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STATEMENT OF H. L. GRAHAM, SUPERVISOR OF SHIPMENTS, THE
HOBART MANUFACTURING CO., TROY, OHIO Mr. GRAHAM. Mr. Chairman, members of the committee, I wish to read my statement into the record. .
My name is H. L. Graham, supervisor of shipments for the Hobart Manufacturing Co. with corporate headquarters at 711 Pennsylvania Avenue, Troy, Ohio, and manufacturing plants located in Dayton, Greenville, Nedina, and Troy, Ohio; Chicago, Ill. ; Louisville and Mount Sterling, Ky.; Minneapolis, Minn.; and Clearfield, Utah. In addition, products are manufactured or assembled and shipped in our name from Kew Garden and Manhasset, N.Y., and St. Johnsbury, Vt.
We are manufacturers of food store and kitchen equipment including scales, meat choppers, meat slicers, meat saws, food cutters, potato peelers, food waste disposers, tenderizers, wrappers, dishwashers and glass washers as well as Kitchenaid dishwashers, mixers, and coffee mills for home use.
We are appearing in support of H.R. 10831 which will permit railroads and freight forwarders to make agreed or contract rates.
Our transportation costs for our Troy, Dayton, and Greenville, Ohio; Louisville and Mount Sterling, Ky.; and Clearfield, Utah, plants for 1967 were in excess of $2,500,000. Of this amount approximately $286,000 was paid to freight forwarders. This represents only a portion of the traffic we control at these locations because a number of our products are shipped on a collect basis. Freight costs are not included for our Medina, Chicago, or Minneapolis plants. These are subsidiary companies and costs were not available for 1967 at this date.
We are primarily an 1.t.l. or 1.c.l. shipper with exception of our household dishwashers which normally move as volume shipments and consequently we are vitally interested in seeing the freight forwarder industry remain healthy and competitive.
We urge passage of this bill because the motor carriers already have this authority under the Interstate Commerce Act. The freight forwarder industry will be placed at a competitive disadvantage and in serious jeopardy if this bill is not adopted. We do not believe this should be allowed to happen. There should be competition for 1.t.l. freight and it will cease to exist if the future of the freight forwarders is imperiled. Competition results in lower rates and better service.
My company needs the freight forwarders because of the excellent service they provide.
We consolidate shipments and receive the benefit of their dock rates. We also benefit by their package rates.
Once again we urge your support of this bill. As a large 1.t.l. shipper we feel it is vital the freight forwarder industry remain competitive with the motor carrier industry because of rates and the services it provides.
Mr. GRAHAM. Well, we build kitchen and food store equipment and we ship it to practically anyplace where there is a grocery or restaurant where food is prepared.
Much of this is one, maybe, well, two or three different kinds of units but it still is less-than-truckload shipment.
Mr. FRIEDEL. Mr. Devine, are there any questions?
Mr. DEVINE. I just want to welcome a constituent from Ohio and say hello to you.
Mr. GRAHAM. Thank you.
Mr. FRIEDEL. Our next witness will be Mr. Robert G. Lewis, president of White's Delivery Service, Philadelphia, Pa.
STATEMENT OF ROBERT G. LEWIS, PRESIDENT, WHITE'S
DELIVERY SERVICE, PHILADELPHIA, PA. Mr. LEWIS. Mr. Chairman and members of the committee, I just want to read my statement into the record.
My name is Robert G. Lewis and I am president of White's Delivery Service. We operate 15 commercial vehicles in the city of Philadelphia. My business consists of freight pickup at commercial establishments and transferred for further delivery to all parts of the United States via motor line or freight forwarder.
Since the majority of my operation consists of small-lot shipments, in essence, I am a small-lot shipper, and the freight forwarder is geared to handle this type of freight.
The freight forwarder, under the present law, does not have the same privileges as the motor carrier, and I strongly support passage of H.Ñ. 10831 to remove this inequity and for competitive equality.
Passage of this bill would equalize opportunity, which in my opinion, would contribute to better coordination and service in our overall transportation system.
Mr. FRIEDEL. Thank you for a very pertinent and brief statement.
Our next and last witness today will be Mr. Charles W. Owen, president, City Transfer, Inc., Santa Fe Springs, Calif.
STATEMENT OF CHARLES W. OWEN, PRESIDENT, CITY TRANSFER,
INC., SANTA FE SPRINGS, CALIF.
Mr. OWEN. Mr. Chairman, my name is Charles W. Owen. I am president and owner of City Transfer, Inc., of Santa Fe Springs, Calif. My company was started by myself in 1947, and after 20 years of 15 hours a day, two nervous breakdowns, reinvesting every earned dollar except a reasonable salary, I find my very existence being challenged by those whom I have helped grow and prosper; namely, the long-line-system motor carrier.
I have very strong feelings about my rights as a certificated local and short-haul common carrier, to continue serving the shipping public that gave witness to the need and necessity” for my ICC certification as a common carrier.
