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to the freight forwarder from the carriers that were previously hauling their goods under regulated tariffs. The regulated carriers, especially motor carriers, who employ members of the International Brotherhood of Teamsters, would lose traffic to the freight forwarder.
To the extent that the regulated motor common carrier industry lost out on long haul transportation, our members, employees of these carriers, would likewise suffer. It is the long haul operation which is most profitable to the motor carrier and in some instances enables him to provide service to areas where profits are marginal. A healthy motor freight industry is essential to maintain the economic well being of this nation and of our members.
Any legislation or regulation which provides another mode of transportation with a competitive advantage, as would be the case here, would tend to reduce long haul volume of the motor carrier industry and would have an adverse effect on the employment opportunities and earnings of Teamster drivers.
In short, we believe this legislation, if enacted, would destroy the motor freight industry as we know it today. We would appreciate your giving full consideration to our position and oppose this legislation. Sincerely yours,
Legislative Director. SEARS, ROEBUCK & Co.,
Chicago, Ill., November 2, 1967. Hon. HARLEY O. STAGGERS, House Office Building, Washington, D.C.
DEAR SIR: The provisions of bill H.R. 10831 which was introduced in Congress on June 14, 1967 would allow freight forwarders to enter into individual contracts with railroads. We are opposed to this bill for the following reason.
Under the provisions of this bill a railroad could charge a lesser amount to a freight forwarder than to a shippers association, such as Terminal Freight Cooperative Association, of which Sears Roebuck & Co. is a member, for identical services under identical conditions.
Section 1 (5) of Part I of the Interstate Commerce Act reads in part as follows:
All charges made for any service ... shall be just and reasonable.
We feel that to be just and reasonable, rates must be identical for identical service.
If a freight forwarder has unusual tonnage or shipments with special characteristics, for which he desires specific rate arrangements, he can secure these rates through the present rate making procedures. He does not need the privilege of negotiating a private contract.
Your support of our position would be appreciated. May we please hear from you. Cordially,
R. E. STUDNICKA, Regional Traffic Manager.
S. S. KRESGE Co.,
Detroit, Mich., January 16, 1968. Hon. John D. DINGELL, Committee on Interstate and Foreign Commerce, House of Representatives,
Washington, D.C. DEAR SIR: Speaking as General Traffic Manager of the S. S. Kresge Company, main office at Detroit, and as a member of many shippers co-operative associations throughout the United States, I want to strongly oppose H.R. 10831.
This bill is not necessary. I ask your cooperation in opposing same. This writer takes the position that the freight forwarder is in reality nothing more than a railroad shipper and should be entitled to the same, but no more preferential treatment than a private shipper or a private shipper association.
The rate contract privilege unrestricted by I.C.C. control would discriminate against similar carload traffic tendered under identical conditions by non-profit shipper associations and others.
The carload rate publishing mechanism is adequate for the purpose of the establishing of freight forwarder carload rates and not, as claimed by the forwarders in the Section 409 consideration of motor carrier assembly rates, any burden on the forwarders.
The forwarders purchase millions of dollars worth of rail transportation each year and need no additional help in the form of legislation to enhance their bargaining power. The railroads furnish most of the loading and unloading terminals for the freight forwarders and most of the line-haul equipment, except for some line-haul trailers. In short, the railroads are doing everything possible for the freight forwarders now, and there is no need to give them further advantages over shippers using identical railroad services.
Again I repeat, the bill is not needed, is totally unwarranted and would appreciate your whole-hearted cooperation in opposing this legislation. Sincerely,
H. E. CHAPMAN, General Traffic Manager.
THE SHIPPERS' CONFERENCE OF GREATER NEW YORK, INC.,
New York, N.Y., January 19, 1968. Hon. HARLEY O. STAGGERS, Chairman, Committee on Interstate and Foreign Commerce, Rayburn House Office Building, Washington, D.C.
