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flexibility on an equal basis for the freight forwarders which should be in the public interest as provided in the Act.
Passage of this bill would not result in rate reductions but could possibly put the freight forwarders in a position to forego some rate increases in the future, which again would be in the public interest. It would result in the freight forwarders being in a more flexible position to deal with some of their operating problems regarding certain underlying costs.
The freight forwarders competitive through rates become of more interest to us as some of the motor carriers, the only competition on less-truckload shipments, have canceled their through routes and joint rates to certain points.
The freight forwarders are performing a much needed service on less carload shipments. They should be allowed to compete for this traffic on an equal basis.
We respectfully urge your committee to give favorable action to this bill.
Mr. FRIEDEL. Gentlemen, this concludes the hearing. I want to thank you very much.
Those witnesses who were unable to appear may file their statements for the record, and the record will be held open for 5 days to afford others the same opportunity.
(The following material was submitted for the record :)
STATEMENT OF CHARLES A. BINDER, VICE PRESIDENT, NATIONAL RETAIL MERCHANTS
ASSOCIATION The National Retail Merchants Association is a non-profit membership corporation under New York State laws, comprising approximately 2,400 corporations and partnerships operating about 14,000 department and specialty stores located in every state and in the District of Columbia. This 56 year old organization, hereinafter called NRMA, is the trade association for these type of stores and in 1966 its members had a combined annual sales volume approximating $21 billion.
NRMA members use all kinds of transportation to bring goods from manufacturers' plants to their stores. Therefore we are deeply interested in legislation which affects such transportation and wish to express our strong opposition to H.R. 10831. We offer the following in support of our position :
1. We concur with the opinions of the American Retail Federation, the Washington-Oregon Shippers Cooperative Association, the Pacific Northwest Shippers Cooperative Association, the Northwest Furniture Manufacturers Association, the Pacific Northwest Traffic League, the National Industrial Traffic League, the Terminal Freight Cooperative Association and other shippers and shipper groups who feel that the freight forwarder in his relation to the rail carrier, is actually no different than a railroad shipper and should receive the same, but not more special, treatment as any private shipper association or shipper.
2. According to Commission statistics, the freight forwarders have prospered substantially under current laws, experiencing their most profitable years during the last six years. It is in this same period that the freight forwarders claim they have suffered as a result of the truck/rail concurrences. In view of the growth of this industry in size and profit, it is evident that there is no need for legislation preferential to it.
3. The position of the freight forwarders with the railroads is strong enough already, considering the fact that they purchase about $170 million dollars in transportation from the railroads annually.
4. The rate contract privilege, unrestricted by ICC control, would discriminate against similar carload traffic tendered under identical circumstances by nonprofit shipper associations or others. The carload rate publishing mechanism is certainly adequate for the purpose of the establishment of freight carload rates and not, as was claimed by the forwarders in the Section 409 consideration of motor carrier assembly rates, any burden on the forwarders.
Substantial credit benefits will accrue to freight forwarders if forwarder/ railroad contract rates are allowed. These would extend to six months (compared to 120 hours) the time by which the forwarder must pay his freight bill. Thus the railroads would be financing, to a great extent, the forwarders' operations, weakening the railroads' already difficult credit position.
5. Trucks and forwarders have parity rates now in the most realistic sense, and, if anything, the freight forwarder rates in current tariffs are more favor
able than truck contracts between the railroads and the truck lines. In fact, the ICC has found that truck lines should have the right to use rates that forwarders and shippers have available to them under current tariffs.
STATEMENT OF JOE G. FENDER, COUNSEL, NATIONAL CONFERENCE OF NONPROFIT
SHIPPING ASSOCIATIONS, INC. The National Conference of Nonprofit Shipping Associations, Inc., is a nonprofit trade association of member associations, also nonprofit in nature, which are engaged in the shipping and receiving of freight for the business houses which comprise their groups. Such member associations are located at major cities throughout the country, including: St. Louis, Mo.; Atlanta, Ga.; Dallas, Houston, and El Paso, Texas; Great Falls, Montana; Tampa, Fla.; Memphis, Tenn.; Cincinnati, Dayton, and Toledo, Ohio; Salt Lake City, Utah; and others. Conference member groups include in their membership a few manufacturers, a number of large wholesalers, and a great many small retailers and wholesalers.