My company has seven terminals in the four counties comprising the Los Angeles, Calif. basin area, giving 24-hours-a-day, 7-days-a-week service in all this area and twice a day in some of the area.
The shippers need intermodal pickup and delivery carriers that can handle all their traffic by air, air forwarder, rail forwarder, transcontinental truck, and by water. Our company pioneered these services along with several others like us in this area, and now the organizations which we have built are being systematically destroyed by the large system highway carriers. One of the large carriers movement into the rail forwarding business deprived me of over $15,000 per month of local delivery and pickup that I had serviced for over 8 years.
The mergers, acquisitions, and extensions of authority have allowed them into relentlessly cull the profitable traffic for their own systems and leave the "obligation traffic to the local carrier.
I sincerely believe that the amendments proposed to section 409 in H.R. 10831 will allow the rail forwarders a competitive parity with the highway long-line carrier that is needed to prevent another siphoning of profitable traffic hurting the rail forwarders and in turn the short-line carriers who serve them in their distribution and pickup. They, like us, have to haul the traffic the highway carrier manages to get rid of.
In our service to the rail forwarders—which amounts to the handling of approximately 10 million pounds and 20,000 shipments per month, we enjoy an interline harmony that allows us profitable operations.
The locals and short-haul carriers have to stay close to home and watch their fences and cannot afford the luxury of full-time assistants to protect their personal interest in the national tariff bureaus, and State and National associations, et cetera. By democratic processes written into ICC law we expect to get a fair shake from these tariff bureaus, and State and National associations, and there are enough of us in attendance at the bureau and on the executive boards of the associations to see what is happening to us.
Our arm of the ATA—the local- and short-haul carriers conference is aware of our plight and its more alert members are awakening the rest of their membership to what is happening to them, such as the letter of O'Nan's, which is submitted herewith. In the essence of time, I will dispense with reading this letter.
I sincerely hope that this committee is able to interpret my appeal to them as one intended to arouse their support for the local- and shorthaul carriers' interests and not just my own interests.
Two of my best friends had to sell their interests in their trucking companies this past year to avoid bankruptcy from problems similar to those I have described, and several others in similar circumstances are trying to sell out.
As I see it, the rail forwarders need the same freedom, rights, and privileges that long-line highway carriers now enjoy. Congressman Samuel Friedel’s bill, H.R. 10831, to amend section 409 of the ICC Act, should accomplish this.
I should like to submit a letter which I wrote to Mr. Ken Ketcham of the local- and short-haul carriers conference, which elaborates on the previous comments.
Thank you for according me the privilege of making my thoughts known. (The letters referred to follow :)
O'NAN TRANSPORTATION Co.,
Carrollton, Ky., December 27, 1967. FELLOW SHORT HAUL CARRIER: I want to remind you that serious changes are taking place in transportation that demand your attention. Patterns of traffic flow are changing and so are the methods of moving this traffic. If your business is like mine-a combination of door-to-door service and pickup and delivery of interlined freight—it is being affected by competitive policies and advancing technology such as we've never seen before.
Like myself, you have probably wondered how the future will find your business; and whether your company will keep its identity as an independent motor carrier. Let me tell you that forces are at work which should well cause you to wonder and unless we get to work to preserve what we've worked hard to create and build, there won't be enough of us left to care about the future transportation problems !
I'm talking about the growth of the long-line, system carrier and its relentless movement into areas which once was yours and mine. Today the trend toward mergers, acquisitions and off-route extensions to pick off the profitable freight is driving us to the wall--and we must wake up to these threats now!
If you wonder why I speak of this with such dedication, let me tell you about a bill nearly passed in Congress in 1962 which was designed to rip out the intrastate carriers' I.C.C. registration of his state certificate the so-called "second proviso" episode. Our long-line friends supported an I.C.C. bill to remove this provision from the Interstate Commerce Act. No one in Washington seemed to realize or care that this would literally wipe out companies such as mine which realizes a large percentage of its total revenue from interlined interstate freight. I was more shocked to realize that when we appealed to existing trucking organizations in Washington to help us oppose the legislation, we got a blank stare and no support! Since only a handful of us realized that real threat to this bill we discovered we didn't have the resources or time to alert many second-proriso carriers. And had we not acted quickly through the Local and Short Haul Conference of ATA and demanded additional hearings through our personal friends in the Congress, the I.C.C.--the registered intra-state carrier would have the rug pulled from under him! And you, like myself, may be one who still enjoys this business due to this effort, which may have happened unknown to you!