DEAR CONGRESS MAN STAGGERS : The Shippers' Conference of Greater New York is vigorously opposed to H.R. 10831 (Friedel-Md.) to amend Sec. 409 of Part IV of the IC Act, as amended, to authorize contracts between freight forwarders and railroads, unless such legislation is amended to encompass bona fide shippers' Associations as provided for in Sec. 402 (C) (1), Part IV of the IC Act.
Members of this Conference wish to call attention to the fact that those engaged in consolidating small shipments into carload lots were all shippers as one class of freight forwarders, prior to the enactment of Part IV of the IC Act in 1942. At that time, not all consolidating and forwarding operators were serving the public for profit. It was only those seeking profit who sought to restrain competition via the route of regulation.
The proposed negotiated rates for regulated freight forwarders could effectively eliminate the last real nonprofit shipper forwarding competition that exists. Today, more than a hundred such nonprofit shipper groups pool their freight to overcome the long spiral of World War II rate increases. Several thousand industries whose product lends itself to consolidation before shipment belong to these nonprofit, freight-pooling shipper associations. As noted recently by the Federal Court, and affirmed by the Supreme Court only a few days ago (Baltimore Shippers and Receivers Association, Inc., et al vs. Public Utilities Commission of the State of California, judgment and order handed down September 7. 1967, U.S. District Court, N.D. of Calif. S. Div.-affirmed Supreme Court 1/15/68), there is virtually no functional differences between a freight forwarder and a shipper association in utility to shippers. One operates for profitthe other almost identically-except not for profit.
Should the Congress grant for-hire forwarders the special privilege of nego. tiating contract rates with railroads, the equality between freight forwarders and nonprofit shipper associations would be destroyed.
"Tor Profit” freight forwarders, with or without assistance from the railroads, would be in the position to develop rates by unfair advantage that would soon cause the dissolution of shipper associations everywhere. Once these arch-competitors were eliminated, the forwarders would be free to raise rates back to higher levels—as much as the traffic would bear.
Turning to the small shipment crisis, shipper associations are one of the most effective remedies available to shippers. Contract rail rates for forwarders would not help solve the small shipment problem to any measurable degree but, rather, would aggravate it by giving an unnecessary advantage to the regulated freight forwarders. To include shipper associations and distinguish them from occasional co-loading shipper arrangements, such associations could be defined, by amending this bill, as a group of six or more shippers who, from time to time, jointly load freight. 402 (C) (1) of the IC Act, Part II, thus would be amended to read: "The provisions of this part shall not be construed to apply (1) to the operations of a shipper, or a group of six or more shippers in consolidating or distributing freight for themselves, etc."
Those members of this Conference who are predominently rail shippers are also adamantly opposed to this bill. They see a sharp loss of rail revenues because of the extraordinary bargaining power of the forwarding industry. Some of the railroads already are giving contract Plan I rates to motor carriers that presently depresses net rail revenue which shippers have been compelled to make up in recent rail rate increases.
In conclusion, the Shippers' Conference of Greater New York believes that on balance, any possible benefits to the shipping public are offset by the serious damage this bill would do to the national small shipment problem, in destroying the efficacy of nonprofit shipper associations. It believes that railroads would lose a great deal in net revenues and that the shipping public would end up subsidizing the freight forwarding industry.
The Conference would be less opposed if the same privilege was accorded bona fide shipper associations. It urges, however, that the bill be defeated. Respectfully submitted.
T. J. O'NEILL. President.
HOUSTON MERCHANTS SHIPPERS ASSOCIATION, INC.,
Houston, Tex., January 25, 1968. Hon. SAMUEL N. FRIEDEL, Chairman, Aeronautics and Transportation Subcommittee, Interstate and Foreign Commerce Committee, House of Representatives, Washington, D.O.
DEAR CONGRESSMAN FRIEDEL: The Aeronautics and Transportation Subcommittee has before it H.R. 10831 which proposes to give to regulated freight forwarders the right to establish rates with rail carrier by contract at a lower or different basis than fixed by tariff for other shippers.
H.R. 10831 is basically discriminatory in its favored treatment of the regulated forwarder over non-profit shipping associations, which would not have the same privilage to negotiate.
