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Thank you very much, gentlemen, for allowing me to testify before your committee.
Mr. FRIEDEL. I want to thank you. Mr. Kuykendall wants to ask one question.
Mr. KUYKENDALL. I don't want to ask one question. I want to make an observation. The small shipper has been quite well represented at these hearings.
Mr. Quinn. Thank you. I am glad to hear it.
Mr. FRIEDEL. Our next witness is Mr. Caughey B. Culpepper, chairman, National Conference Non-Profit Shipping Associations, Atlanta, Ga.
STATEMENT OF CAUGHEY B. CULPEPPER, CHAIRMAN, NATIONAL
CONFERENCE OF NONPROFIT SHIPPING ASSOCIATIONS, INC. Mr. CULPEPPER. Yes, Mr. Chairman.
Mr. FRIEDEL. Mr. Culpepper, your full statement will be included in the record unless you wish to read it.
Mr. CULPEPPER. Thank you very much, Mr. Chairman, I will read it,
if I may.
My name is Caughey B. Culpepper. I have been actively engaged in traffic and transportation work almost continuously since 1921. I have been connected with the Atlanta Freight Bureau, a civic, nonprofit and highly ethical and professional traffic and transportation organization since 1935, and have been its general manager since 1951.
I served as president of the National Conference of Non-Profit Shipping Associations from its organization in 1953 until early in 1967, at which time I was elected chairman of its board of directors.
Since 1950 the Atlanta Freight Bureau has supervised for its members a freight consolidating service out of New York and Chicago into Atlanta, Ga.; and as general manager of the bureau, I have had direct oversight of this operation which is conducted under the exemption provided in section 402(c) of the Interstate Commerce Act, as are the operations of all bona fide nonprofit shipping associations, approximately 20 of which comprise the National Conference of Non-Profit Shipping Associations, Inc.
I appear here today on behalf of those nonprofit shipping associations comprising the national conference and speak specifically for, and under direct authority from, the Atlanta Freight Bureau, the Memphis Freight Bureau, and Gulf Shippers Associations of Tampa, Fla.
Our opposition to H.R. 10831 is based upon the well-founded fear that to grant to the regulated freight forwarders subject to part IV of the act the right to enter into negotiated and reduced charges agreements with the railroads would automatically be contrary to one of the cardinal aims and purposes of the act to regulate interstate commerce; that is, the elimination of the promulgation of preferential and/or prejudicial rates and charges.
To grant to the regulated freight forwarders the right to enter into or operate under contracts with common carriers by railroadespecially without the imposition of the 450-mile length-of-haul limitation-would certainly prefer these forwarders over individual shippers and groups or associations of shippers performing for themselves and their members the same essential service as that offered by the freight forwarders, without the imposition of any additional expense or cost of service to the railroads themselves.
What would the freight forwarders do with any savings that might be effected by the contemplated contracts? The forwarders would only do one or two things with these savings. They could use them to improve their own financial status or they could pass
them along to their customers.
In the first instance, the onus of preferential treatment is apparent. It would mean that these companies which have no real transportation characteristics, in spite of their designation as common carriers, would enjoy the reduced rates and greater profits than individual shippers of the same commodities or the bona fide groups or associations of such shippers.
In the second eventuality, and presuming that the freight forwarders would pass along to their customers such savings as might be effected, these savings could be used in a competitive manner against organized nonprofit shipping associations to narrow the spread between the charges based upon actual costs to such an extent that these associations would no longer find it advantageous to operate.
This would be the case involving freight shipments to destinations where there might be active nonprofit shipping associations, while the present charges could or would be maintained at other points where there were no such association.
Your witness and his principals recognize the apparent logic of the contention of the regulated freight forwarders that inasmuch as both they and the motor common carriers are creatures of, and parties to, part IV of the Interstate Commerce Act, they should be allowed then the same privileges regarding contractual rates and charges with the railroads as those granted to the motor common carriers.