I've gone into this much detail because, as it turns out, this was only one of a series of moves by our big competitors to push the small, regional motor carrier farther and farther into the wall. One of their current schemes is the “multiple pickup discount rate,” which has been proposed in eastern and southern tariff bureaus; in fact, one is pending now in the south. This gimmick gives special rate discounts to shippers who agree to tender specified minimum pickups to the carriers. Since the short haul carrier cannot offer these cut rates, because he doesn't have the over-the-road profits to subsidize him, our big brothers who adopt this scheme would get the cream of the freight and leave the high-cost small and infrequent pickups to us! And this would further depress our share of the revenue split on interlined freight. Many of us aren't satisfied with the split we're getting today!
Finally you must be alerted to two additional developments which are today a serious threat to your business. One is the Through Route/Joint Rate legislation pending right now in the Congress and the other is the imminent, tremendous growth in air freight; and truck transportation of which is being monopolized by the airlines and the forwarders under your very nose!
While you will learn in greater detail about these threats in subsequent mail. ings, you must wake up to their importance and what neglect on your part will do to your business future. I do wish to impress upon you now that you can get the facts on these two vitally important developments from the Local & Short Haul, Carriers National Conference of ATA and that you should waste no time doing so!
So, if you're still with me, my pitch is simply this: short haul carriers are learning that everything is just rosy between the big system carriers and the short haul carrier when we are equally threatened, but the organization and association they support simply won't come to our aid when a conflict of interest arises-such as those spelled out above. That is why we have been building our own organization—the Local & Short Haul Carriers National Conference of ATA. It is made up of short hand carriers like you and me and it is dedicated to act in OUR PEST INTERESTS before the policy-making agencies of the American Trucking Associations, the Tariff Bureaus and the Government agencies. Thus, when the goals of all trucking segments are alike, the Local & Short Haul Conference takes the same position as any other ATA Conference, and ATA itself, but when our interests_yours and mine--are at stake, this Conference speaks out ONLY for us!
We are a growing and dynamic organization. If you haven't heard of the irork we are doing daily for the short haul carriers, you will from now on. And you
will find that we speak your language; that we express YOUR views in the
CITY TRANSFER, INC.,
Santa Fe Springs, Calif., January 12, 1967. LOCAL AND SHORT HAUL CARRIERS NATIONAL CONFERENCE OF THE AMERICAN
TRUCKING ASSOCIATIONS, Inc., Washington, D.C. (Attn.: Mr. Kenneth R. Ketcham, Executive Director).
DEAR SIR: It has been brought to my attention that a bill has been introduced by Congressman Samuel Friedel (D., Md.) H.R. 10831, to amend Section 409 of the Interstate Commerce Act to authorize contracts between freight forwarders and railroads. Hearings are scheduled for January 23, 24th.
That section now allows forwarders to make such contracts with motor common carriers with the proviso that these contracts are authorized up to 450 miles. Beyond that the forwarders traffic must move at published rates.
Heretofor, the freight forwarder and any shipper who could qualify under the tariffs could use piggyback service by rail but the tariff provisions made it impossible for the truckers to enjoy the same benefits. This, I feel was not equitable since one mode of transportation was underprivileged to the advantage of another. To combat this situation the truckers began to enter into contract arrangements with the railroads. This arrangement was denied the forwarders. In the meantime the truckers maintained through the U.S. Supreme Court that they were entitled to the provisios of the piggyback tariffs and the Supreme Court upheld that principle with the result truckers are now free to use both methods; piggyback and contract for joint rates.
The forwarder does not have the same freedom and is requesting only that he be afforded the same rights and privileges that the long-haul truckers enjoy. I concur in that request.
As a short haul trucker I have been dismayed at the transcontinental truckers ability to secure preferential legislative treatment at the short haul truckers expense. We have all had the experience of watching accounts that we have developed being “taken over" by the long haul truckers pick up and delivery equipment and simultaneously being offered shag pick up and deliveries by the same carriers. It has taken years of effort and expense to secure equitable rate divisions from the long haul truckers and even these hard won increases lag far behind increased labor and other production expenses.
We, as do many short haul carriers conduct business with many forwarders and enjoy an excellent relationship—they do not attempt to compete with us but consider us partners and make certain that we are tendered all of the freight in a given area. Their chief interest is long-haul freight and they do not pretend to be specialists in extended area pick up and delivery operations.
The forwarders do business with us, do help to keep us operating and do not compete in areas of profitability by back soliciting, as do the transcontinental truckers. If we as short haul carriers were dependent upon a transcontinental trucker to keep us in business we would expire in a few short gasps.
Inasmuch as the freight forwarder is asking only parity, only the right to compete on equal advantages, he should be given that right without further delay. While it may not be germane, I recall that Transcontinental truckers were also afforded the right to purchase and operate a freight forwarder while the freight forwarder was told it was illegal for a freight forwarder to purchase and operate a truckline. I fail to see the reasoning and the justice of that decision. Surely in order to maintain proper levels of competition which should ensure the American public rates and service beyond compare, legislative and other duly appointed authority should be ever alert to the possibility of inadvertantly according one segment of the transportation industry an umbrella that is not made available to everyone in transportation or one that is absolutely preferential.