The Houston Merchants Shipping Association is a non-profit association of 100 large and small Houston business firms, to consolidate their small shipments into carload lots thereby receiving the benefit of carload rates. Consolidation services are maintained at four points of origin-New York, Philadelphia, Chicago and Charlotte, North Carolina. The Association operates on a cost basis, thereby passing on savings generated from use of carloads, to its participating members.
This Association vigorously opposes H.R. 10831 as unjustly favoring freight forwarders and discriminating against non-profit shipping groups, of which there are many throughout the nation. If legislation in this area is needed, then it should include and provide for equal treatment of such groups with the freight forwarders. Very truly yours,
W.J. Wallace, Secretary.
NEW ENGLAND INDUSTRIAL TRAFFIC LEAGUE,
Worcester, Mass., January 10, 1968. Re H.R. 10831. Hon. HARLEY O. STAGGERS, Chairman, Interstate and Foreign Commerce Committee, House of Representatives, Washington, D.O.
DEAR CONGRESSMAN STAGGERS: The New England Industrial Traffic League membership is comprised of the major industrial and commercial traffic managers in New England. The writer has been instructed by the New England Industrial Traffic League to record with your committee, for the public hearings on the bill Jan. 23, and 24, the opposition of this organization to the bill as cur. rently drawn. In this action we join other shipper organizations such as the National Industrial Traffic League and the American Institute of Shipper Associations.
Our concern is based on the lack of equal treatment and privilege for Shipper Co-operatives. As your committee is aware, Shipper Co-operatives have grown rapidly during the past decade in the face rising freight costs which would otherwise tend to “Balkanize” the United States. The individual shipper associations do not have the massed bargaining power that the large freight forwarders do, so according the same right to shipper associations to negotiate rates with the railroads (as is proposed in this bill for freight forwarders) is a necessity if the shipper association is to preserve his level of costs vis a vis the freight forwarder. The forwarders are, of course, common carriers but their rate structure is such that the lower classifications of less than carload freight are excluded from utilization of forwarder service by the cost. This is one reason for the growth of shipper associations.
Hence, we plead that this bill be amended to accord shipper associations the same right to negotiate rates with railroads. If this were done we are confident other organizations would withdraw their objections to the bill too. Sincerely yours,
John T. FLOYD, Chairman, Legislative Matters Committee.
HAMMOND ORGAN Co.,
Chicago, II., January 16, 1968. Hon. SAMUEL N. FRIEDEL, Chairman, Committee on Transportation and Aeronautics, Rayburn Building, Washington, D.C.
DEAR CONGRESSMAN FRIEDEL: I am unable to attend the hearing on bill H.R. 10831, however, I would like to support legislation in its favor, to authorize contracts between Freight Forwarders and Railroads.
We have throughout our history used the services of all of the types of transportation for the conveyance of our products to the consignee.
We do feel that Freight Forwarders should be given the opportunity to make agreed or contract rates with the Railroads.
If the transportation industry is to prosper and progress in the future, we must have competition, which in reality, is a necessity in any business.
Freight Forwarders offer a number of services not readily available by the other types of transportation which we have found to be an advantage in our operations. Sincerely,
R. N. SPITZER, Traffic Supervisor.
Hawthorne, Calif., January 18, 1969. Hon. SAMUEL N. FRIEDEL, Chairman, Transportation and Aeronautics Subcommittee, Committee on Inter
state and Foreign Commerce, House of Representatives, Washington, D.C. DEAR SIR:We have given careful consideration to Bill H.R. 10831 which you have sponsored, a bill which we understand will authorize contracts between railroads and freight forwarders. My company is most anxious to support this proposed legislation. Were it not for the press of prior commitments, I would have requested an opportunity to testify in behalf of the bill. Since I cannot be there in person, I will appreciate my testimony being made part of the record favoring support of H.R. 10831.
Mattel, Inc., Toymakers, is the largest toy manufacturer in the world, with general offices located at 5150 Rosecrans Avenue, Hawthorne, California, 90230. Mattel has multi-million dollar sales with plants located in the United States, Japan, Hong Kong, Taiwan, West Germany, England, Canada, and Mexico. Our products are distributed world wide and we rely almost exclusively on common carriers.
