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Public Utilities Commission of the State of California authorizing operations in interstate and foreign commerce as well as intrastate commerce.

The company maintains terminals at Stockton and Sacramento, Calif., and operates 65 pieces of equipment. Gross annual revenue from trucking operations amounts to $500,000, of which 55 percent is derived from freight forwarder operations.

We unload and distribute for the freight forwarders, freight consolidated by them in the east for distribution to points in California.

We have been operating as distributors of forwarder freight since 1941. The freight forwarder business has contributed substantially to the success of our operations. Without the forwarder business the entire service of the company to the California public would be curtailed.

I am familiar with the content of H.R. 10831, to amend section 409 of the Interstate Commerce Act to authorize contracts between freight forwarders and railroads, and strongly urge its passage for the present and future success of the freight forwarder industry.

Throughout the years the rails have gradually abandoned 1.c.1. traffic which has worked to the disadvantage of the small shipper.

Conditions have changed and are in a state of change. Railroads remain competitive in the 1.c.l. field largely through the medium of freight forwarders.

The Supreme Court has held that truckers are free to use piggyback and contract or joint rates with the railroads whereas the freight forwarders are held strictly to tariff provisions.

While I do not advocate preferential treatment to freight forwarders I do advocate equal opportunity between freight forwarders and motor carriers in their authority to negotiate with railroads.

Mr. FRIEDEL. Our next witness is Mr. Harry J. Scherer, vice president, Peninsula Delivery Service, San Francisco, Calif.

(No response.)

Mr. FRIEDEL. At this rate we might be able to finish this morning. Our next witness is Mr. Van Noy Davis, general traffic manager, Rerell, Inc., Venice, Calif.

STATEMENT OF VAN NOY DAVIS, GENERAL TRAFFIC MANAGER,

REVELL, INC., VENICE, CALIF. Mr. Davis. Thank you, Mr. Chairman. I am Van Noy Davis. I have a brief statement I would like to enter into the record.

Mr. FRIEDEL. It may be included in the record.
Mr. Davis. Mr. Chairman, do you desire I read the statement !
Mr. FRIEDEL. You may read it.

Mr. Davis. My name is Van Noy Davis. I am general traffic manager of Revell, Inc., and have held this position for the last 23 years.

The home office is Venice, Calif., with offices and/or plants in New York, London, and Bunde, West Germany. My other affiliations briefly, are: (1) Delta Nu Alpha, Chapter 116, Los Angeles, Calif.

(2) Shippers Advisory Subcommittee and Freight Committee for the Los Angeles Chamber of Commerce.

(3) Member of West Coast Traffic Committee for Toy Manufacturers of America.

(4) Past president and chairman of the board of traffic managers conference of California.

(5) Past president of Bay Cities Traffic & Transportation Club. (6) Member of the Los Angeles Transportation Club. (7) Member of Pacific Coast Shippers Advisory Board.

Revell's gross movement of finished goods during 1967 amounted to something in the neighborhood of 101,2 million pounds.

Some 60 percent of this traffic moves through the services of the numerous forwarding agencies, and for this reason I am deeply concerned about the continued health and longevity of the forwarding industry.

Our operation needs the flexibility peculiar to the forwarders service since our volume moves in commonly considered small lots and package rated lots.

It is my belief the forwarder industry will suffer immeasurable damage in the absence of benefits provided by H.R. 10831.

Further, denial of contractual privileges between forwarders and the railroads could move the forwarder out of the competitive field as we have known it--the forwarders being bound by the prevailing open tariff plans, while highway common carriers appear to have distinct advantages under contractual arrangements such as plan 1 affords.

The railroads having discouraged and/or entirely eliminated the handling of less-than-carload-lot shipments over the past few years, have created an increasing need for forwarder services to meet lessthan-carload-lot service requirements resulting from such abandonment.

The railroads and the rail freight forwarders have, historically, complemented each the other's effort, the rail freight forwarder being treated as something like a stepchild denied status of carrier and paying shippers rates.

I strongly urge the cementing of these coordinated operations in such a manner as to provide the inherent flexibility and economies resulting from joint rates and other equalizing opportunities.

I believe H.R. 10831 is a step in the right direction and urge its passage.

Mr. Chairman, one conclusion, being located as we are on the west coast and using forwarder services to the high degree that we do, a great deal more than half of our transportation, we have shipments that range anywhere from 25 to 15,000 pounds, and for us with jobber outlets, to attempt some of the suggested remedies of loading cars into these points for distribution the timing lag very often would prohibit the activity.

Secondly, if you have too small lots, then you have a distribution problem at destination. We have found this to be true.

Also, the type of customer that we have, if it is directly to a jobber, we are not his only vendor; his warehouse space is limited. If we could take advantage of a carload rate to this jobber on a minimum of 30,000 pounds it would be well and good, but he is not equipped to handle that. He would probably have to do this with 20 or 30 other vendors.

