is that practically all of his service and compensation arrangements with railroads and other underlying carriers, are under "open tariffs". This means under the same provisions established to provide compensation and rules covering the handling of merchandise for the general public. This has directly caused the formation of many "non-profit shippers' associations". These associations generally benefit a relatively small number of large shippers at selected points. The freight forwarder primarily utilizes railroad service for his underlying transportation and is in direct competition with motor carriers. Where the railroad has found it practical to extend arrangements to the forwarder, which will permit him to more effectively compete with motor carriers for traffic which will ultimately move in railroad service, the railroad must publish such arrangements in its "open tariffs". The railroads have, from time to time, published such provisions which the forwarders have utilized in their service to the general public. At the same time however, these provisions are attractive to enterprising individuals (referred to many times by the ICC as "entrepreneurs") who organize "not-for-profit" shippers associations, exempt from regulation. Their operations are confined to major industrial and mercantile centers so the expense of transfering to and from the smaller, removed, communities is avoided. Rates which undercut the rates of the regulated carriers can be "quoted" as inducement for shippers to join association. The foregoing is verified by the numerous proceedings before the Commission, some instituted by the Commission and others by the regulated motor carrier associations, as to the lawfulness of some "not-for-profit" shippers' associations. Private shippers too, affluent and substantial, benefit from keeping the forwarders' negotations with other carriers limited to an "open tariff" basis. Inasmuch as their business volume is conducive to shipping in carload and truckload quantities, they can use to their advantage, any rate and traffic adjustments which the forwarding industry, in return for increased traffic and improved forwarder service in the public interest, may secure from the railroads. Some in the regulated motor carrier industry too. seek to maintain the status quo, evidently under the assumption that denying the forwarders the right to negotiate traffic arrangements with railroads will limit the effectiveness of the freight forwarder as a competitor. This view is patently defective because the motor carriers themselves, as evidenced by their formal complaints, acknowledge that substantial volumes of traffic are continually being diverted from regulated carriage to unregulated "associations". And it is further known that the “open tariff" provisions which the railroads initially established. whereby the freight forwarders could attract large shipments and more effectively serve the general public, are the magnets which attract certain "gray area" operators. Another adverse by-product of the present restriction on freight forwarders, is higher freight rates to smaller communities involving transfer, and higher charges on small shipments. With the "cream” traffic skimmed off by the associations, the full burden must fall on the freight which can least absorb it (small shipments and interline). It was the existence of "cream" traffic which permitted the regulated carriers to maintain bearable charges on the less productive traffic. Now however, with the "cream" traffic gone, we see increased charges on small shipments and on interline. Further, the freight forwarder is the subject of unequal and unjust treatment. He is worse off than the "associations". He presently has no more right than those associations to negotiate rates with the underlying railroads, yet he is subject to full common carrier liability and responsibility. The record is indisputable. Where there is a common carrier liability or obligation the freight forwarder is included; but as to the major common carrier benefit, negotiated rates with other carriers, the freight forwarder is barred. A recent example is Public Law 89-170 which became effective September 6, 1965. Prior to that date motor carriers were not liable for reparations to shippers where collected tariff rates were found to exceed a reasonable amount, although railroads were. With the effective date of P.L. 89-170, motor carriers and freight forwarders became liable. Here the prevailing pattern was followed if it is a common carrier liability, the freight forwarder is unquestionably included. The present inequality cries for removal. Forwarder regulation as it now stands is tailored to accomodate his competitors and those large mercantile and industrial organizations who demand all forwarder-with-railroad transactions be under "open tariffs" so they can "ride on the