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Now I heard a question asked of an earlier witness about the making of rates or making a contract with either a motor carrier or rail carrier. I would like to point out this is not just something that the freight forwarder would have carte blanche authority to do. That any agreement made between the freight forwarder and the rail carrier, the same as with motor carriers, must be filed with the ICC and they will review it.
So they can't just say my cost is a dollar and we will only charge 25 cents, the ICC will not permit it.
We are concerned because of the ever-increasing costs of the freight forwarders and all carriers for that matter. We would like to see anything done and we think this legislation would assist, to lower the cost of transportation wherever possible in order that the rates may be at the lowest rates commensurate with the needs of the carriers.
There are several other items in my dissertation here but I will not take the time because as you say we have many other witnesses.
(Mr. Bordelon's prepared statement follows:)
STATEMENT OF THE LOS ANGELES AREA CHAMBER OF COMMERCE, SUBMITTED BY
VINCENT A. BORDELON, MANAGER, WASHINGTON, (D.C.) OFFICE Mr. Chairman and distinguished committee members, my name is Vincent A. Bordelon and I hold the position of manager, Washington office of the Los Angeles Area Chamber of Commerce. In order to establish my qualifications with your committee, may I state for the record that I have approximately 30 years of experience in the transportation field and that prior to my present position I was, for approximately eight years, manager of the Chamber's Transportation Department. Further, I am a registered practitioner before the Interstate Commerce Commission and the Federal Maritime Commission and have often participated in matters before those Commissions as well as the Civil Aeronautics Board and various state and other regulatory agencies.
For more than eighty years the Los Angeles Area Chamber of Commerce has used its most strenuous efforts to foster an industrial climate conducive to the proper development of Southern California. In accomplishing our purpose I may say parenthetically that our Transportation Department has been one of the most active Departments of the Los Angeles Area Chamber of Commerce.
During these hearings there will be witnesses appearing in behalf of the freight forwarders, railroads, motor carriers, shipper associations and shippers. Inasmuch as the Los Angeles Area Chamber of Commerce is concerned with the economic well-being of each it was deemed of significant importance for the Chamber to offer our views on H.R. 10831.
At its regularly scheduled meeting, held on January 18, 1968, the Board of Directors of the Los Angeles Area Chamber of Commerce, voted unanimously to support legislation, such as H.R. 10831, presently before this Committee, which would do no more than permit freight forwarders and the rail carriers to deal with each other the same as the freight forwarders are presently able to do with the motor carriers.
Mr. Chairman, in the eyes of the Los Angeles Area Chamber of Commerce, perhaps one of the most important parts of the free enterprise system is competition. Whether this competition be for jobs; business; a whole market or for a given territory. Competition has done much to make the entire world a better place in which to live. Looking at it from a shipper's point of view, competition, basically speaking, has afforded better and faster service at rates commensurate with the needs of the carriers but at the same time at their lowest basis.
We believe that competition is a healthy condition. But we also feel that one carrier should not be allowed to wheel and deal while his competitor has one hand tied behind his back. It is our opinion that the legislation presently before this Committee will go a long way towards the establishment of an equality of opportunity as between two modes of transportation.
Perhaps my choice of words of "two modes of transportation" is not proper because in actual operation in today's market the motor carriers are presently operating almost identically with the freight forwarders. On the other hand, while the motor carrier can presently operate similarly to freight forwarders, it is our position that motor carriers have an advantage in certain areas that the freight forwarder does not have. The legislation presently before you would eliminate this motor carrier advantage and place the freight forwarder in a more competitive position.
One of the most talked about problems on Capitol Hill today is the dollar drain and the upset in balance of payments. Mr. Chairman, may I respectfully submit that the Los Angeles Area Chamber of Commerce is also concerned about the “dollar drain" and "balance of payments". not on the international level but as it pertains to the amount of goods presently moving into Southern California versus goods being shipped out.
