When forwarders consolidated freight they always had given the freight to the railroad for the consolidated long-haul movement and the railroads wanted it kept that way.

Mr. PICKLE. What are you asking-what you are asking for is equality. You want to be able to negotiate with the railroads the same as the carrier can negotiate with them today?

Mr. MORROW. Yes, sir.

Mr. PICKLE. When this bill was discussed some last year in the letter to our chairman the ICC stated that if the legislation you were asking for were granted to the freight forwarders this would not only provide you equality, it would give you preferred treatment.

I think they recognized that there was a problem that you have inasmuch as you could not negotiate with the railroads. You are both a shipper and a carrier. Now if you were given this law would that not give you some preference?

Mr. MORROW. No, sir. I have the Commission's current letter before me and I glanced quickly through it while Mr. Moir was giving his testimony and they do refer to the fact that this would give us a preferred shipper status.

They recognize that we are in a bad position today due to their ruling that trucks can become shippers, too. I don't know why the Commission or anyone else ever has had the notion that the forwarder has this dual status of shipper and carrier, only because Congress did not see fit to permit us to deal with railroads on some other basis then that which we assumed.

The motor carriers now, under the Commission ruling and Supreme Court decision, can also ship by rail.

Mr. PICKLE. You are a shipper, are you not?

Mr. MORROW. We are the same kind of shipper that the motor carrier is when he takes his trailer down and gives it to the railroads to move piggyback.

Mr. PICKLE. But you are a shipper?

Mr. MORROW. When we tender shipments under a tariff rate, yes. Mr. PICKLE. You are also a carrier because you actually transport the goods?

Mr. MORROW. Right.

Mr. PICKLE. There must be a distinction on that basis because you say that a shipper association is only a shipper and cannot therefore claim the rights of just shipper and assume none of the responsibilities of the carrier. Now if you object to their status you must admit then that you are both a carrier and a shipper.

Mr. MORROW. Every piece of freight that moves in our service is on our bill of lading at our rate. You see, that is not true with respect to shipper associations.

Mr. PICKLE. You say that the ruling that the ICC has issued with respect to their ex parte 230, as I recall, saying in effect by that ruling, and it was upheld by the Supreme Court, that actually the motor carriers were forced under this interpretation to ship their freight by rail and pay the open tariff.

That would mean cheaper rates. Is that not an attempt for equalization? Is that not sufficient so far as your organization is concerned? Mr. MORROW. It would be sufficient if we had the authority not only to take the tariff rate where we can get it but to make a deal with the

railroad for a better rate. Now the motor carriers had no rights taken away and they still have contracts for the larger portion of truck trailers shipped by rail in this country today.

They are shipped on a contract rate between the motor carrier and railroad which is not published, not disclosed. Nobody knows what it

is.

Now we don't have that right.

Mr. PICKLE. One last question. I noticed that you dismiss in somewhat short manner the claim of a shipping association they can't have their cake and eat it both. You say that the legislation would help all shippers. Now how would this help their associations if you got the relief you asked?

How will this help the shipper? The shippers have opposed this bill. How would this help their associations?

Mr. MORROW. Unless they are included in the-well, it will help their association even if they are not included in it if the bill is passed just as it is. Their associations don't handle all shipments for all points. They will handle the right kind of commodities between certain key points but the members of those same shippers' associations have other traffic and we have to take it all.

We have to take the good with the bad. So if this does help us to help shippers it will help even the members of the shippers association.

Mr. PICKLE. They just have not got the word then.

Mr. FRIEDEL. Mr. Devine.

Mr. DEVINE. Mr. Morrow, the issue involved here is whether freight forwarders should be able to make contracts with railroads as well as motor carriers.

Mr. MORROW. That is right.

Mr. DEVINE. In response to a question by Mr. Pickle you said that this was not provided originally because it was probably overlooked. The first thing you said in your statment was that you have been counsel and connected with the institute for 28 years when this law was on the books. Was it overlooked in 1942?

Mr. MORROW. I am afraid I gave the wrong impression. When I said it was overlooked I was talking about the passage of the Motor Carrier Act in 1935 which did not provide for continuance of contracts that were then in existence between forwarders and motor carriers.

