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Whether deliberately or through lack of knowledge, the witnesses who dealt with the subject simply did not give straightforward or correct answers to the questions. I shall set forth the facts without fear of contradiction.
The Commission described Plan I, in its report in Ex Parte 230 (322 I.C.C. 301), as follows:
“Plan I. Railroad movement of trailers or containers of motor common carriers, with the shipment moving on one bill of lading and billing being done by the trucker. Traffic moves under rates in regular motor carrier tariffs."
In its Rule 4, authorizing Plan I, the Commission provided that
"... tariffs embracing rates or charges covering such service may provide for the performance of TOFC service for the entire line-haul movement."
Under a Plan I operation a motor carrier gathers up freight at a City such as New York and makes up trailer loads. The trailers are shipped all the way by rail to another City, such as Chicago, where the trailers are taken back by the motor carrier and the individual shipments are delivered to the consignees. The rate charged the shippers is the rate published by the trucker in his tariffs and it is the same whether the trucker ships by rail or hauls the trailers over the highway in his own service. The trucker may bring some of the shipments in from offline points, but he is not required under the Commission's rule to do so. As the above-quoted rule says, the trucker may perform only the pick-up in New York and the delivery in Chicago, leaving the entire line-haul to the railroad. This is identical in every way to the operations of a forwarder.
It was pointed out at the hearing that the trucker must have rights all the way from origin to destination. So must the forwarder. But truckers have joint rates with each other and the I.C.C. rule does not say the same trucker must have highway rights all the way to destination. He may join with other truckers.
When pressed for the difference between Plan I and forwarder operations the witnesses said the trucker is a carrier but the forwarder is a shipper. The forwarder, as I have shown, is a common carrier, not a shipper. He pays the railroads' published rates only because Congress, thus far. has provided no other basis of relationship. This argument also overlooks the fact that while the motor carrier has rights to transport freight on the highways he does not use those rights when he ships by Plan I. While the motor carrier might, as stated, bring in some shipments from off-line points the fact is, as transportation people know, that most of the Plan I shipments are originated and terminated by the motor carriers within the exempt terminal areas of the origin and destination cities and no highway service is performed at all.
The illustration given by one witness of a Plan I movement where the motor carrier would haul the trailers hy highway from New York to Buffalo and then ship by rail from Buffalo to Chicago is not realistic. If the motor carrier used the railroad he would use the railroad all the way from New York to Chicago. If the motor carrier could save money by shipping by rail from Buffalo to Chicago he could save more money by shipping from New York to Chicago. And that is what he would do.
Under both Plan I and freight forwarder service the shipper deals only with the trucker or the forwarder; he pays the trucker or the forwarder rate; he holds a trucker or a forwarder bill of lading; he looks to the trucker or forirarder for the safe carriage of the goods and for the payment of loss and damage claims. The shipper does not know any carrier other than the trucker or the forwarder, as the case may be, and he does not know or care how the shipments are transported to destination. The operations are identical.
Yone of the witnesses could tell your Subcommittee just how much lower the Plan I charges are than the comparable Plan III charges. The Plan I charges are not filed with the Commission. The so-called "division sheet" which one witness said is filed with the Commission does not reveal the charges. But enough has been learned about Plan I charges from I.C.C. proceedings so that everyone in the transportation industry should know that Plan I charges are materially lower than Plan III charges. In addition to charging a lower dollar amount per trailer under Plan I the railroads participating in that plan normally make other conces. sions to the truckers, such as hauling a certain percentage of empty trailers free; hauling all empty trailers at discounts under the loaded charge; permitting the loading of more freight in Plan I trailers than forwarders may load in Plan III trailers without penalty; and providing a graduated scale of charges which provide discounts based on the number of trailers tendered in a given period.
American Trucking Associations submitted an exhibit in Ex Parte 230, the proceeding in which the I.C.C. approved Plan I as a joint rate arrangement, which consisted of a comparison of Plan I and Plan III charges submitted in an earlier proceeding by a witness for the Pennsylvania Railroad. That exhibit is attached hereto as Appendix A.
Looking at Appendix A you will see that it compares Plan I charges with Plan III charges between seven pairs of points in the East. The Plan I charges are divided into five groups, depending on the number of trailers shipped in a month by an individual motor carrier. If a motor carrier ships more than 900 trailers per month, qualifying for group V', he obtains a much lower charge than the motor carrier in group I who ships less than 150 trailers per month.