forwarders' coat-tails". They reject from consideration, the fact that the forwarder is a public carrier operating under regulations designed to promote the public interest; that the forwarder is a valuable arm of the nations transportation system providing expedited movement of industry's products and is one of the few remaining carriers actively soliciting and willingly providing, service on small shipments for all shippers. This unnatural dual classification of freight forwarders has given birth to "gray area shippers' associations", has been responsible for diversion of the most profitable traffic to unregulated carriage and has compelled regulated carriers to increase their rates in order to keep their facility on a sound operating basis. Motor carriers are permitted to, and do, negotiate rates with other carriers. They even negotiate rates with railroads on piggyback service, while the freight forwarder must pay the railroad the higher "open tariff" rate. There is no physical difference between the manner in which the railroad hauls or services motor carrier piggyback loads or freight forwarder piggyback loads. Yet the motor carriers may negotiate lower contract rates. The motor carriers are even permitted to chose either contract rates (Plan 1) or “open tariff“ rates, whichever best suits their purpose when they tender their loaded trailers to the railroad. It is in the public interest that the freight forwarder be relieved of his restrictive dual classification. The granting of common carrier rights (to go with his common carrier liabilities), would permit him to more effectively serve the public. With the railroads almost completely out of the small shipments business, the freight forwarder is the motor carrier's only effective competitor on less than volume traffic. Clearly it is to the public's interest that this competition be not destroyed. Adoption into law, of H.R. 10831 would establish the freight forwarder as a full fledged common carrier and would serve the aims of establishing a most adequate transportation system to meet the nation's needs, as express in the National Transportation Policy. Without equality the regulated freight forwarding industry cannot survive. STATEMENT OF E. M. BURK, TRAFFIC MANAGER, WYATT INDUSTRIES, INC., HOUSTON, TEX. My name is E. M. Burk and I am traffic manager of Wyatt Industries, Inc., with headquarters in Houston, Tex., who operate one heavy steel fabrication plant, one light steel fabrication plant, and one plastics product plant, one barge building yard and a field erection subsidiary at that point, and with heavy steel fabrication plants located in Dallas and Corpus Christi, Tex. Our company has been a consistent user of the services of the freight forwarders for many years and have always felt that they are deserving of an important place in the transportation field. This, we believe, applies more at the present time than at any time in the past. The reason for this is that the railroads have, for all practical purposes, gone completely out of the less-carload business and the motor freight companies are continually stressing the idea that they are losing money on small shipments, and in an effort to avoid this, are gradually pricing themselves out of the field. While it is my personal belief that this view should be taken "with a grain of salt” and it is merely a revenue angle, nevertheless, this is the case. As a result of the circumstances outlined, the freight forwarders represent about the only means remaining for movement of small shipments in any volume at a reasonable cost. We believe this will be true even more in the future than it is at this time, based on the present trend. Naturally, therefore, we feel that the freight forwarder should have the right to make contracts and agreed rates with railroads if they are to remain in competition with the motor freight industry. Presently, and for quite some time past, the motor freight industry is is a position to make contracts with the railroad, so their only real competition should likewise be in a position to do so. It is an expressed feeling of Congress, as outlined in the national transportation policy that the inherent advantages of each mode of transportation should be preserved. In line with this policy and our feeling that the freight forwarder is a mode of transportation within itself, even though they do not actually perform the carriage of shipments, we feel that their inherent advantage should be preserved and that this proposal is a strong step in the right direction. STATEMENT OF DONALD A. MACMILLAN, PRESIDENT, SELOVER TRUCKING CO., INC., SOUTH RIVER, N.J. Mr. Chairman, my name is Donald A. MacMillan, and I reside at 21 Farmingdale Road, East Brunswick, N.J. I am the president and principal stockholder of Selover Trucking Co., Inc. of South River, N.J., a common carrier by motor vehicle