Mr. KUYKENDALL. Would you generally say that the piggyback motor freight would pay 66 cents? Mr. SMITH. Will you repeat that, please? Mr. KUYKENDALL. Would you say that, generally speaking, I know of exceptions, that the motor freight company would pay the same 66 cents today? Mr. SMITH. They would today as a result of the decision in Ex parte 230. Mr. KUYKENDALL. Would you say they are paying about the same as the freight forwarder today for that particular haul? Mr. SMITH. I don't know all the arrangements under part 3. Mr. KUYKENDALL. Would you say generally they pay the 66 cents? Mr. FRIEDEL. Or less? Mr. SMITH. I can't make a truthful and general statement along these lines. Mr. FRIEDEL. Could you furnish that for the record, please? Mr. SMITH. Pardon? Mr. FRIEDEL. Will you check and furnish that for the record? Mr. SMITH. I will go back and see what I can develop. Plan 1 arrangements are, as I say, divisional arrangements between motor carriers and railroads. The arrangements, just the same as railroads' divisions, are not on file with the Commission. All we were talking about under plan 1, the only cost, the one single cost to the shipping public is whatever the truck rate or whatever the trucks published rates. I don't think the truckers publish commodity rates of 66 cents a hundredweight in New York and Chicago. (The information requested follows:) TRAFFIC EXECUTIVE ASSOCIATION-EASTERN RAILROADS, Mr. W. E. WILLIAMSON, DEAR MR. WILLIAMSON: During our testimony on H.R. 10831, presented January 25, 1968, Chairman Friedel requested examples of the rail carriers share of revenue under joint rate movements under Plan 1 TOFC. A review of the files and records in this office does not provide the sought information. In fact, section 5a (4) of part I of the Interstate Commerce Commission Act specifically prohibits the Interstate Commerce Commission from authorizing this Association to specifically handle joint rate arrangements between carriers of more than one class. Under the circumstances I regret that this association is not in a position to furnish the requested material. Very truly yours, C. L. SMITH, Chairman. Mr. FRIEDEL. All right. Thank you. Our next witness will be Mr. N. F. Cunningham, traffic manager, Sunbeam Corp. STATEMENT OF NEIL F. CUNNINGHAM, TRAFFIC MANAGER, SUNBEAM CORP. Mr. CUNNINGHAM. My name is Neil F. Cunningham and I am the traffic manager of the Sunbeam Corp., 5400 West Roosevelt Road, Chicago, Ill. I will summarize my statement previously submitted. Mr. FRIEDEL. Your full statement will be included in the record. Are you in favor of H.R. 10831 or opposed to it? Mr. CUNNINGHAM. We are in support of that legislation, sir. Mr. CUNNINGHAM. The reason we are in support of that proposal is because Sunbeam Corp. is very concerned about the future of the freight forwarder. We feel that this mode of transportation should be afforded the same equality as the other regular modes of transportation, regulated modes of transportation. The forwarder competes, their only competitor is the motor carrier and they are not currently enjoying equality as compared to the rate advantages available to the motor carrier. It seems to us that all regulated carriers, the motor carriers and the freight forwarders, should be equal in their advantage. There seems to be some effort here to categorize the freight forwarders, should be equal in their advantage. There seems to be some effort here to categorize the freight forwarder with a shipper or shipper association. Neither a shipper nor a shipper association is regulated under the Interstate Commerce Act and it would seem to me that you must not include a freight forwarder in that category. Rather he should be included in the category of a regulated carrier under the Interstate Commerce Act, part IV. Currently the forwarder is not able to enter into agreed rates with the railroad under section 409 of the Interstate Commerce Act. This advantage is available to the motor carriers and an obvious inequality in our opinion is resulting which will in our opinion result in the total destruction of the freight forwarder. We do a significant business with the freight forwarding industry. We are extremely satisfied with their services and their attitude toward us as a shipper. It is in this thinking as in the matter of equality and the salvation of the freight forwarder as a regulated mode of transportation that Sunbeam Corp. feels they should be having equality with other regulated modes of transportation. (Mr. Cunningham's prepared statement follows:) STATEMENT OF NEIL F. CUNNINGHAM, TRAFFIC MANAGER, SUNBEAM CORP. Gentlemen, my name is Neil F. Cunningham and I am the traffic manager of the Sunbeam Corporation, 5400 West Roosevelt Road, Chicago, Illinois. My company's position in this matter is in support of the freight forwarding industry because we feel that all regulated carriers should be allowed to compete on an equal basis. At present, section 409 of the Interstate Commerce Act does not allow the freight forwarder the opportunity to draw contracts with the rail carriers. The motor carriers may now enter into rate agreements with the railroads and the resultant inequality will eventually spell the demise of the freight forwarding