I said that Congress did not intend any such result. There is a long legal history there. I did not intend to give the impression that when Congress enacted part IV in 1942 they overlooked the relationships between forwarders and railroads.

There was a pretty hot battle over that question. We had always shipped by rail at that time. That was the historic pattern. We and a number of other people thought we should have joint rates across the board, rails and everybody else. But others thought we should not have any such rights. Congress came to a compromise.

They said we will permit you to continue these arrangements in effect between forwarders and motor carriers but you continue to ship your freight by rail as you have done in the past.

As I said that was all right for the past but we have come to the future and we think we need the right now, which we would like to

have had then. It was not overlooked. It was simply that it got involved in controversy and Congress did not give it to us.

Mr. DEVINE. Mr. Moir's statement is that there has been a sufficient change in circumstances during the intervening 25 or 30 years to allow you to make contracts with railroads?

Mr. MORROW. Precisely. We have had a complete revolution in transportation in the last decade. We are standing on the edge of further revolution in containerization. We are in a bad competitive situation with motor carriers in that field alone but there are others as Mr. Moir mentioned,

Mr. DEVINE. It will be interesting to hear the other side of the controversy develop.

Mr. MORROW. Yes, sir.

Mr. FRIEDEL. Mr. Ronan.
Mr. RONAN. No questions.

Mr. FRIEDEL. Mr. Kuykendall.

Mr. KUYKENDALL, I am sure I am not alone on this committee that needs some education here. May I ask several questions for my own. enlightenment?

For purposes of clarification-and I am talking about very elementary clarification-one of the problems we have in this committee is that some of our problems are so complex that most of us don't want to admit that we are so ignorant that we don't understand them.

I want to plead ignorance and start from the beginning. For purposes of clarification could a freight forwarder be called a broker?

Mr. MORROW. No, sir. Not by any means of the term at all. It is as improper to call freight forwarders a broker as it would the Railway Express Agency or any other type of indirect carrier. A forwarder is a common carrier, not a broker.

A broker is regulated now under part II, who merely arranges for transportation, assumes no responsibility, has no responsibility to the shipper at all.

Mr. KUYKENDALL. Do they own fleet vehicles?

Mr. MORROW. A very great many. We are permitted to operate our own trucks within the terminal areas of cities and we have in the forwarding industry probably one of the greatest truck fleets in the world.

Mr. Mom. I think in our own company that between the piggyback fleet and our equipment operating within terminal areas performing pickup, delivery, and transfer we probably have some 5,000 pieces of equipment tied into this common carrier service that we render.

Mr. KUYKENDALL. For the sake of clarification let us talk now about the situation as it now exists between the freight forwarders and trucklines.

I am talking about a theoretical case now, not what happens under the law.

You as freight forwarder of course are given the right to go and negotiate with a truckline a rate less than the ICC quoted rate between two points; is that right?

Mr. MOIR. Yes.

Mr. KUYKENDALL. That is so you can make money. You are really negotiating your margin of profit; is that it?

Mr. MOIR. That is right. I am sure you understand this is for the portion of the service basically involving pickup and delivery in and out of the terminals.

Mr. KUYKENDALL. If some truckline were hungry enough and competitive enough, his competitor running the same route was running the same route from Memphis to Nashville, Tenn., if he were hungry enough to give such a rate that you can make what you considered a satisfactory profit and still cut under the ICC quoted rate between Memphis and Nashville could you legally do so?

Mr.MOIR. Yes.

Mr. KUYKENDALL. Is this not a privilege then that no one else has? Actually quoting to me as your customer a rate less than ICC rates? Mr. MoIR. No. Our rates are the ICC rates. We file our tariffs with the Interstate Commerce Commission.

Mr. KUYKENDALL. Let me restate my question. A truck company governed by ICC regulations between Memphis and Nashville. If Ï, a manufacturer in Memphis, wish to use one of those trucklines I am going to have to pay that rate; is that right?

Mr. MOIR. Right.

Mr. KUYKENDALL. Would it be possible within the law-I am not talking about the practicality of your economic structure but within the law, would it not be possible for you to quote cheaper rates than the trucklines?