duly authorized by the Interstate Commerce Commission, under Docket No. MC-37303, to conduct operations in interstate and foreign commerce over irregular routes in the states of New Jersey, New York, and Pennsylvania. A copy of Selover Trucking Co., Inc. authority is attached hereto and made a part hereof and marked appendix A. I have been engaged in the motor common carrier business for some 27 years. I submit this statement in support of H.R. 10831 which amends Section 409 (a) of the Interstate Commerce Act so as to authorize freight forwarders and railroads to enter into contracts governing the use by freight forwarders of the services and instrumentalities of railroads. A considerable portion of the traffic persently handled by my company consists of small less-than-truckload shipments picked up and destined for consolidation by freight forwarders and in the distribution of freight forwarder shipments to final destination in the area we are authorized to serve. Most of our customers ship and receive shipments in small lots and must rely on freight forwarders to transport this traffic. We rely on this freight forwarder traffic as an essential part of our business. It provides us with a steady flow of traffic uninterrupted by the seasonal fluctuations which affect the balance of our operations and enables us to provide a steady regular service to those of our customers who ship between the points we are authorized to serve. The proposed amendment will improve freight forwarder service and, because of the economies which will result from permitting the freight forwarders and the railroads to enter into continuing contracts for carriage, will make this coordinated service much more attractive to our shippers. This, in turn, will result in greater use of their service by the shippers and, consequently, more extensive use of our company's services on a steady basis, and permit us to provide a better more complete service to those of our customers who ship between points we are authorized to serve. The flow of freight forwarder traffic provides us with additional revenues which permits us to handle many small, less-than-truckload local shipments which we would not otherwise be able to handle economically. With the additional use of freight forwarder service, which can be anticipated if the subject legislation is enacted, we will be provided with a greater flow of steady uninterrupted traffic. This will enable us to improve our local interstate service in that we will be able to provide a more efficient, more economical and more comprehensive and complete local service to our customers. APPENDIX A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY No. MC 37303 SELOVER TRUCKING CO., INC., SOUTH RIVER, NEW JERSEY At a Session of the Interstate Commerce Commission, Division 5, held at its office in Washington, D.C., on the 4th day of September, A.D., 1942 AFTER DUE INVESTIGATION, It appearing that the above-named carrier has complied with all applicable provisions of the Interstate Commerce Act, and the requirements, rules, and regulations prescribed thereunder, and, therefore, is entitled to receive authority from this Commission to engage in transportation in interstate or foreign commerce as a motor carrier; and the Commission so finding; IT IS ORDERED, That the said carrier be, and it is hereby granted this Certificate of Public Convenience and Necessity as evidence of the authority of the holder to engage in transportation in interstate or foreign commerce as a common carrier by motor vehicle; subject, however, to such terms, conditions, and limitations as are now, or may hereafter be, attached to the exercise of the privileges herein granted to the said carrier. IT IS FURTHER ORDERED, That the transportation service to be performed by the said carrier in interstate or foreign commerce shall be as specified below: General commodities, except those of unusual value, and except dangerous explosives, household goods as defined in Practices of Motor Common Carriers of Household Goods, 17 M.C.C. 467, commodities in bulk, commodities requiring special equipment, and those injurious or contaminating to other lading, with no seasonal restrictions, over irregular routes, Between South River, N.J., and points and places in New Jersey and New York within 45 miles of South River, on the one hand, and, on the other, Bethlehem, Easton, Marcus Hook, Philadelphia, and Reading, Pa., and Tarrytown, N.Y., and points and places in Middlesex, Monmouth, Somerset, Union, Essex, Hudson, Bergen, Passaic, Mercer, Morris, Ocean, Burlington, and Hunterdon Counties, N.J. General commodities, with exceptions specified above, during the season extending from the 1st day of June to the 1st day of October, inclusive, over irregular routes, Between points and places in New Jersey on and south of New Jersey RESOLUTION RELATING TO FREIGHT