There has been a historical disproportionment of the volume of tonnage moving into Southern California versus the amount of tonnage moving out of the area. To this extent, therefore, I respectfully submit that any action taken by this Committee and the Congress to assist us in this vital problem will certainly be of significance to the economics of Southern California. We feel that the vehicle to assist us is contained in the subject of this hearing. Passage of H.R. 10831, we feel, can provide our area with additional competition which we hope will result in improved service and possibly lower rates and charges.
While both freight forwarders and motor carriers carry many volume shipments, one of our concerns is for the small shipper and/or the shipper of small shipments. Because of ever increasing handling costs, carriers have been forced to materially increase their rates and charges on small shipments. Such increases, we feel, have created serious distribution problems for many of our industries. Therefore, to the extent that this legislation will afford the underlying carrier, the railroad, to reduce the costs of the freight forwarders on small shipments, it is our position that the economics of Southern California will be enhanced.
Congressional approval of this legislation, it is respectfully pointed out, will not give the freight forwarders and rail carriers carte blanc authority to contract for rater which are not properly commensurate with the needs of the rail carriers. All such contactural agreements made under the new section of the Act will be subject to the review of the Interstate Commerce Commission. To this extent, therefore, the rail carriers, as well as the motor carriers are properly protected.
Perhaps it may be argued by some that Congressional approval of this legislation would have the effect of reducing the revenue of the rail carriers. This matter received considerable attention by our Board of Directors and it was pointed out that contractural agreements made under the proposed section of the Act should create a greater generation of traffic for the rail carriers, thus better utilizing the huge rail plant facility and at the same time reduce the rail per unit cost, which could, therefore, increase their revenue.
The last point I would like to make is that during discussion of this legislation by our Freight Traffic Committee and our Board of Directors the question of small shipper associations was raised. In answer it was deterinined that a shipper association should provide the service for which it was organized, namely, to provide a cost savings. Discussion disclosed that such savings should be derived if economically sound, and not under protectionism.
We appreciate the opportunity given to us to express our views and respectfully urge that this Committee approve the legislation and seek ultimate passage by the full Congress.
Mr. FRIEDEL. I want to thank you. Are there any questions of the gentleman?
Mr. KUYKENDALL. I would like to ask a question to clarify another point here. If this is out of your field maybe one of the other gentlemen could answer. This is just a matter of public responsibility in the picking up of small loads from obscure shipping points such as small towns and obscure neighborhoods and so forth. This has become less and less desirable business for all the major carriers, is this not true?
Mr. BORDELON. That is correct.
Mr. KTYKENDALL. One of the things that people in the trucking business complain about is that they have become almost the sole people now saddled with this undesirable responsibility of public responsibility, you might say. Now, is the freight forwarder as bound by the public duty of picking up these undesirable cargoes as the truckline is?
Mr. BORDELON. Sir, as you are aware, a motor carrier, freight forwarder or railroad, in order to operate between any given points, must secure the authority from the Interstate Commerce Commission.
Mr. KUYKENDALL. I realize this. But is that going to bind them?
Mr. BORDELOX. Yes, sir; as long as they have the authority to offer the service they must offer the service.
Mr. KUYKENDALL. On the same basis?
Mr. BORDELOX. On the same basis as the motor carrier. That makes a big difference between a freight forwarder and trucker and shipper association. A shipper association would not have to do that, whereas a freight forwarder is a public carrier just as a motor carrier or rail carrier.
Mr. KUYKENDALL. But the rail carrier is not bound by the strict regulation to haul cargoes.
Mr. BORDELOX. Yes, sir; he is. As long as he has the authority he is to provide the service. I grant you the service would not be as good.
Mr. KUYKENDALL. Thank you.
Mr. PICKLE. You made a statement a minute ago that although a freight forwarder could make a rate or agreement less than the published rate still it would have to be filed with the ICC.
Mr. BORDELOV. The agreement would have to be, yes, sir.