At the present time, the prime toy market is located in the eastern part of the United States. The East is also where most of our competition is located. Since we are a West Coast manufacturer, we, of course, find it very difficult to compete in the Eastern market because of the distance we must move our goods compounded by the seasonal nature of the movement. As a result, our domestic distribution is very complex, characterized by numerous small shipments requiring expedited service to literally thousands of destinations within a relativels short span of time. Our solution to this complex distribution problem has, to a large extent, been solved by the freight forwarders. These carriers have been able to adjust their operation to fulfill our needs and have definitely helped to keep us competitive in this most important toy market.
There are only two modes available to us for the movement of our LCL traffic to Eastern markets, either by motor carrier or freight forwarder. Presently. freight forwarders can utilize only railroads as their underlying mode for the long haul move. A freight forwarder must pay to the rail line the rail tariff published rates for these services. The rails and forwarders complement each other, exercise considerable flexibility in the melding of their operations and
fixed charges reflecting the economics inherent in this type of coordinated operation.
As the result of the Supreme Court having recently upheld an interpretation of the Commission in Ex Parte 230, the motor carriers may now ship their freight in trailers on rail flatcars and pay whatever rate is provided in rail tariffs which, heretofore, has been basically the province of the freight forwarder. In essence, it means the motor carriers may become forwarders in the piggyback
It is also clear that motor carriers may participate in all of the piggyback plans whether constructed on the basis of joint rates or published in open tariffs. Trucks also have the right to make contracts with railroads, a privilege to this point denied the freight forwarder.
The advantages accorded the motor carriers can only result in placing them in position of dominance with possible serious deleterious effect upon the long haul freight forwarder. In any competitive arena, when one competitor is accorded excessive advantages, it can only result in the ultimate weakening or defeat of all but the most advantaged. Should this occur, we, and other small lot shippers, would be restricted ultimately to the one mode for the movement of our tonnage to our markets and, thus, would be virtually subjected to what could amount to almost dictatorial powers of the one mode as to the service to be performed and charges to be applied thereto.
We must, in the interest of our free enterprize system, maintain a sound competitive structure in all industries and none is more important than the transportation industry. The forwarders are basically handlers of small lots which they consolidate into volume or carload lot movements. These types of shipments have been a problem for all carriers for a considerable number of years. However, the forwarders have shown an ability to flourish and provide an outstanding service in the handling of this type of traffic, acting somewhat in the nature of the less than carload arm of the railroads who have substantially abandoned less than carload service throughout the country.
Permitting the freight forwarder equal opportunity with their principal competitors, the long haul motor carriers, is a must to preserve a healthy competitive situation. We need, and must have, all forms of transport competing under equal rules. This bill will give the freight forwarders one measure of parity to help preserve their competitive posture.
H.R. 10831 is, in our opinion, excellent legislation and we urge its early passage. Respectfully submitted.
J. K. CHRISTENSEN,
Manager of Traffic.
NEW YORK LIFE INSURANCE Co.,
New Providence, N.J., January 16, 1968. Hon. HARLEY 0. STAGGERS, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C.
DEAR MR. STAGGERS : As a shipper of small 1.c.l. freight, I would like to express myself in favor of Bill H.R. 10831 to amend Section 409(a) of the Interstate Commerce Act.
Shipments made by the New York Life Insurance ('ompany are with few exceptions 500 lbs. or less. In many shipments we must pay the minimum rate charge.
By granting freight forwarders the right to make contractual agreements with railroads, with whom they must operate to survive, is another step in their efforts to serve the need of the shipping public, especially the small shipper.
It is contingent on us to encourage that any reasonable legislation be passed which makes it advantageous for freight forwarders to continue to serve 1.c.l. shippers such as the New York Life Insurance Company. I strongly support amending Section 109 (a) as set forth in Bill H.R. 10831. Sincerely,
N. TRIMARCHI, Manager, Supply Department.