industry. Sunbeam Corporation manufactures a wide variety of portable electric appliances and related articles. Our distribution requirements range from small minimum weight and less-than-truckload shipments to volume truckload and carload consignments. The freight forwarder plays an important role in this overall distribution pattern which includes all modes of transportation. These different modes must all be in a strong competitive position if they are expected to continue to serve our needs and provide the nation with a complete intermodal transportation system. Equality of opportunity for the various modes is essential to foster such competition. The proposed legislation will amend section 409 of the Interstate Commerce Act to give the freight forwarder the right to contract for rate agreements with the railroads. We consider this amendment to be completely consistent with our desire for both healthy inter-modal competition and general transportation equalities. We therefore urge that this section 409 amendment proposed by the Freight Forwarders Institute be approved. Thank you very much, gentlemen, for allowing me to testify before your committee. Mr. FRIEDEL. I want to thank you for your short statement which : is definitely to the point. Mr. Kuykendall? Mr. KUYKENDALL. Yours is certainly a well-known and respected business in the country. How many manufacturing facilities do you have? Mr. CUNNINGHAM. In the United States— Mr. KUYKENDALL. Give me an idea of how they are spread out. Mr. CUNNINGHAM. We have eight plants in the southern part of the country and one main manufacturing plant in Chicago, Ill. Mr. KUYKENDALL. Do you have a distribution center on the west coast? Mr. CUNNINGHAM. No. All of our shipments are shipped to wholesalers, sir. We do not have a regional warehouse on the west coast or any other location. Mr. KUYKENDALL. I am not trying to put you on the spot here, I am just curious, but can you tell us about what percent of your wholesale price is transportation? Mr. SMITH. I would say it is under 5 percent. Mr. KUYKENDALL. You have made a differentiation between what you thought was fair for the shipper association and the freight forwarder. Mr. CUNNINGHAM. Yes. Mr. KUYKENDALL. This surprised me a bit because so many of your cousins in industry have taken the opposite view. Now let me question you here. It is my understanding that the shipper associations own no interstate or intercity rolling stock. Certainly they do some hauling within cities. It is my understanding freight forwarders, even though some of them own over a million dollars worth of rolling stock it is not interstate or intercity generally. What then is the difference between their status-I am not talking about the difference between these two people-the status of shipping associations so far as their status within our economy. Mr. CUNNINGHAM. It is my understanding that a shippers association is not able to directly arrange or affect either a local pickup or a local delivery at destination. Rather, it is my understanding and I do not allege to be an expert on shippers associations, it is my understanding that there their activities are wrapped around so to speak and that the shippers themselves must arrange for delivery. I may be incorrect on that point in that I have not had too many dealings with shippers associations. The reason being, if I may volunteer this, is because it is our opinion that our type of commodity and our type of delivery requirements and pickup requirement and the value of our commodity and the high claim risk of our commodity does not yield themselves to the activity of the shippers association. I am not critical of a shippers association, and I am just indicating the reason that Sunbeam does not use shipper associations. We feel that our type of commodity and the quality of our commodity serves a regulated form of transportation. Mr. KUYKENDALL. Thank you. Mr. CUNNINGHAM. Thank you. Mr. FRIEDEL. Our next witness will be Mr. J. L. Quinn, traffic manager, Canteen Corp., the Merchandise Mart, Chicago, Ill. STATEMENT OF JOSEPH L. QUINN, TRAFFIC MANAGER, CANTEEN CORP., MERCHANDISE MART, CHICAGO, ILL Mr. QUINN. Mr. Chairman, my name is Joseph Quinn, traffic manager of Canteen Corp., 1430 Merchandise Mart, Chicago, Ill. I appear in support of the freight forwarder industry. I have prepared a statement which I would like to enter as testimony but rather than reading it I would prefer to paraphrase it and emphasize certain portions in the interest of conserving time. The situation that we have under consideration during this hearing on H.R. 10831 is a grave and serious matter for the shippers of this country. I refer to the inability of the freight forwarders to enter into contracts with the railroads similar to those now in effect between the railroads and the motor carriers. Because of the railroad's plan 1 rate to the motor carriers being considerable lower than plans 3 and 4 which the freight forwarders must utilize, we cannot expect that the freight forwarders operating under this handicap can continue to operate over the long run with higher operating costs without a curtailment of service or increased rates. In either case, we, the shipping public, will suffer. Throughout