Mr. MoIR. Yes, this is possible between every two points served by a freight forwarder throughout all 50 States.

Mr. KUYKENDALL. Does this not give the forwarders a preferential position within the law?

Mr. MOIR. No, I don't feel that way.

Mr. KUYKENDALL. You can cut ICC and he can't?

Mr. MOIR. No, he can't. He can do exactly the same thing.

If it is possible to move a truck between Memphis and Nashville at a certain cost per mile

Mr. KUYKENDALL. Let us say from West Memphis?

Mr. MOIR. Any two points. If it is possible to run trucks at a certain cost per truck-mile, the other motor carriers are just as smart and just as competent they can do it also. Whatever the cost of producing the services will reflect itself in the marketplace in the price to the shipper whether it be done through an arrangement with the freight forwarder or whether the motor carrier does it in his rate field with the Commission.

Mr. KUYKENDALL. Is there not today, this day, an established Memphis-Nashville ICC truck rate? Now they may negotiate a change next month or next year but is there now one that they can't go below?

Mr. MOIR. I don't know because they are both within the same State. Mr. KUYKENDALL. Let us cross the river then. I want to establish this

Mr. MOIR. I think we can do that very simply in that all shipments moving into interstate commerce, whether moving in truck service or freight forwarder service move at rates filed and approved by the Interstate Commerce Commission.

Mr. KUYKENDALL. But may a truck hauling my merchandise from West Memphis to Nashville actually haul cheaper through a freight forwarder than he could haul for himself?

Mr. MORROW. May I point out something in response to your question, Mr. Congressman? A freight forwarder by law and by definition must assemble, must consolidate, must break bulk, and must distribute. So that you cannot assume that on a given shipment picked up at Memphis and delivered at Nashville a forwarder will be-will go to a motor carrier get a contract that would be so low that on that shipment the forwarder could undercut the motor carrier's rate.

Mr. KUYKENDALL. That is not my premise. I did not say how foolish it might be to do it.

Mr. MORROW. I am saying legally it could not be done. The forwarder would have to have a lot of other shipments in the movement and he would have to pay the motor carrier for the lot you see, the forwarder would not operate that way in the first place.

Mr. KUYKENDALL. Do you turn down a straight truckload just because you are a forwarder.

Mr. MORROW. We can't handle a straight truckload not unless we put it with another truckload and put it on a piggyback train as a carload. Mr. KUYKENDALL. You cannot handle a straight carload?

Mr. MORROW. Not by itself; that is right.

Mr. KUYKENDALL. That is part of the education I am trying to get; we get it from all sides, you understand. So I wanted to question you on this. For further clarification you are stating that this privilege that you have of negotiating a margin of profit, and this is what we are all in business for, when you are a trucking line it is not allowed between you and the railroad at any distance; is that right?

Mr. MORROW. That is correct.

Mr. KUYKENDALL. You can't do the same thing from West Memphis to Nashville with a railroad that you can do for a truckline?

Mr. MORROW. That is right.

Mr. KUYKENDALL. Thank you.

Mr. FRIEDEL. Mr. Morrow, I have only one more question. I understand this proposal was made back in 1956.

Mr. MORROW. Yes, sir.

Mr. FRIEDEL. Then I would like to know what has happened. recently that warrants the bill now.

Mr. MORROW. The legislation that was proposed in 1956 was not the same as this. It was an amendment proposed to section 409 which simply gave the forwarder a right to ship traffic in trailers on flatcars at negotiated contract prices.

The reason for that legislation at that time was that the ICC had ruled that forwarders could not make any kind of arrangements with railroads for the shipment of their trailers and the railroads had not at that time published any rates.

They did not publish any rates for use by forwarders and the general public until 1958 when they began to publish piggyback rates. That relieved the urgency of the situation that had existed in 1956 and no further efforts were made to provide for contracts between forwarders and railroads but we have recited the legal and economic history here that has changed the picture now.

In the piggyback field we are at recognized and complete disadvantage because, while the trucks can ship by rail and pay tariff rates the same as we do, they also can make a better deal with them.