Please observe line 7 on Appendix A, which involves novements between East St. Louis and Kearney (New York). The Plan III charge per car with two trailers having 50,000 pounds of lading is $578.90, or 115.8 cents per hundredweight. For the same line-haul movement of the same lading in Plan I service a motor carrier would pay $399.60 per car or 79.9 cents per hundredweight if less than 150 trailers are tendered to the railroad in a month. If the motor carrier tenders more than 900 trailers per month his charges are reduced to $355.60 per car or 71.1 cents per hundredweight. Thus it is possible for a motor carrier to purchase rail piggyback service between New York and St. Louis for $223.30 per car less than the freight forwarder pays.
The Commission's Bureau of Inquiry and Compliance submitted evidence in Ex Parte 230 showing that one Eastern Railroad had a Plan I contract with one motor carrier under which the railroad agreed to transport 300 trainloads of the trucker's trailers over a 12-month period for the sum of $2,172,000. (Exhibit No. 6, Ex Parte 230).
We have no later official data at our disposal. The figures quoted above probably have changed in the five or six years since they were submitted in evidence. I doubt if the differential between Plan I and Plan III charges has been reduced. Mr. Charles L. Smith, who testified for the Eastern Railroads was requested by the Chairman to submit comparative figures showing Plan I and Plan III charges. Perhaps he will be able to update the figures I have quoted.
I submit that there is no reason whatsoever why motor carriers should have their trailers transported by rail at charges so much lower than those available to common carrier forwarders. In the National Automobile Transporters case, 91 M.C.C. 398, the Commission said that “... the physical rail transportation service provided by the railroads under Plans I, III, and V, is identical."
Both the forwarders and the motor carriers are common carriers and they turn over their trailers to the railroads under exactly the same circumstances and conditions. There can be no reason for the legally compelled discrimination against forwarders which exists today.
Questions arose at the hearings as to why, since the physical service performed by the railroads is the same whether the trailers are those of the motor carriers, the forwarders, or commercial shippers, the charges should not be the same for everyone. The answer is that physical service is not the only consideration involved when two common carriers are dealing with each other. Connecting common carriers in a thorough movement always receive less as their share or "division" of the through rate than they receive from shippers for local transportation on their own lines.
When a forwarder tenders freight shipments to a railroad the forwarder has already performed a great many carrier services in connection with the shipments, and he has a continuing responsibility to the shipper until the shipments are delivered. This is what distinguishes forwarder traffic from the freight of commercial shippers. But there is no distinction at all between the freight of the forwarders and the freight of motor carriers when it comes to the railroads. There should, therefore, be no discrimination in the pricing of the rail service. Position of the Eastern Railroads
The position of the Eastern Railroads, arrived at a week before the hearings, is both surprising and difficult to understand. The reason for the opposition of those roads was stated to be that under a system of “give-and-take bargaining” there would be a reduction in railroad revenues. Recognizing the incompatibility of this reasoning with the existence of large-scale Pan I operations in the East, the Eastern roads sought to distinguish Plan I by saying that "the motor carrier and the water carrier provide all the facilities required and all of the service required for intercity transportation" whereas the forwarder does not.
I have already shown the invalidity of the attempted distinction where Plan I is concerned. The motor carrier has the facilities for intercity transportation but those facilities are not used when Plan I service is performed. Even so, what has that to do with the question of depletion of rail revenues? Does the railroads' fear about depletion of their revenue depend upon whether it is depleted by motor carriers or by freight forwarders? The argument simply does not hold water.
In the I.C.C. release "Monthly Comment” for October, 1967, piggyback statistics for the years 1964-1966 are set forth. They show that the Class I railroads terminated 329 thousand trailers in Plan I service in 1966. They also show that freight forwarders reported only 103 thousand trailers moved in Plan III service in that same year.
It is a known fact that a predominance of Plan I operations is in the East. It would appear that the Eastern railroads transport at least three times as many trailers for motor carriers under Plan I as they transport for forwarders under Plan III. The figures set forth in Appendix A hereto show that the railroads transport trailers under Plan I at very large discounts under their Plan III charges.
If the railroads really fear the bargaining power of the relatively small freight forwarding industry they should be terrified about the bargaining power of the giant trucking industry. But the Eastern roads in particular seem to like Plan I very much.
I point out, in conclusion, that the contracts proposed to be authorized by H.R. 10831 are purely voluntary. No railroad would be forced to make a contract with a forwarder. Many railroads do not like Plan I, and they have not made Plan I arrangements. But we are faced with a condition, not a theory. Plan I is in effect and it is largely used. It discriminates unfairly against freight forwarders. National transportation policy calls for fair and equal treatment. H.R. 10831 simply conforms the law to transportation policy. Yours very truly,
GILES MORROW, General Counsel.