Most of our customers want a steady flow, they want the carrier to be a conveyor directly from our finished goods plant to their door, and they want shipments moving in every week-small shipments. If one comes in they want to know that another one is moving behind. This makes it necessary that we have some sort of consolidation service into every nook and cranny of the United States.

Mr. FRIEDEL. Our next witness is W. G. Walkup, Jr., executive vice president, Walkup's Merchants Express, San Francisco, Calif.

Thank you.

STATEMENT OF WARD G. WALKUP, JR., EXECUTIVE VICE PRESI.

DENT, WALKUP'S MERCHANTS EXPRESS, SAN FRANCISCO, CALIF.

Mr. WALKUP. Thank you, Mr. Chairman.

Mr. FRIEDEL. Your entire statement will be included in the record, Mr. Walkup:

(Mr. Walkup's prepared statement follows :) STATEMENT OF WARD G. WALKUP, JR., EXECUTIVE VICE PRESIDENT, WALKUP'S

MERCHANTS EXPRESS, SAN FRANCISO, CALIF. Thank you for permitting me to testify today before your committee on H.R. 10831.I am in favor of this House bill and do hope it is passed by the House of Representatives.

I would like to introduce myself to you. I am Ward G. Walkup, Jr., executive vice president and general manager of Walkup's Merchants Express, with headquarters in San Francisco, Calif. Walkup's Merchants Express, as a common carrier of intrastate and interstate commerce, serves essentially the entire State of California and is one of the State's largest motor carriers. We have over 1,000 pieces of equipment and handle freight from the Mexican border to the Oregon border, with terminals in the major cities of the State. Walkup's Merchants Express was founded by my father in 1906, and I have been associated with the company since 1946.

I do not feel that under sound regulation one mode of transportation should have an advantage over another. We handle a large amount of freight for freight forwarders within the State of California. Such revenues are an essential part of our total revenue and we feel that the freight forwarders are entitled to equal rights with the transcontinental trucking industry. Under the present Interstate Commerce Act, freight forwarders do not have the right to make contracts with rail carriers, but the trucking industry does. My company is governed by the California Public Utilities Commission and the Interstate Commerce Commission, and all trucking companies compete uniformly under the State's minimum rate tariffs and required published tariffs and regulations. It is difficult to understand how in the transcontinental freight field, companies offering similar services are not governed equally, with one mode being given a decided advantage over another when they are in exactly the same type of business.

As our company does a large volume of freight forwarder business, I have been given to understand by the forwarders that if they have the right to make contracts with railroads, the same as the trucking industry, they can expand their services, and this, of course, would benefit motor carriers such as my company in California. More importantly, however, such coordinated freight forwarder and rail services working under uniform contract arrangements would also greatly benefit all businesses in the State of California who receive freight from the Eastern part of the United States. The freight forwarders are governed by tariffs and, in my opinion, are only asking for equal rights with the trucking industry. They are not asking for preferential rights.

As my company is one of the oldest and largest motor carriers in California, we have always believed that the freight companies doing similar business should have the right to be competitive and discriminatory practice should not be permitted. It is for this reason that I ask for permission to appear before you gentlemen with the hope that my testimony will assist you in reaching a decision on H.R. 10831.

Thank you for granting me the time to be a witness, and I do hope you will act favorably on this vital legislation.

Mr. Walkup. I appear here in support of this bill because I feel that it is necessary corrective legislation to protect essential revenues of my company. It is obvious a point of disparity between the freight forwarder industry which is rail-oriented and cannot compete with the motor carrier industry to the same advantage under rail transportation.

Mr. FRIEDEL. Thank you very much.

Mr. Ernest L. McMaster, traffic manager, John Middleton, Inc., King of Prussia, Pa.

STATEMENT OF ERNEST L. MCMASTER, TRAFFIC MANAGER, JOHN

MIDDLETON, INC., KING OF PRUSSIA, PA.

Mr. MCMASTER. Mr. Chairman, I have a statement which I would like to submit for the record. Are there any questions?

Mr. FRIEDEL. Are you in favor of the bill?
Mr. McMASTER. Yes, I am.

Mr. FRIEDEL. I have no questions. Your statement will be included in the record.

(Mr. McMaster's prepared statement follows:) STATEMENT OF ERNEST L. MCMASTER, TRAFFIC MANAGER, John MIDDLETON, INC.,

KING OF PRUSSIA, PA. John Middleton, Inc. is a manufacturer of pipe smoking tobacco which is shipped to all parts of the United States in only l.t.l. or l.c.l. lots.

My name is Ernest McMaster and I am the traffic manager of John Middleton, Inc., located in King of Prussia, Pa., a community located approximately 20 miles from Philadelphia.

