Conscious of this trend, and desirous of recovering volume lost through this trend, S. 3366 was introduced in 1956 and this bill was designed to allow forwarders to make special contract rates with railroads lower than those applicable to similar movements by other shippers. S. 3366 was substantially if not exactly, similar to H.R. 10831 which is before you. I have before me a statement which I was privileged to make before a House committee on companion bill in the Senate, S. 3366, that being H.R. 9548. My statement at that time read as follows: This bill seems to be an expansion of the theory that a freight forwarder is a common carrier in his relationships with underlying carriers. We do not subscribe to this theory. While we agree his relationships to the general public are similar in making available selective transportation service any legislation which attempts to further grant the freight forwarders privileges of an actual carrier in relation with the underlying carriers in our opinion is not conducive to a sound healthy transportation system. If the freight forwarding industry as a consolidator and distributor is permitted the right of contractual relationships with the railroads on piggyback service it would be a stepping stone and invite us to establish a similar arrangement on railroad traffic handled in freight cars. In our opinion this would have a detrimental effect on the general public's railroad transportation bill. This bill before you, if enacted, in my opinion will not result in reduced costs to the public—it will mean reduced costs to the forwarders, reduced revenues to the railroads, and increased profits to the forwarder, but there is nothing inherent in this bill which will mean that the shipping public will have a lower transportation bill. On the contrary, to the extent that railroads are pressurized into entering into contracts for large volume movements with the forwarders, the reduction in railroad revenue can easily compel the railroads to seek additional revenues from other sources to offset these reductions. The shipping public in my opinion will eventually be asked to pay this bill. The shipping public has a much greater chance to evaluate the equitability of railroad general increases such as Ex parte 256 if rates are in tariff form, as contrasted to contract charges not publicized as are tariff rates. In this connection it would be interesting to know if the contract rates the motor carriers have with the railroads under so-called plan I piggyback were increased in the same amounts as were the plan III, plan II, and plan 111/2 rates under Ex parte 256. It is my opinion that many of them were not. It seems to me that if this bill is enacted the benefits the freight forwarders derive from it will be used to reduce rates where shipper association competition is existent. When this competition has been diminished or eliminated the same thing will happen as did immediately after part IV was enacted in 1942_higher charges to the shipping public and greater profits for the freight forwarding industry. Finally, as to the suggestion that enactment of this bill will mean better transportation service, I can't believe the railroads will run their trains faster or put in new transportation services on movements where their revenues are to be reduced. reasons: In summary, our opposition to H.R. 10831 is based on the following 1. Preferential position in which the regulated freight forwarder will be placed in relation to the exempt shippers' associations by having contract rates in lieu of published rates. 2. Dissipation of railroad revenue which inevitably will result from contract rates. 3. Eventual increased costs to the shipping public with no improvement in service. Thank you for the privilege of submitting this statement to you. (Appendixes A and B, referred to above, follow :) APPENDIX A ITOFCA, INC. MEMBERS Ace Hardware Corporaton, Chicago, Illinois Harris Hub Company, Inc., Harvey, Illinois Walgreen Company, Chicago, Illinois APPENDIX B ITOFCA, INC., 1967–68 OFFICERS President: William F. Cassidy, Jr., Traffic Manager, Joanna Western Mills, Chicago, Ill. Vice President: George A. McElroy, General Manager, Traffic and Transporta tion, Ceco Corp., Chicago, Ill. Secretary: William C. O'Connor, Traffic Manager, The Anaconda Co., New York, N.Y. Treasurer: Robert J. Tyler, Traffic Manager, Chemetron Corp., Louisville, Ky., DIRECTORS Boyd, Don A., Commerce Counsel, E. I. duPont deNemours & Co., Inc., Wilming ton, Del. Fenaroli, Al J., Manager, District Services, Union Carbide Corp., New York, N.Y. Harmon, Lou B., Director of Traffic, Kaiser Aluminum & Chemical Corp., Oak land, Calif. Hillenbrand, George, Jr., Traffic