COMPARISON OF RAIL LINE-HAUL CHANGES FOR PLAN I AND PLAN III SERVICES, PRR LOCAL MOVEMENTS (10-FOOT TRAILERS) (Plan I charges: Group |--When individual motor carrier tenders 150 loaded trailers or less per month. Group 11-When individual motor carrier tenders more than 150 but less than 300 loaded trailers per
month. Group 111-When individual motor carrier tenders more than 300 but less than 600 loaded trailers per month. Group IV--When individual motor carrier tenders more than 600 but less than 900 loaded trailers per month. Group V--When individual motor carrier tenders more than 900 trailers per month.]
50.000 LB. LADING PER CAR (2 TRAILERS)
70,000 LB. LADING PER CAR (2 TRAILERS)
1 East St. Louis, ill.
Fort Wayne, Ind
Fort Wayne, Ind.
60,000 LB. LADING PER CAR (2 TRAILERS)
Fort Wayne, Ind.
36. 7 $224, 60
$212. 60 $205.60
$200. 60 32. 1 31.1
1 Sec. IV. PRR tariff 2170, ICC 3777.
(The following reply to Freight Forwarders Institute's comments was submitted by the ICC at the request of Chairman Friedel :)
INTERSTATE COMMERCE COMMISSION,
Washington, D.C., March 8, 1968. Hon. SAMUEL V. FRIEDEL, Chairman, Subcommittee on Transportation and Aeronautics, House of Repre
sentatives, Washington, D.C. DEAR CHAIRMAN FRIEDEL : This responds to your letter of February 6. 1968, enclosing a letter to you from Mr. Giles Morrow, General Counsel of the Freight Forwarders Institute, dated February 5, 1968, which comments on the views er pressed by various parties in the course of the hearings on H.R. 10831. In your letter you specifically request the views of the Commission on the objections which the Institute has made to the second of the three amendments proposed by the Commission in its letter to you of January 23, 1968, and to the suggestions offered by the shippers' associations that they be included in H.R. 10831. For convenience, each of these points is discussed separately below.
As set forth on page 10 of the Commission's letter of January 23, our second proposed amendment would place the burden of proof on the parties participating in a contract of the type authorized by section 409 ( a) to show that the terms, conditions and compensation specified in such contracts were not inconsistent with the substantive provisions of section 409(a) whenever the terms of such contracts were called into question. In essence, the Institute contends that the legislative history of section 409 (a), specifically the quoted portion of the Committee's 1950 report which appears on page 3 of the Institute's letter, indicates that these contracts are to be considered as comparable to traditional joint rate arrangements between common carriers and that the compensation received under them is similar to a division of a joint rate. From this premise, the Institute points out that, unlike the situation with regard to changes in rates, the burden of proof in proceedings involving disputes over divisions of joint rates rests with the complainant. The Institute further states that if the burden of proof is specifically imposed on the parties to these contracts, whether the compensation received is considered to be a "division" or a "rate", the result will be harassment from "endless litigation".
We do not agree with these contentions and believe that, if favorable consideration is given to H.R. 10831, our proposed burden-of-proof amendment should be included. At the outset, we should point out that the Commission has always attempted to avoid the application of an inflexible rule as to the burden of proof, believing that all parties to a Commission proceeding have the obligation to come forward with pertinent information in their possession irrespective of where the burden of proof in strict technical sense may lie. Although the usual rule, reflected in section 7 (c) of the Administrative Procedure Act, places the burden of proof on the proponent, the Congress has in the past seen fit to change this general rule in appropriate circumstances. See for example, the provisions of section 15(7), and comparable sections in Parts II, III and IV of the Act which place the burden of proof on the carriers to justify changes in rates when such rates are protested and placed under suspension by the Commission. Irrespective of whether the compensation received by a party to a contract authorized by section 409(a) is substantively considered as a "division” or a “rate”, the basic justification for this amendment is found in the distinct and unusual nature of these contracts themselves when considered in the context of other sections of the Act and the unique legal status of freight forwarders which we discussed in detail in our prior letter.
Since a freight forwarder legally shares many of the characteristics of both a shipper and common carrier, its relationships with other carriers are, as we pointed out on page 9 of our prior letter, “[S]ufficiently distinct and different [S]o as to warrant special consideration". In this regard, it should be noted that, separate and apart from the use of the contracts authorized by section 409(a) or the provisions of H.R. 10831. a forwarder, as a matter of right, is entitled to take advantage of carload, truckload or other volume-related rates which are offered to the shipping public generally. Complaints against divisions are usually disposed of by the participating carriers and are usually submitted to the Commission in those cases where parties themselves are unable to reach agreement. In such cases, imposing the burden of proof on the complaining parties creates no hardship since they could be expected to have sufficient information available to make