However, this position is not as fully substantiated by the facts as it might seem, because the Congress at the time the freight forwarders were made common carriers under part IV recognized that there was a difference; and your body then took particular pains to see that the legislation designating freight forwarders as common carriers should be so worded as to still permit the free and unhampered consolidation of small shipments of freight by individual shippers and groups or associations of shippers, as is evidenced by the inclusion of section 402(c) of the Interstate Commerce Act in the law which was eventually passed.
Thus, to now enact into law H.R. 10831 would by indirection permit the regulated freight forwarders to have a surreptitious advantage over individual shippers and groups or associations of shippers, which the Congress at the time the freight forwarders were made common carriers distinctly sought to prevent.
Consequently, the National Conference of Non-Profit Shipping Associations, Inc., speaking for its approximately 20 members, the Atlanta Freight Bureau, representing approximately 550 shippers and receivers of freight in 14 different States, the Memphis Freight Bureau with approximately 400 shipping and receiving members and the Gulf Freight Association with 450 members respectfully urge that this subcommittee recommend that H.R. 10831 do not pass.
If you will permit me I would like to do something that may not be necessary; but I was interested in the question the Congressman asked with reference to joint rates and the mechanism that went into the promulgation of them. My bureau down in Atlanta recently had an inquiry from a manufacturing concern in Brunswick, Ga., with reference to a commodity that they wanted to ship into Iowa. We contacted the then Atlantic Coastline Railroad.
They said they would be glad to undertake to get the connecting lines to participate in a commodity rate on that particular commodity. They did not know whether they could or not. But they are working at it now. Now that will be a joint rate. That will be by negotiation, by agreement between the railroads.
They will publish the rate in the tariff and then the Interstate Commerce Commission will consider it. Maybe some other railroad will object to it, protest it, and it may or may not go into effect. Now that is a joint rate. Now if the law were amended properly the railroads could publish such rates in connection with various motor carriers.
They could propose a rate and publish a rate from Atlanta, Ga., to some point in Michigan with the Illinois Central, L. & N., all of them participating up to a certain point and the truckline taking the shipment from there and carrying it to the Michigan point, if they had the right under the law to do it.
Now that would be a joint rate. Now if you tried to publish a joint rate with a freight forwarder, the freight forwarder would have to turn around and hire the transportation from somebody else to participate in the rate because he does not have any mode of hauling freight.
He has to buy his transportation. If you published a rate by railroad to a certain point with the freight forwarder to carry the shipment beyond, the freight forwarder would then have to buy the transportation from that point from another railroad or from another truck company.
Do I make myself clear? I was interested in your point about that, you see. I do appreciate very much the opportunity to appear before you. I have nothing in the world against freight forwarders, absolutely nothing in the world. I think that they should be permitted to operate at a profit but to give them the characteristics of a common carrier which has all of the facilities for moving freight, itself, is inconsistent.
You can't do it because they would have to turn around and buy the transportation from somebody else.
Mr. FRIEDEL. Mr. Culpepper, I would like to ask one question. You are opposed to the legislation. Now yesterday there was a proposed amendment to include the nonprofit shipping associations. Would you be in favor if the shipper associations were included?
Mr. CULPEPPER. Mr. Chairman, I would not be in favor of the bill. I would not be as diametrically opposed to it because it would eliminate one of the points that I have raised here and that is the question of preference.
Mr. FRIEDEL. If the shipper associations were included, you would not be opposed to the bill, is that it?
Mr. CULPEPPER. I would probably not be so willing to tear my shirt, if you will excuse the expression. I don't mean to be disrespectful. Here is the thing about it. The railroads would turn around, and, with millions of pounds of freight between two points, might enter into a contract with that freight forwarder.
In the case of a nonprofit shipping association that had one-tenth of that moving, the railroads would not enter into a contract with them. There would be nothing in the law that would make them, you see.
Mr. FRIEDEL. You would be opposed to the amendment even if you were included.
Mr. CULPEPPER. I would say we are opposed to the bill as it is written and let it go at that, Mr. Chairman.
Mr. FRIEDEL. Thank you very much.
Mr. FRIEDEL. Our next witness is Mr. Claude G. Smith for the West Point Pepperell, Inc., Carpet & Rug Division, of Dalton, Ga.