Mr. PICKLE. In that sense it would be a published rate. But it could be less than the published rate. You start at one level and it could go down correspondingly one, two, or three levels. Though you filed it, it could be less than what was in the original published rate.
Mr. BORDELOX. I hope we are not confusing rates with agreements. Rates are published in tariffs that are available to the public. We are speaking here of contractual arrangements between two carriers, a freight forwarder and motor carrier. These are not published. They are an agreement that is filed with the Interstate Commerce Commission but not in a published tariff. There is a big difference between the two.
Mr. PICKLE. Between the rates and the agreement?
Mr. FRIEDEL. Our next witness will be Mr. Samuel S. Bretzfield, California Fashion Creators.
STATEMENT OF SAMUEL S. BRETZFIELD, REPRESENTING CALIFORNIA FASHION CREATORS, AND MEN'S APPAREL GUILD OF CALIFORNIA
Mr. BRETZFIELD. Sir, I would like to file my statement and also say a few brief words.
Mr. FRIEDEL. Are you in favor of the bill?
As a representative for the garment industry in the State of California, four shipments from small points from the eastern portion of the United States have been carried by the members of the less-thancarload carriers for years and years.
We are solely dependent on these freight forwarders for our shipments. They have been the only people who have been willing to service the off peak areas where most textile mills are producing these textiles which in turn are shipped to the communities in Los Angeles, Calif., and service our particular industry. We feel that if allowed, if bill H.R. 10831 is passed that this would favor our industry and help our industry which must remain competitive with the eastern garment manufacturers.
Today we have the additional problem of hauling raw freight to California to produce a garment to ship it back east.
Mr. FRIEDEL. Would this benefit you in any way!
have reduced rates ? Mr. BRETZFIELD. I would say in the face of rising costs that at least rates we are paying today would be preserved. Additional freight costs would hurt our industry greatly in terms of competition with the east.
Mr. FRIEDEL. Thank you.
STATEMENT OF SAMUEL S. BRETZFIELD, REPRESENTING CALIFORNIA Fashiox
CREATORS, AND MEN'S APPAREL GUILD OF CALIFORNIA
My grateful thanks to your committee for making the time available for me to testify in favor of House of Representatives bill H.R. 10831.
I would like to introduce myself. My name is Samuel S. Bretzfield. I am currently representing the apparel industry on the board of directors of the Los Angeles Chamber of Commerce and I am chairman of the market development committee for this organization. In addition, I have been appointed to serve on two committees for Mayor Sam Yorty again representing our industry. I am immediate past president of the California Fashion Creators and I am also president of my own business, a sportswear firm, known as International Set. I am here today on behalf of the 209 members of California Fashion Creators and the Men's Apparel Guild in California. These people represent approximately 70% of all garments produced on the west coast. The manufacturers of the California Fashion Creators and the Men's Apparel Guild have elevated California to the number 1 source area of sportswear in the United States. The largest swimwear manufacturers in the world are part of the membership of these two organizations. Our members produce apparel of all kinds in the women's wear, men's wear and children's wear field.
The fashion industry's gross business in 1967 is estimated about 700 million dollars in the State of California. The fashion industry's total business on a national and international scale is estimated to be in excess of one billion dollars. Approximately 1,000 plants employing some 90,000 people make up the industry. The California apparel industries are only second to the aircraft and space-age industry in terms of total employment in the State of California and are the largest employer of unskilled and semi-skilled workers in the Los Angeles
The board of directors of California Fashion Creators and the Men's Apparel Guild instructed me to represent our industry in favor of H.R. 10831, a bill amending the Interstate Commerce Act authorizing freight forwarders to make contracts with railroads. Our industry uses all forms of transportation, but as I will explain, is greatly dependent on the freight forwarder for the majority of their freight which falls in the category of raw materials. Apparel products, as you know, must start with the basic fabrics and findings. Even thongh California produces much raw cotton, the actual weaving and looming of textiles is executed by textile mills and converters throughout the eastern and south
eastern part of the United States. For this reason, raw products must be transported transcontinentally to our manufacturing plants.
