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STATEMENT OF GILBERT R. HOLLIDAY, OFFICE MANAGER, HILL
SIDE PLANT, CALLAWAY MILLS CO., LA GRANGE, GA. Mr. HOLLIDAY. Thank you, Mr. Chairman.
Mr. FRIEDEL. Your full statement will be included in the record, Mr. Holliday.
Mr. HOLLIDAY. By way of emphasis, I will make my additional comment very precise. I think this is a way of being emphatic. No. 1, it is a fact that the rails have withdrawn from the 1.c.l. service, generally by declaration and otherwise by performance. Motor carriers are not now performing as well as they once did. I suspect the reduction of competition may have some effect on all this service. In regard to freight forwarders we in our company have come to think of freight forwarders as common carriers.
I believe one of the other witnesses made this same statement. I certainly want to underline that. Some comments have been made with regard to distributing profit. The cost of freight is borne by consumers. The consumer is going to really control the division of any profits.
(Mr. Holliday's prepared statement follows:)
STATEMENT OF GILBERT R. HOLLIDAY, OFFICE MANAGER, HILLSIDE PLANT, CALLAWAY
MILLS Co., LA GRANGE, GA. My appearance here today is to support House bill H.R. 10831 which I recommend for passage, as it is in the best interest of my company and its customers. During 1967 we shipped approximately 45 million pounds of floor coverings, soft surface pile, power machine woven or tufted, most of which was shipped in lessthan-truckload lots, to all parts of the United States. A large portion of these goods moved in freight forwarder service. I am interested in the passage of this bill to maintain services of the freight forwarders. Most of the major railroads have discontinued accepting small 1.c.l. shipments. Freight forwarders consistently handle all types of traffic, while other modes have a tendency to restrict bulky and cost-problem commodities. I am most anxious to see such an overall service protected. Every day, it seems, a letter crosses my desk relating plans of various motor carriers and motor carrier conferences to increase the rates for moving our commodity.
There have already been several increases during the past two years.
It is my opinion that passage of this bill would aid in keeping rates lower by the retention of the competitive principles so important in any industry. There are now many areas which cannot be reached by railroad in less than carload lots, and those that can be reached generally perform very poorly.
We feel passage of this bill will allow the freight forwarders to sustain their service on small shipments, and enhance coordination of freight forwarder service with their underlying transportation. The freight forwarders have attempted to keep their rates in line and perform a service on a consistent basis, and we plan to continue to use them. I feel passage of this bill will be in the interest of the shipping public and national transportation policy.
I sincerely appreciate the time allowed me by the committee for this testimony. Thank you.
Mr. FRIEDEL. In other words, you are in favor of this legislation?
Mr. HOLLIDAY. Yes, sir, I am definitely in favor of this legislation. Passage of this bill in my opinion would aid the shipper and consumer by permitting the freight forwarders to contract directly with railroads, thus obtaining better rates which would be passed on to the ultimate consumer. Mr. Smith, the first witness who appeared in opposition to this bill, somewhat surprised me by making the statement that they worried about he said in his opinion this would be additional business for freight forwarders.
If the bill were passed the freight forwarder would be able to obtain business that they are not now getting and would move by rail rather than by highways. I was surprised they were in opposition.
Mr. FRIEDEL. Thank you, Mr. Holliday. I have no questions.
Mr. KUYKENDALL. Let me ask a couple of questions here. I would imagine, Mr. Smith, speaking for the railroads, not long ago the volume and profits many times were not the same thing. One of the fears that has been mentioned here is opening up Pandora's box of indiscriminate price cutting.
That is what a lot of people are afraid of. I know the railroads are afraid of it. What would you think of a published regulated piggyback rate? In other words, instead of giving you an opportunity to bargain just give the railroads an opportunity to publish a piggyback rate?
Mr. HOLLIDAY. I understand that those rates are published now.
Mr. KUYKENDALL. They do not apply to everybody. Right now the freight forwarder is operating within the difference between carload and 1.c.l., is that right?