FORWARDER CONTRACT RATES, ADOPTED BY THE FLORIDA TRUCKING ASSOCIATION, INC., SEPTEMBER 26, 1967 Whereas, the Freight Forwarder Institute, for and on behalf of its members, is advocating an amendment to the Interstate Commerce Act which will permit freight forwarders to enter into contracts with railroads for rates lower than paid by other shippers for the transportation of the same kind and quantity of traffic between the same points; and, Whereas, a bill (H.R. 10831) to accomplish such amendment is pending in the Congress of the United States; and, Whereas, the Surface Transportation Subcommittee of the Senate Commerce Committee of the Congress of the United States has such amendment under consideration with said Subcommittee's consideration of S. 751 and S. 1768; and, Whereas, freight forwarders are shippers in their relations with common carriers, whether rail or motor, providing no facilities for transpotation between the cities at which they operate and are not entitled to the special privilege such amendment will accord them; and Whereas, such special privilege is contrary to the public interest and inimical to the economic stability of common carriers, by rail and by motor vehicles: Now, therefore, be it Resolved by the Florida Trucking Association, in annual convention assembled at Miami Beach, Florida, this 26th day of September 1967, That: 1. The Association does hereby express its strong opposition to the amendment proposed by the Freight Forwarder Institute; and 2. A copy of this resolution shall be forwarded promptly, upon its adoption, to: (a) The Chairman of the Surface Transportation subcommittee of the Commerce Committee of the United States Senate; (b) The Interstate and Foreign Commerce Committee of the United States House of Representatives; and, (c) To each of the members of the delegation from the state of Florida to the Congress of the United States. CERTIFICATION I hereby certify this to be a true and correct copy of Formal Resolution unanimously Adopted by the membership of the Florida Trucking Association, Inc., in 30th Annual Convention meeting, September 26, 1967 in Miami Beach, Florida. FLORIDA TRUCKING ASSOCIATION, INC., By C. A. GERTNER, Managing Director. Chairman HARLEY O. STAGGERS, [Telegram] LOS ANGELES, CALIF., January 23, 1968. Interstate and Foreign Commerce Committee, Our 20 corporate members oppose H.R. 10831 set for hearing January 23, 24. Since railroads serve all freight consolidators alike, there is no reason to favor for-hire forwarders over non-profit shipper associations. Both now pay same published tariff rates. CALIFORNIA MANUFACTURERS FREIGHT ASSOCIATION, [Telegram] BRIDGEPORT, CONN., January 12, 1968. Hon. HARLEY O. STAGGERS, House Office Building, Washington, D.C.: I am opposed to House Bill H.R. 10831 unless it is amended to include the same benefits to bonafide shippers associations. INTERSTATE AND FOREIGN COMMERCE COMMITTEE, This association vigorously opposes House Bill 10831 as unjustly favoring freight forwarders and discriminating against non-profit shipping groups. If legislation is to be enacted it should include and provide for equal treatment of non-profit shippers associations operating under section 402 (c) of the Interstate Commerce Act, with the regular forwarders. MID-TENNESSEE FREIGHT ASSOCIATION, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, Hon. HARLEY STAGGERS, House of Representatives, Washington, D.C. DEAR CONGRESSMAN STAGGERS: We wish to express our opposition to H.R. 10831 now before the Transportation and Aeronautics Subcommittee for consideration. H.R. 10831 is injurious and prejudicial to bona fide carriers who have to abide by ICC regulations with respect to the setting of tariffs. This bill would authorize freight forwarders to enter into contracts with railroads for tariffs which are less than those which other shippers of whatever type have to pay in order to have their freight moved by rail. This is discriminatory and constitutes an open door to deregulation which is adverse to the best interests of a unified transportation system and to other shippers. Anyone who is only slightly familiar with the problems of the Interstate Commerce Commission in dealing with so-called shippers associations readily recognizes the present and potential dangers of permitting so-called shippers associations to negotiate with the railroads for tariffs below those required to be established for other shippers. This bill would open the door to long haul transport of goods by railroads in behalf of freight forwarders solely because the freight forwarders could negotiate a substandard tariff with the railroads for the transportation of freight tendered by the freight forwarders. Shippers would soon become aware that freight forwarders were in a position to offer a substandard tariff. They would tend to shift or transfer their business |