STATEMENT OF CLAUDE G. SMITH, TRAFFIC MANAGER, WEST
POINT PEPPERELL, INC., CARPET & RUG DIVISION, DALTON, GA.
Mr. Surth. I have a statement which I would like to read if I may be allowed.
Mr. FRIEDEL. Is it short?
West Point Pepperell, Inc., Rug & Carpet Division, is a manufacturer of tufted rugs and carpets and distributes its merchandise to all points in the United States and many points in Canada.
Our product is shipped under a description of “Carpets or Rugs, Soft Surface (Pile) Fabric, Power Machine Tufted or Power Machine Woren.” The majority of shipments of this merchandise orig. inates in the Southeast and is covered by column commodity rates.
The industry during the past 3 years, as reported by the Bureau of Census, has reached and exceeded the billion-dollar level. Eighty percent of our shipments are less than carload or less than truckload and average approximately 300 pounds per shipment.
Therefore, it is vital to our industry that we be able to secure adequate and satisfactory 1.c.l. and 1.t.l. service to properly distribute our merchandise.
For the last 5 or 6 years, the railroads have severely curtailed or eliminated altogether their l.c.l. service. From the Southeast we have no rail l.c.service to the east and north in official and central territories. Even in the southern territory elimination is beginning.
The Southern Railroad has eliminated all l.c.l. service under 6,000 pounds.
The motor carriers have curtailed their l.t.l. service by refusing to establish through routes and joint rates. We have attempted to overcome these restrictions by appealing to the ICC for certification of additional carriers, particularly for one-line long-haul carriers.
I question though whether such tactics are the answer to our problem. It solves the problem where such certification is granted. How long it will last is anybody's guess.
I think it quite apparent that our industry is handicapped by our lack of satisfactory 1.c.l. or l.t.l. service. It is for this reason that we are interested in the adoption of H.R. 10831. We believe that the freight forwarder could take over the 1.c.l. and 1.t.l. shipments and do it satisfactorily provided they could control their costs through legalization of a contractual relationship between them and the rail carriers under part I of the ICC Act.
At present West Point Pepperell, Carpet and Rug Division, uses the service of freight forwarders, particularly to the west coast. We have found their service to be consistently good. We would like to see their services extended to areas not now available to us, because they cannot control their costs into the territories that we have no service into, particularly the Middle West.
Prior to the placing of motor carriers under regulation under part II of the act and before freight forwarders were regulated under part IV, forwarders had the right of contract with the motor carriers for consolidation and distribution of forwarder freight from key points.
But even after the motor carriers were placed under part II, this right of the forwarder still held. As the forwarder has always been considered a shipper in their relationship to the rail carriers under part I, we think that when the forwarder was regulated under part IV their relationship of shipper between them and the rail carriers should have been dropped and that they should have been considered as a regulated forwarder with rights to enter into contracts with the rail carriers.
Should this committee see it fit to approve H.R. 10831, and should the Congress in its wisdom adopt this resolution, we believe it would be good for the shipping public and would be in accordance with the national transportation policy.
Such a relationship between the forwarder and the rails as set forth in H.R. 10831 would allow the forwarder, in my opinion, to offer an 1.c.l. service that would be satisfactory to the shipping public, servicewise and ratewise.
For this reason, we urge this committee to recommend adoption of H.R. 10831.
Now I want to add one other thing. The use of the nonregulated shipper associations I do not believe is the answer to our problem. We want the service to points where there is no ability of anyone to consolidate volume loads. We must ship 300 pounds, 400 pounds to Podunk points and we can't get such service by the motor carrier and we can't get such service by the rail carrier.
The only one as a last resort we turn to is the regulated freight forwarder. I believe if the regulated freight forwarder had this right of contract they could come in and offer us service to points that they are not now serving because the spread between the carload and 1.t.l. rates is not sufficient to allow them to operate.
Mr. FRIEDEL. Thank you, Mr. Smith, for your very fine statement. Mr. Kuvkendall!
Mr. KUYKENDALL. I have no questions.
Mr. FRIEDEL. Our next witness is Mr. G. R. Holliday, office manager, Hillside plant, Callaway Mills Co., La Grange, Ga. You may proceed, sir.