It is estimated that some 1.500 mill, converter and finding sources comprise the suppliers of our basic products and their shipping points exist in erery little town and hamlet from New England down throughout the eastern seaboard and across the great Southeast to Mississippi. Purchases from these sources of basic textile fabrics alone are estimated at 350 million dollars. It is difficult to estimate the dollar volume purchases of findings, such as zippers, buttons, thread, snaps and hooks and sewing machine needles. However, much more significant than these dollar statistics is the fact that in terms of freight these sources ship to the California apparel industry transcontinentally via freight forwarder in excess of 200 million pounds of freight a year. Even more significant is the fact that this freight is made up primarily of minimum shipments and small shipments. For the clarification of the committee, a minimum shipment is approximately 150 pounds, a small shipment would be from 150 pounds to 350 pounds.
Shipments of this size are identified in the parlance of the carrier as less-carload shipments. It is rare and far between that an apparel manufacturer will transport a carload or truckload of raw material. I think you can visualize the impossibility of a carload of buttons. Textile mill and fabric suppliers historically ship their products daily as they come off of the production run and only under special arragnements are any sizable weight of textiles accumulated for shipment. In other words, the California manufacturer receives freight from approximately 1,500 sources shipping from eastern States multiple number of less-carload shipments daily. I wish to emphasize again that most of these points of shipment are located in the little towns and hamlets away from the major industrial areas of our great Nation. For this reason, the freight forwarder has become a most important factor in the transporting of our raw materials since he specializes in the handling of less-carload freight.
Under the Interstate Commerce Act, part IV, acting as common carrier, the freight forwarder facilitates the movement of our raw products from the very door of the offline rural mill across the Nation to our receiving door at our plant in California. Because of the nature of our fashion business, which is one of frantic overnight fashion changes and seasonable promotional markets, we are dependent on an expedited service. Here again, the freight forwarder by virtue of his ability to use the best modes of transportation to coordinate his handling has provided an important service. In other words, gentlemen, eren though as stated before our industry used all modes of transportation, including rail erpress, air freight, and motor carrier, we are greatly dependent on the freight forwarder in the conduct of our daily business. The California Fashion Creators and the Men's Apparel Guild take the position that the Interstate Commerce Act in its present form discriminates between one mode of transportation and another. Freight forwarders under the present Interstate Commerce Act, do not hare the right to make contracts with railroads whereas the trucking industry has this right. The freight forwarders are subject to rail tariffs, whereas the truckers are not. We ask that the freight forwarder be given the opportunity to be equal amongst the modes of transportation available to us.
As stated. the California fashion industry, in order to maintain its growth and compete in the fashion markets throughout the world, must not be limited in moving freight competitively, transcontinentally from the raw material source. It should be noted that the California manufacturer must remain competitive with the eastern manufacturer. We, as manufacturers, by virtue of our geographical location with respect to our suppliers of raw materials, already have large additional expenses of handling that our eastern competitors do not.
Our industry is aware of a potential source of transportation difficulties coming from some carrier circles. Let me call your attention to an article appearing in "Transportation Topics”, September 1967, reporting on the Southern Shipper and Motor Carriers Council meeting held in Atlanta, Georgia, September 14 and 15: “Shippers in Podunk cannot expect the same transportation services and prices offered those located in New York, Chicago, and San Francisco and other terminal city areas. James K. Seymour, president. Associated Transport in New York told Southern Carrier and Motor Carrier Council here last week." Mr. Seymour added later in his speech “What kind of traffic is it that the motor carrier tends to run away from? The list is long and familiar; small shipments, interline, light and bulky articles, claim-prone articles, short-haul freight, furniture and peddle freight destined for the boondocks.” Gentlemen of this committee, our sources are in Podunk and many of our contract plants are at the boon