the past years there has been a steady curtailment of service between certain areas of this country because of the steadily increasing operating costs to the freight forwarders. This trend must stop. In fact, we must do all that is possible to reverse this trend. Why is this important? Because we need the competition in the small shipments field. After the freight forwarder has left the scene, whom have we to turn to? If we feel that the motor carriers are not providing the service that we require or that their rate increases are going unchecked we have no other mode of transportation specializing in the handling of small shipments to turn to. When I speak of small shipments I refer to those shipments over the size and weight limitations of parcel post, United Parcel Service, bus, or REA. We at Canteen Corp. utilize the services of freight forwarders and motor carriers almost exclusively for the handling of our small shipments. We're not members of any shipper association nor do we have the tonnage to combine our small shipments to send as a consolidated truckload or carload. I would venture to say that there are hundreds of thousands of firms in this country that are in the same situation. Unfortunately these smaller firms are not as well represented here as are the larger shippers and shipper associations that are opposing this bill. I think that if you were to determine from those shippers and associations which are opposing this bill what percentage of their small shipments move by the freight forwarder or motor carrier industry under 1.c.1. ratings, you would find it substantially less than the per centage that the small shippers move under 1.c.l. ratings via freight forwarders or motor carriers. These large shippers and associations, have alternative methods of shipping their small shipments. We do not. I again emphasize the need for competition in the small shipments field. To not allow this bill to pass will result in the demise of the freight forwarder industry and this would indeed be a sad day for the shippers of this country. Digressing for the moment, I would like to make one point. We at Canteen consider the freight forwarders common carriers. You will find many statements being given throughout this hearing about whether they are or are not common carriers. If the railroads do not and cannot by law consider the freight forwarders as common carriers, then this legislation is needed more so. This is why we have a Congress to make sure that if laws need to be changed that they are so done and I believe this is why this hearing is being held. With the passage of this bill the railroad industry will be able to consider the freight forwarders as common carriers and thereby allow the freight forwarders to enter into agreements under plan 1. Mr. Smith, representing the eastern territorial railroads, has stated that he was not sure whether there was a difference between the payments made to the railroads for shipment made by the freight forwarders and by the motor carriers. There is a substantial difference between plan 1 and plans 3 and 4, very substantial. Without this bill being passed I am quite sure and I sincerely feel that the forwarders cannot continue to be a strong competitor to the trucking industry. I again emphasize that we as a shipper consider the freight forwarder as a common carrier. (Mr. Quinn's prepared statement follows:) STATEMENT OF JOSEPH L. QUINN, TRAFFIC MANAGER, CANTEEN CORP., CHICAGO, ILL. Gentlemen, my name is Joseph Quinn and I am the traffic manager of Canteen Corp., 1430 Merchandise Mart, Chicago, Ill. My company's position in this matter is in support of the freight forwarding industry. As a substantial user of the freight forwarder industry, we are very concerned with the disparity between the operating costs of the motor carriers and the freight forwarders. This difference, as you know, is the result of the freight forwarder being prohibited from entering into contractual arrangements with the railroads, similar to those now in effect between the motor carriers and the railroads. The continuation of this situation will eventually result in decreased earnings for the freight forwarders, bringing about a deterioration in service or increased rates. In either case, the shipping public will suffer. We at Canteen Corp. need the freight forwarding industry, because of the competition that they provide the motor carrier industry. More specifically, the forwarders provide our company with superior service and lower rates between certain areas of the country. It has already been demonstrated that the motor carrier industry is becoming more selective each day in the freight they will handle. Without any competition whatsoever, one can readily expect more independent action on the part of the motor carriers, which will result in immediate detrimental treatment to certain individual industries and to the general shipping public over the long run. Your support in helping to enact this legislation will enable shippers throughout of the United States to have a legitimate choice between the motor carrier industry and the freight forwarder industry which is essential to the continuation of an "adequate, economical, and efficient transportation system." |