Nonprofit shipping associations have existed for many years because small business houses particularly have found them to be necessary. By associating and consolidating their shipments, these small firms realize the economy incident to volume movement and obtain the personalized and expeditious transportation which they require. It should be stressed that service has been a factor as important as savings to these companies.
House Bill 10831 is sponsored by the freight forwarding industry. By its terms, it would give forwarders a right to contract for railroad freight rates lower than are generally available to shippers under published railroad tariffs. Forwarders presently have the right to negotiate rates with motor carriers but only to a limited extent. Beyond 450 miles, negotiated rates are subject to the published tariff as a minimum. Apparently the forwarders predicate their demands on their present recognition as carriers in Part IV and see no objection to what is here proposed, in view of their regulations under that part.
What may not be made plain to this committee is the fact that the forwarder continues to operate as it always has in a dual status, being in the position of a shipper in its relation to the railways. This fact has long been judicially recognized [I.C.C. vs. Delaware Railroad Co., 2220 US 235). At this time, except with respect to the provisions for distribution in motor carrier service, all shippers, including forwarders, are compelled to pay precisely the same rate for the same service that they receive from rail carriers. There is no reason why the situation now prevailing should be changed to give forwarders and the railroads a legal right to negotiate rates required to be nondiscriminatory with respect only to their effect on other railroads and freight forwarders. The Conference cannot agree that forwarders and railroads should be unrestrained in their negotiation of rates which are discriminatory of shippers of all other kinds and classes.
It would seem that the proposed legislation would be objectionable to the railroads. Those carriers joined with shippers and even with the freight forwarders themselves to obtain the protection of Part IV. Be that as it may, the National Conference would make plain to this committee that it does not want Congress to permit freight forwarders to have Railroad rates which discriminate against them, their members, or shippers generally.
It is hoped that the discriminatory aspects of the proposed legislation will be apparent to this committee. The potential for discrimination in this type law must have been recognized by Congress when it saw fit to impose the 150-mile limitation under Section 409 as it relates to rates with motor carriers. In any event, the Conference cannot agree that what is here proposed is proper.
If, however, the proposed legislation is enacted over this protest, and such other protest as there may be, then the Conference requests that such legislation be amended to at least include nonprofit shipping associations along with those to whom negotiation of favored rates may be extended. If the privilege is granted to the freight forwarders, there is justification factually and legally for extending it to nonprofit groups. Such groups are similar to freight forwarders in their physical operations and have been so recognized by the Interstate Commerce Commission (16 FCC 35,694, Atlanta Shippers Association, Inc., Atlanta, Ga.--Investigation of Operations; So. FF C-7 (and other decisions cited therein)). Unless shipping associations are included in the legislation, there will be nothing to protect them against the unrestrained negotiation of rates by freight forwarders. Such power in the hands of freight forwarders would expose associations to possible selective rate cutting in areas harmful to them and they might not survive the competition. If the legislation has that result its long range effect will be to increase the rates that shippers pay.
In summary, this group most vigorously opposes House Bill 10831. If the bill is enacted over this protest, however, then the Conference requests that it be so worded as to permit the negotiation of rates by nonprofit shipping associations as that term is used in Section 402(c) of Part IV.
STATEMENT OF RICHARD C. Childs, PRESIDENT, WILSHIRE CENTER CHAMBER OF
COMMERCE, LOS ANGELES, CALIF. I am Mr. Richard C. Childs and I am employed as vice president and branch manager of the Bank of America located at Wilshire Boulevard and Western Avenue, Los Angeles, Calif.
I am president of the Wilshire Center Chamber of Commerce of Los Angeles, representing a great cross section of approximately 500 metropolitan business houses engaged in all type of business enterprise, most of which are effected by interstate commerce.
I wish to go on record in behalf of the Wilshire Center Chamber of Commerce of Los Angeles urging passage of House of Representatives bill, H.R. 10831. Our organization clearly understands H.R. 10831 which seeks to change the wording of Section 409(a), part 4 of the Interstate Commerce Act, making it possible for freight forwarders subject to this part to enter into contracts with the railroads. We favor this legislation since it will allow the freight forwarders to be competitive with the motor carrier who presently have the right to make contracts with railroads. Section 409(b) of the Interstate Commerce Act clearly indicates that contracts must be investigated, reviewed and approved by the Interstate Commerce Commission, thus providing the necessary safeguards for the public interest.