Since we are located about 20 miles from Philadelphia, almost all of our shipments are required to be transferred to Philadelphia for further transportation. Finding adequate transportation for our 1.c.l. shipments is increasingly becoming a problem for us, and we rely heavily on freight forwarders to move these l.c.l. shipments for us to our customers throughout the United States, and under favorable circumstances.

We urge passage of H.R. 10831 which would equalize competition and encourage the continued handling of our 1.c.l. shipments.

Mr. FRIEDEL. The next witness is Mr. W. V. McLaughlin, general traffic manager, Burham Corp., Irvington, N.Y.

(No response.)

Mr. FRIEDEL. Mr. Frank Bender, president of Bender Warehouse Co., Reno, Nev.

Mr. Bender, you may have your full statement included in the record and briefly outline what it contains.

.

STATEMENT OF FRANK N. BENDER, PRESIDENT, BENDER

WAREHOUSE CO., RENO, NEV. Mr. BENDER. I would like to do that. I would like to make a couple of observations. I will not read the statement if it will be included.

(Mr. Bender's prepared statement follows:)

STATEMENT OF FRANK N. BENDER, PRESIDENT, BENDER WAREHOUSE Co.,

RENO, Nev.

To introduce myself, I am president of the Bender Warehouse Co., Nevada's largest public warehouse. I appear in behalf of this legislation and give it my full support.

We've been in business since 1945 and our customers number sixty-four national firms that use Reno as their central Western distribution point. Our 12 local cartage trucks last year handled 4,203,309 pounds of freight forwarder deliveries. In addition to hauling freight forwarder tonnage, we also received 2,041,726 pounds from them for off-line carriers and in behalf of our warehouse customers 4,906,633 pounds of goods direct into our warehouses. The bulk of these goods arrived in small lot quantities. The success of our business is therefore directly dependent upon the ability of the freight forwarders to provide our customers with service competitive with other modes of transportation.

Last year our payroll topped $400,000 which for the Reno area is a major payroll in other than tourist oriented business. I know the community well a I am a past president of the Greater Reno Chamber of Commerce, represent our county on the State Board of Economic Development, and am co-chairman of the chamber's Business and Industrial Development Committee. The Reno-Sparks area has over 125 national firms distributing to the west and with few exceptions, they received goods into their warehouses from the east and Midwest via freight forwarders. Therefore, not only are my customers dependent upon the forwarders, but all businesses in the Reno-Sparks area as well.

There is no question that the freight forwarders are at a disadvantage in competing with the trucklines because of the trucker's ability to use the rail rates, or make joint rates or to make contracts with the railroads. Why should the truckers have this advantage? It certainly isn't in the Nation's interest to have one form of transportation have such an advantage over a competing form of transportation. So passage of this bill does not establish anything new, but it would equalize the competitive base from which they start, thus providing the public with better service. Because if the freight forwarders are granted the same privileges in contracting with the railroads as the truckers do now, then the result can only mean improved forwarder service.

I mentioned the bulk of the freight we receive from the forwarders is in small lot shipments. It is obvious the railroads have given up this business and from my experience as a shipper and receiver of freight, the truckers do not go out of their way to promote less than truckload business. I don't blame them because it's natural that's where their highest costs of doing business are found. Thus it is imperative to the Nation's economy that the forwarders that specialize in small lot shipments be given at least an equal chance to integrate their operaions with the railroads.

It made sense when the Supreme Court granted the long haul truckers the privilege of making contracts for piggyback service, and it makes good sense to grant the freight forwarders the same privileges by passage of H.R. 10831.

Mr. BENDER. I would like to ask that in your deliberations of this legislation you look very closely at who the opposition is and who is in support of this bill. I think it is pertinent because the shippers, the people, the public who are using and are dependent on this type of freight are the ones who are supporting this.

They are the people who need this legislation. The opposition, of course, is the competition that wants to close the door so to speak and keep them out. It also seems to me that the shippers associations are cutting their nose off to spite their face because basically they are formed to try to get the lowest freight rate for their members.

They should be able to use any kind of transportation, whether they do their own pickup and delivery themselves or not. They should in some instances--and certainly out in the West-be able to use the freight forwarder even though there is an association.

If they can get a lower rate because of passage of this legislation it would then be in their interest to do so. So, it seems to ride the coattails here.

They are not regulated. But I agree certainly with Mr. Kuykendall that then it seems ridiculous that a railroad is charging two competing forms of transportation a diffeernt rate for hauling the same type of freight the same distance, with the same pickup and destination points.

The shippers associations are not regulated and the freight forwarders are. The freight forwarders are in competition with the trucklines. Therefore in charging the rates, I agree with you 100 percent, you are absolutely right, the railroads are going to charge rates where

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