Mr. HOLLIDAY. That is right.
Mr. KUYKENDALL. You are speaking for a bill that gives them more margin?
Mr. HOLLIDAY. Yes, sir.
Mr. KUYKENDALL. Instead of opening up this Pandora's box to indiscriminate price cutting this is the answer, why not give them the piggyback published rate and then let them have more margin?
Mr. Holliday. I am not sure I understand your point. My point is that I want better service and service that I am not now getting. One way I am getting service is the fact of competition. The freight forwarders are trying to get more business and they get it by giving better service.
Mr. KUYKENDALL. My point is this: After all, if one man backs a trailer up to a rail car and hauls it between point A and point B and so much weight involved what would be wrong with just having a rate for that service for Joe Blow and John Smith the same?
Mr. HOLLIDAY. I can see nothing wrong about that.
Our next witness is Mr. Steve Sakoutis, traffic manager, Embassy Industries, Inc., Farmingdale, N.Y.
Did I pronounce your name correctly? STATEMENT OF STEVE SAKOUTIS, GENERAL TRAFFIC MANAGER,
EMBASSY INDUSTRIES, INC., FARMINGDALE, N.Y. Mr. SAKOUTIS. Yes, you did, sir.
Embassy Industries, Inc., and its wholly owned subsidiaries, who are all divisions of P. & F. Industries, Inc., and are herewith represented by its general traffic manager, Steve Sakoutis, is a publicly owned corporation, incorporated in 1950 under the laws of the State of New York. Its principal place of business is 300 Smith Street, Farmingdale, N.Y. Embassy Industries, Inc., is engaged in the manufacture of industrial and home heating equipment, chemicals, and industrial machinery. It relies upon the services of all modes of transportation, to which it tenders shipments from single package shipments to carload quantities, throughout these continental United States, Alaska, and Hawaii, and in foreign commerce.
* * to promote safe, adequate, economical and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences, or advantages, or unfair or destructive competitive practices * * *
The above excerpt, taken from no less a declaration than the national transportation policy, clearly states the essence of our support.
The language in section 409(a), as amended, is in complete consonance with this declaration, and brings forth many inherent advantages to shipper and carrier alike. The most obvious of these advantages gained by the passage of this bill, are offered here for your consideration.
Provided with the authority to enter into contractual agreements, with common carriers by railroad subject to part I of the Interstate Commerce Act, a freight forwarder can provide a more efficient, more extensive, and perhaps more economical service to shippers.
Since the freight forwarder, under the present section 409(a), may enter into contractual agreements with common carriers by motor vehicle subject to part II of this act, and can provide a successful and efficient service because of the contractual agreement, then it should naturally follow that the freight forwarder be able to extend a similar arrangement with common carriers by railroad, subject to part I of this act, all to the benefit of the shipping public.
BENEFITS FOR THE SMALL SHIPPER
One of the most often echoed complaints of the transportation industry has been the small shipment. Railroads, to all intents and purposes, have abandoned 1.c.l. service. Motor carriers complain about their high costs in handling these small shipments. The freight forwarder by the very character of this operation, has contributed heavily in helping to solve this problem.
With the passage of H.R. 10831, this very vital service could be extended over a greater area, all to the benefit of the shipping public.
COORDINATED SERVICE AND INTERMODAL COOPERATION
Since its inception, the Department of Transportation has been encouraging a coordinated system in transportation, and for more cooperation among the various modes.
Passage of H.R. 10831 would be a forward step toward achieving that goal.
The freight forwarder is largely dependent upon the railroad in furnishing his transportation services. Since these two modes compliment each other so well, passage of the bill would give them greater Hexibility to blend their operations more efficiently.
This increased efficiency should be reflected in the economics of the service, particularly in the area of the small shipments where costs are spiraling.
In a coordinated transportation system, carriers and shippers alike must be the beneficiaries, or the system cannot survive.