We favor H.R. 10831 primarily since our many members must have access to competitive modes of transportation.
STATEMENT OF C. G. LUNDQUIST, GENERAL TRAFFIC MANAGER, SCM CORP.,
NEW YORK, N.Y. SCM (Smith-Corona Marchant) Corp., a major shipper via freight forwarders recognizes that passage of the subject bill permitting freight forwarders to enter into contracts with common carriers by railroad will provide the small lot shipper with many economic advantages.
Only if freight forwarders are permitted to negotiate contracts with railroads based on the individual circumstances of each move, will they be in a position to establish a competitive level of rates to the shipper; thus offsetting the rising cost of the small shipment. Obviously, if freight forwarders are constrained in negotiating with the line haul carrier, the level of rates that must assess the shipper will never truly reflect the inherent economic advantage of freight forwarders as a mode of transportation.
In this day and age when competition between motor carriers and freight forwarders generally sets the level of rates, freight forwarders, particularly on long haul shipments in many instances are in a better position to offer expedited service at less cost. If the freight forwarders are allowed, depending upon characteristics of the individual move, to negotiate a compensatory carload or piggyback trailer load rate, to be sure, the freight forwarders will be in a position to pass off part of the line haul savings to the shipper.
It is the ever rising cost of the less-than-truckload shipment that forces many companies, such as SCM Corp. to divert freight forwarder traffic to consolidators, shippers associations, and private fleet operations.
In summary. SCM Corp. wishes to go on record in favor of the subject bill which will facilitate even further progress by freight forwarders to move long haul t. -ffic expeditiously at lower cost to the shipper.
STATEMENT OF JOSEPH A. ILLES, DIRECTOR OF TRANSPORTATION, OUTBOARD MARINE
CORP. As director or transportation for Outboard Marine Corp., my obligations extend to and demand continued transportation cost studies, reviews of economic trends in distribution and presentation of facts pro or con before quasi-judiciary bodies and governmental agencies to foster the needs not only of my employer but of the national and international transportation needs of our great nation.
Obligated with this unselfish determination and representing my employer, Outboard Marine Corp., and its respective divisions; Johnson Motors, OMC, Gale Products, Cushman Motors and Evinrude Motors, and subsidiaries; Trade Winds Company, A & D Enterprises, Cushman Sales and San Francisco Distributors, my appearance is necessitated in support of House bill 10831.
As a manufacturer of various products, large and small, also a provider of parts for each product, we are often considered a volume shipper yet are constantly categorized in the same breath as a volume shipper of small shipments. This is the very area stigmatized by the common motor carrier industry as their relentless, insurmountable burden in transportation.
Small shipments per se have carried this stigma for several years placing undue obstacles upon shippers or payers of freight only to be deprived of many markets due to prohibitive costs. In our opinion the harassment has exceeded the stage of reasonableness; therefore, to obtain the required satisfaction net essary to maintain progress and equitable service, we have through letters to various Representatives in Congress expressed and in fact solicited their support favoring bill HR 10831.
Careful study of the subject bill appears to open the necessary gap in progressing inter-model transportation, afford “small shipments" the required protection which shipments are under constant attack by motor carrier bureaus as previously implied through increasing rate proposals, and would undoubtedly improve the measure of protection in service and transportation costs of both small shipment shippers as well as those shippers with volume shipments. It is obvious that railroad interests and common motor carrier interests may be vigorously object to the text th bill; however, the need of industry and he welfare of our national transportation requirements are at issue-therefore, selfish interests of one mode of transportation versus another must be obliterated in this instance to gain the needed requirements of out distribution pattern and to serve the best interest of our national transportation policy.
Should this bill fail or “sine die" before your honorable committee or in Congress, the results would lead to catastrophic jeopardies to an industry paramount in our national transportation system and would undoubtedly distort many manufacturers' futures.
We respectfully pray facts submitted by this payer of freight will be favorably weighed, and as a result thereof will not permit one or more segments of transportation interests to influence or destroy the best interest of our nation's future integrated transportation outlook.
STATEMENT OF HAROLD H. STEVENS, GENERAL TRAFFIC MANAGER, CARSTENSEN
FREIGHT LINES, INC., CLINTON, IOWA Gentlemen, my name is Harold H. Stevens and I am the general traffic manager of Carstensen Freight Lines, Inc., Highway 30, West, Clinton, Iowa 52732.
