. KUYKENDALL. You get the benefit of the truck arrangements of negotiated contracts for freight forwarders to most of California then. In other words, a freight forwarder may negotiate a special rate with a truckline for less than 450 miles?

Mr. MINARDI. That is correct.

Mr. KUYKENDALL. The freight forwarder might negotiate with a motor carrier for less than 450 miles?

Mr. MINARDI. Yes.

Mr. KUYKENDALL. That covers most of your area.

Mr. MINARDI. It covers all my area.

Mr. KUYKENDALL. My recollection is that California is not an oldtime railroad State, it is a great truck State; is that right?

Mr. MINARDI. Yes, sir.

Mr. KUYKENDALL. If you were shipping from Los Angeles to San Francisco, you would probably go more by truck than to some other part of the country?

Mr. MINARDI. I would say that is right. The reason that I am here today is that I do extensive business with freight forwarder traffic which enables me to have a solid operation to work around in my own local company operation.

Frankly, this is about the only way left for me to participate in transcontinental traffic. We had in the past transcontinental truckers that did turn over much of their transcontinental traffic to us.

Mr. KUYKENDALL. I thought you said you did not do any business outside the State of California.

Mr. MINARDI. I don't; but the freight forwarder brings the freight over to California and turns it over to me for ultimate delivery, or I pick it up for them, take it to one of their terminals.

Mr. KUYKENDALL. You want a combined rate?

Mr. MINARDI. No, sir. We act as an agent for the freight forwarder in pickup and delivery service.

Mr. KUYKENDALL. You are an agent for a freight forwarder?

Mr. MINARDI. Yes, sir, but only for the pickup and delivery service of their shipments.

Mr. KUYKENDALL. Thank you.

Mr. FRIEDEL. Our next witness is Mr. John Lincoln, general manager, Los Angeles Wholesale Institute and the California Shippers Associates. Mr. Lincoln is accompanied by counsel, Mr. Stanley Tobin. STATEMENT OF JOHN C. LINCOLN, GENERAL MANAGER, LOS ANGELES WHOLESALE INSTITUTE, AND CALIFORNIA SHIPPERS ASSOCIATES; ACCOMPANIED BY STANLEY E. TOBIN, COUNSEL

Mr. TOBIN. Mr. Chairman, Mr. Lincoln will give a statement. on behalf of the Los Angeles Wholesale Institute, California Shippers Associates, Piggy-Back Shippers Association, and Manufacturers Shipper Association. I want to make one statement before Mr. Lincoln gives our statement and also answer any questions that the committee may have.

Sir, our position is that we are against H.R. 10831. We would not be against it, however, with the addition of the amendment in regard to nonprofit shippers that the American Institute has introduced or asked to be introduced. We would not favor nor oppose the bill under those circumstances, but we would oppose it without that amendment. Mr. Lincoln.

Mr. LINCOLN. My name is John C. Lincoln, Glendale, Calif. I am the general manager of the Los Angeles Wholesale Institute and Cali