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most—the idea of an advantageous rate being given by a truckline to forwarders do you object most to that being passed on in the form of a competitive rate or forwarder
Mr. BEARDSLEY. I would like to put it this way, Jr. Kuykendall. Under provisions of 408 a motor carrier would see what another motor carrier was going to charge for the transportation of forwarder traffic. He would then have the right to file a complaint with the Commis
a sion charging that this rate was unreasonably low considering perhaps the nature of traffic or any number of reasons. Now he would be put to the proof. Xow if he failed to show that his contention was correct; that is tough.
That situation prevails every day all over the transportation field. The mere fact that he said the rates were unreasonably low would not mean that he could prove they were.
Then if he could not then those rates under 408 would stay effective. He would have to prove his point. I see nothing wrong with that. No carrier has the right to demand that another carrier handle shipment at rates that he, the demanding carrier, charges!
I think he has the right to insist that the other carrier may not burden and weaken the rate structure and ability of all carriers to handle traffic by quoting rates which are not compensatory, to use the Commission's usual terin, under the circumstances that we are talking about.
Mr. KUYKENDALL. In other words, you object primarily to the use of this advantage for unfair competition? Mr. BEARDƏLEY. Yes.
Mr. KUYKENDALL. For the sake of the record and the edification of one of the members of the subcommittee, would you tell me how the joint rate is published?
Am I right in assuming that here is the way a joint rate might take place? I am going to go back to my district now, that we have à place down in Arkansas that is not rail connected, the truckline would pick up or make up a truckload and he would bring that truckload to Memphis and then go piggyback to Knoxville.
When you talk about a published joint rate, of course the customer in, let us say, Pine Bluff, Ark., would be quoted one rate to knoxviile.
Is this right?
Mr. BEARDSLEY. I mean that the railroad and the motor carrier agree between themselves as to what their division of the charges that are charged the shipper will be.
Usually depending on the quantum of tran-portation or work involved, through whose terminals the freight goes or over whose dok it goes.
Nr. KUYKENDALL Is there a set piggyback rate from Memphis to Knoxville?
Mr. BEARDSLEY. Quite frequently.
Mr. BEARDSLEY. So, rares ordinarily are not set by the ICC to begin with. The carriers have the initial jobofetting ther.
Jr. KtYKENDALL. Would there be a st piggyback rate from Nemphis to Knoxville on interstate commerce?
Mr. BEARDSLEY. Yes, you mean
Mr. KUYKENDALL. Let us say you were in Memphis-would you pay always exactly the same thing to Southern Railroad to haul piggyback from Memphis to Knoxville ?
Mr. BEARDSLEY. Yes, I think they would. This does not mean that after a while, for example, one side or the other might not suggest there should be consideration that the rate be changed up or down, that the division of that rate be changed up or down. As far as the motor carrier movement is concerned, the motor carrier publishes the rate from Pine Bluff.
We will say the rate is a dollar. The shipper tenders that traffic to the motor carrier. The motor carrier has in his tariff a statement that says “Unless you tell me you do not want me to use piggyback service I reserve the right to use it or not as I deem best in moving your shipment from Pine Bluff to what was the other point?”
Mr. KUYKENDALL. Pine Bluff to Knoxville.
Mr. KUYKENDALL. You mentioned deciding on the share of joint costs between Pine Bluff and Knoxville. Don't they just quote you a rate?
Mr. BEARDSLEY. Yes, but I don't think they just reach up in the air and quote you a rate. I don't think the rates are made that way or the divisions of rates are made that way. There is undoubtedly a discussion between these two carriers both of whom are carriers and who are utilizing their services jointly to perform this service for the shipping public.
True, eventually these things come out in the form of a certain charge for a trailer but I don't believe that the railroad on the one hand or the motor carrier on the other just reaches up in the sky and says I want so much and the other says I will give you so much. There is an individual investigation made of the cost of each performing that service. The railroads are not joining with the motor carriers to provide piggyback to help motor carriers.
Mr. KUYKENDALL. They compete with each other?
Mr. BEARDSLEY. Of course they do. In most instances where railroads are joining with the motor carriers to provide plan 1 service the railroads are satisfied that otherwise it is business that is going all the way by highway.
KCYKENDALL. Would they be under any burden to prove tha they are not quoting below cost?
Nr. BEARDSLEY. They would be; there is nothing in the law to stop another railroad from contending that the rates
Mr. KUYKENDALL. You say there is a law that would prevent if there was a plaintiff to prove it.
Mr. BEARDSLEY. Yes.
Mr. KUYKENDALL. The railroad may not quote you a rate for piggyback service below their cost of doing business, is that right?
Mr. BEARDSLEY. This gets to the question of division of the through charge. There is a law that says the Commission can pass on those divisions and determine whether they are reasonable.
Mr. FRIEDEL. May I interrupt you for a moment?
Mr. FRIEDEL. I think Mr. Kuykendall is talking about plans 2, 3, and 5 and we are talking about plan 1. I think it is confusing the record.
Mr. BEARDSLEY. I don't mean to confuse it. Would it help if I shortly described my understanding of the various plans?
Mr. KUYKENDALL. I am trying to learn something. I don't know what plan I am talking about.
Mr. BEARDSLEY. I will give you my understanding. There are a lot of refinements of these plans but they generally are numbered 1, 2, 3, 4, 5. One is a so-called substituted service where the motor carrier and the railroad get together, and as I said before the motor carrier publishes in its tariff that it will use the services of the railroads between the points where the railroad has its ramp.