My company's position in this matter is in support of the freight forwarding industry because our company is a common carrier, via motor, authorized to handle general commodities with the usual exceptions as would pertain to household goods, explosives, livestock articles of unusual value, etc. We are considered a class I carrier and for the year 1966 our transportation revenues amounted to $3,000,000, plus.
Our operations, for the most part, cover the handling of goods and articles, moving in all the existing phases of transportation, including long haul motor carriers and freight forwarders subject to the Interstate Commerce Act.
Chicago, Ill. is the primary interchange point of our concern, as well as Rock Island, ill. and Cedar Rapids, Iowa.
We find the existence of various competing modes of transportation has enabled our shippers to secure reasonable freight rates, as well as a diversified choice of transportation service. Thus, as a result, they can market their commodi. ties throughout the United States and stay competitive with other markets in other sections of the country. This has created a healthy and wholesome financial condition in our area of operation and has enabled all phases of commerce and industry in our territory to enjoy financial stability and thus improve our own financial picture as a common motor carrier. It only stands to reason that we will only be as prosperous as the area we serve.
Thus, it is of importance to us that we remain independent through the established fact that there is a sufficient and competitive outlet for the goods we handle and that our shippers have a freedom of choice of service beyond our line. We would like to elaborate a bit on this fact.
In recent years we have seen many of our smaller competitors swallowed up by major motor carrier systems. Previously, many of these major systems came no further east than Chicago. As of late years, they have been slowly closing in on our territory to the extent that in a number of cases, they now maintain terminals at just about every site we maintain a terminal. In some cases, freight that we used to have a line haul out of is nothing more than a peddle operation. In other situations where we used to receive freight from these same major systems for these same terminal points, we now receive nothiing at all as they are able to handle the point themselves. Thus, we look to the freight forwarder as a still open source of freight to all of our points without being a direct competitor operating to our terminal points. We also find that our shippers can still market to areas on through rates, whereby some major carriers must pay through rates plus various surcharges and arbitraries.
The freight forwarder, with whom our small industry has done a goodly share of business at all times, will perish if they do not have a right to make agreed rates with railroads similar to those agreements already covered by law and already in effect between railroads and motor carriers. If the freight forwarders perish and our shippers do not have this additional service, it can only lead to an invitation to the larger carriers to come into the area. Undoubtedly, it would not be long before we would either look for one of them to purchase our authority because of lack of patronage or just cease operations entirely. The only result of this would be the fact that many small communities we serve would be denied a healthy and vigorous transportation service which they presently enjoy.
We urge very strongly that this bill will be passed as soon as possible, allowing freight forwarders to make agreed rates with railroads.
Thank you very much, gentlemen, for allowing me to testify before your committee.
STATEMENT OF H. L. ROSENTHAL, GENERAL TRAFFIC MANAGER, LIFSCHULTZ Fast
FREIGHT, CHICAGO, ILL. The regulated freight forwarder is presently unfairly burdened with unjust and judicial regulation. The proposed amendment is long overdue and will remove an unreasonable inequity and operate to the general public interest as shown.
Part IV of the Interstate Commerce Act, which presently regulates the freight forwarder, defines him a "Common Carrier". In spite of this, interpretations have prevailed which make him only one-half "Common Carrier". He has been adjudged "Common Carrier” in his relations with shippers and “Shipper" in his relations with other carriers. This has been grossly unfair to the forwarder and injurious to the public because it has limited the forwarder's ability to contribute fully to the development of improved transportation service for the nation at the lowest cost to the public.
As a “Common Carrier", the freight forwarder's obligations and liabilities are the same as for any other common carrier. His responsibility to the public is identical. His rates and tariffs are subject to complaint, investigation and suspension. He cannot establish rates or rate changes without legal advance notice to the public and to the Interstate Commerce Commission, the same as all other common carriers. His files are open to the Commission's investigators and he must maintain to the satisfaction of the Commission, continuing proof of adequate insurance for the protection of the pulbic. He is obligated to furnish his service to all who request it.
Opposing forces have prevailed, that in his relations with other carriers, the forwarder has been forced to observe the status of a shipper (except under Section 409, I.C. Act where he is permitted to negotiate with motor carriers on less-than-truck-load traffic; and on truckload traffic where the distance is less than 450 miles). Since the forwarder is primarily a long haul carrier, the result