Manager, Time, Inc., Chicago, Ill. Krause, Frank, Director of Traffic, P. Lorillard Co., New York, N.Y. Lacey, Hugh, General Traffic Manager, Jos. T. Ryerson & Son, Inc., Chicago, Ill. Lewis, Sheldon R., Manager Traffic Service, General Electric Co., New York, N.Y. Moore, Allan N., Director of Traffic, Interlake Steel Corp., Chicago, Ill. O'Neill, Frank L., Director of Traffic, Minnesota Mining & Mfg. Co., St. Paul, Minn. Reed, John R., Traffic Manager, W. W. Grainger, Inc., Chicago, Ill. St. Amant, Julius C., Secretary-Treasurer, Geo. H. Lehleitner & Co., Inc., New Orleans, La. Scharoun, Fred A., Manager of Transportation-West, Western Electric Co., New York, N.Y. Sutherell, Kenneth J., General Manager of Traffic, Sherwin Williams Co., Cleveland, Ohio. Mr. FRIEDEL. Thank you very much. Are there any questions, Mr. Ronan? Mr. Ronan. You say you have 120 members in your organization ? Mr. ALLEN. Yes, sir. Mr. Ronan. One of the gentlemen earlier mentioned that in the Chicago area there are 14,500 manufacturers. Is that true? Mr. ALLEN. I don't know the number, sir. I know there is a large number. Mr. Ronan. In other words, your association takes care of a very limited number, from what I can see, the larger corporations, larger shippers, and apparently does not get down to the smaller shippers. Mr. ALLEN. I think there are very large corporations in our organization, yes, there are also medium size and also fairly small. The size of the corporation does not mean too much. A member has to want to participate. We don't solicit any membership. There are things he has to do to make his participation worth while. Mr. Ronan. Is there a fee? Mr. ALLEN. Yes, sir, there is an initiation fee of $500 per member and there are annual dues of $200. Mr. Ronan. Thank you. Mr. FRIEDEL. Mr. Allen, on page 7, I am trying to follow your logic, in the third paragraph you say “this bill , if enacted, in my opinion will not result in reduced costs to the public—it will mean reduced costs to the forwarders, and increased profits to the forwarder, but there is nothing inherent in this bill that will mean that the shipping public will have a lower transportation bill.” If the public would not benefit how would it benefit the shippers' association! I don't follow your logic. Mr. ALLEN. I think the position of the forwarders is that if the law is changed and they are able to contract for rates with the railroads they are going to have lower cost. The inference is that they will pass this along Mr. FRIEDEL. You say “this bill, if enacted, in my opinion will not result in reduced cost to the publio. Mr. ALLEN. Yes, sir. Mr. FRIEDEL. I just could not follow your logic there that it would hurt the shippers' association. Mr. ALLEN. If you go back, it is my opinion that when Congress granted the freight forwarders the right to contract with the motor carriers it did not necessarily follow that you had reduced costs. Apparently as one of the freight forwarders brought out today, there are still some problems in conjunction with short-haul transportation and one of the purposes of the amendment to section 409 permitting contracts with the motor carriers was to solve that very problem. Mr. FRIEDEL. Are you familiar with the proposed amendment to the bill offered by the shippers' association that they be included in this? Mr. ALLEN. No, sir, I am not. Mr. FRIEDEL. Would you be in favor of the bill if that were included ? Mr. ALLEN. Our directors have not considered that question and I would not feel qualified to answer. Mr. FRIEDEL. Mr. Adams. Mr. Adams. I would like to know what your general position is on whether or not there should be special contracts at all that are contracts outside the regularly published rates and tariffs that are filed by the railroads. Mr. ALLEN. I think there are many problems in this area in fairness to the freight forwarders. I think I would have to confine my discusșion to piggyback. Piggyback is relatively new. I have some figures here that I think are indicative of the problem. Here again, taken from the Interstate Commerce Commission, Bureau of Economics. For 1965 these figures show that plan 1 accounted for 23 percent of the total cars mored in piggyback but only 13 percent of the revenue. Plan 3 accounted for 26 percent of the cars moved and 22 percent of the revenue. I think there are instances where there are some problems in this area. For example, going to the west coast, and incidentally, sir, it is somewhat difficult to talk about these plan 1 rates because they are contract rates and it is not easy for a freight forwarder or shipper to find out exactly what these are. I would hope they would all be in tariff form from that point of view. |
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