Section 490 (a) of the Interstate Commerce Act appears to be in conflict with the language of the national transportation policy, particularly with that language which deals with the promotion of economical and efficient service, and, with that language which deals with undue preferences or advantages.
It was not the intent of the act to create a paradox, yet, a paradox does exist.
The freight forwarder is at a distinct disadvantage because of this paradox, in that he cannot enter into contracts with railroads as can the motor carriers subject to part II of the act.
Passage of the bill would correct this discriminating exclusion and again, all to the good of the shipping public.
It was not the purpose of this statement to effect a dramatic change in the Interstate Commerce Act. But if it has aroused enough curiosity amongst the members of this august committee, to induce them to take a closer look at the national transportation policy in relation to section 409(a), then its purpose was meaningful, for then logic should dictate that passage of H.R. 10831 is essential, and just.
Mr. FRIEDEL. Thank you very much for your statement
Mr. FRIEDEL. Our next witness is Mr. Ben Gutman, Jr., president,
TRUCK SERVICE, INC., ST. LOUIS, MO.
Mr. GUTMAN. Mr. Chairman, my statement is very brief. I will read it. I think I can read it faster than I can summarize it.
Mr. FRIEDEL. You may proceed.
Mr. GUTMAN. I am Ben Gutman, Jr., president of the Ben Gutman Truck Service, Inc., with principal offices at 1221 Locust Street, St. Louis, Mo.
Our company has been a corporation since 1929 and has always had its
principal operations in St. Louis, Mo. Our company serves the St. Louis-East St. Louis metropolitan area within the commercial zone as prescribed by the Interstate Commerce Commission.
We have served the forwarding industry. since its inception. In 1967 our company received from the forwarding industry in St. Louis for services performed in pick up and delivery and piggyback approximately $800,000 in revenue.
My interest in appearing before your committee is obviously the fact that I definitely feel that I am a part of the forwarding industry and as such, I desire to see the forwarding industry maintain a competitive position with other modes of transportation.
I refer specifically to the fact that forwarders are limited to the open tariff plans which places the freight forwarder at a competitive disadvantage in relation to their principal competitors, the common carrier trucks.
Throughout my 30 years of experience in the local cartage business serving the forwarder it has been obvious to me that the forwarding industry has been a progressive and worthwhile part of our transportation system. The forwarding industry should be given the privileges offered to their competitors in order that they are able to maintain their services for the shipping public.
As a cartage company performing services for the forwarding industry, I am dependent upon a volume of business in order to operate economically. If the forwarder is not competitive and consequently is forced to give up a percentage of the volume of traffic handled by our company as far as pick up and delivery and piggyback services are concerned.
Bear in mind that I will still be serving the metropolitan area as mentioned above, but with a smaller volume of traffic resulting in a higher cost per hundred pounds to handle this traffic.
I am certain that this increased cartage cost would prevail under these circumstances in every city regardless of whether the forwarding companies own and operate their own cartage companies, or whether they employ outside cartage companies such as ours to perform these services.
I do not believe that under the competitive conditions that exist today that you can ignore the factor of cartage costs in the overall operations of the forwarding company industry.
It is my opinion that if section 409(a) of the Interstate Commerce Commission Act is amended by the passage of H.R. 10831 the forwarding industry will be permitted to operate in a competitive position for the benefit of the shipping public.
Mr. FRIEDEL. Thank you, Mr. Gutman, I have no questions.
Mr. FRIEDEL. Our next witness will be Mr. J. Robert Evans, traffic manager, National Lock Co., Rockford, Ill.
STATEMENT OF J. ROBERT EVANS, TRAFFIC MANAGER, NATIONAL
LOCK CO., ROCKFORD, ILL.
Mr. Evans. My name is J. Robert Evans, traffic manager of National Lock Co. of Rockford, Ill. I am here in support of H.R. 10831. I don't think it is necessary to read my statement but I would like to summarize briefly my viewpoints.
Our company is a shipper of small shipments. We are vitally concerned with the spiraling transportation costs, the deterioration of services, and we feel that we need the freight forwarder competition