A motor carrier can't do that unless it has authority to serve those points. The Commission has recognized this as essentially a joint rate, through route between two common carriers.
Plan 2 is a completely all rail rate in which the railroad performs the whole service, utilizing its trailer to go to the shipper's dock and pick up the freight and it moves to the rail ramp and the railroad takes it on to destination. A complete service.
Plan 3 is a so-called open tariff under which the railroad charges the published rate for the transportation of loaded trailers, usually two to a flatcar. This is a plan that moves, I think, significant forwarder tonnage.
I might say on plan 3 the trailer has to be furnished by the shipper, whoever he may be. The railroad does not undertake to furnish the trailer. Plan 4 is the same as plan 3 except that there the shipper has to
3 furnish both the trailer and the flatcar.
Plan 5 is what I would call an end-to-end movement, again involving joint rates, but through routes between railroads and motor carriers in which the shipment moves part of the way by rail and the rest of it—the rest of the way by motor or vice versa.
Mr. KUYKENDALL. The present law says that you may not give the forwarder the reduced rate over 450 miles; is that right?
Mr. BEARDSLEY. In truckload lots.
Mr. KUYKENDALL. Let us assume and talk about a haul of 500 miles. You mentioned 408 as being an area of negotiation, possible negotiation, that I assume you recommend that the forwarders use. Do they habitually use section 408 in distance over 450 miles ?
Mr. BEARDSLEY. They don't habitually use 408 for anything. They don't like it for the reasons I previously stated.
Mr. KUYKENDALL. That is all they have for over 450 miles.
Mr. BEARDSLEY. That contains the provision that motor carriers must charge their published tariff rates for distance over 450 miles but the language is so indefinite when it says in truckload lots.
Mr. KUYKENDALL. Let me make the question clear. You mentioned that there is a section, I thought it was 408, whereby a freight forwarder may if he can show that his cost of doing business to the railroads is less than the normal obtain a lesser rate, on that basis.
You mentioned in your testimony about
Mr. KUYKENDALL. Yes, I am talking about motor carriers. I have switched back to motor carriers. Are they using this right which is given to them by 408?
Mr. BEARDSLEY. Mr. Kuykendall, they are not using, as far as I know, anything under 408. They don't want 408 rates because they are required to show that the lower rates that they get are justified by the differences in the cost of handling the traffic.
Even if they could show a differential it would not probably be anything like the differential they presently enjoy by virtue of their bargaining ability. Consequently they have no use for 408 rates.
Mr. KUYKENDALL. They cannot bargain for anything over 450 miles?
Mr. BEARDSLEY. The statute says they can't but the Commission says in its letter it is very ineffectual because the language says in truckload lots.
Mr. KUYKENDALL. I am talking about over 450 miles.
Mr. BEARDSLEY. Supposing a motor carrier enters into an agreement with the forwarder which I understand is being done not too infrequently which quotes a so-called any quantity rate, so much a hundred pounds for any quantity.
The claim is made that is not a truckload rate even though the forwarder tenders 30,000 pounds of freight. Where you get your longdistance movements, I believe that by and large the railroads have them now and probably would have them almost under any situation that really reflected the cost of performing it because they will quote lower rates than we can quote for significant tonnage over long movements.
Mr. FRIEDEL. Mr. Beardsley, I have one question; were you here yesterday?
Mr. BEARDSLEY. Yes, sir; I was.
Mr. FRIEDEL. Yesterday's witness, Mr. Morrow, testified that in ex parte 230 the Commission prescribed exactly what Congress has refused to authorize by change in the law and found that the motor carriers may ship their freight in trailers by rail and pay the open tariff rates but they could use plan 1 and ship their trailer by rail and pay an undisclosed contract charge to the railroads.
I have listened this morning to your condemnation of the ability of large shippers, whether you call them carriers or not, who have goods transported under undisclosed contract charges rather than published rates.
My question is, Why should you have the right to piggyback under plan 1 under a negotiated contract any more than anyone else?
Why should you not, as a carrier, when utilizing the services of another carrier, do so under plan 4 where you enter into joint rates as envisioned under plans 2 and 3 where the shippers pay the published rates?
Mr. BEARDSLEY. When you say plan 4 I believe you mean plan 5. Mr. FRIEDEL. Yes, plan 5.
Mr. BEARDSLEY. The answer to your question is that motor carriers and railroads are each of them common carriers. Historically common carriers have entered into joint rates and made arrangements between themselves as to what the division of those joint rates will be.
That is the basis on which I believe that these common carriers should be allowed to continue to do that same thing. Joint rates are necessary between common carriers because every carrier does not serve every point.
Mr. FRIEDEL. Then it should apply to both.
Mr. BEARDSLEY. All common carriers in their relationship to each other. The forwarder is not a common carrier in its relation to other common carriers no matter what they say.
Mr. FRIEDEL. Plan 1 is joint contract.
Mr. BEARDSLEY. Plan 1 is commonly referred to as substitute service. The thing that I—that intrigues me so much is that everyone talks as though it only went in one direction.
The railroads have historically for years used the motor carriers, sometimes their own subsidiary, sometimes other ones under the same deal in the reverse direction, where they have substituted motor carrier service for the railroad service.
But the Commission has recognized, a few technicalities aside, that the practical operation of plan 1 is for all intents and purposes a joint rate through service between common carriers.
Mr. FRIEDEL. Part 5 is negotiated contract.
Mr. BEARDSLEY. No, sir, it is a different type of a joint rate between common carriers. Essentially the difference is that a motor carrier under plan 1 is utilizing the railroad to operate between points it can serve.
Under plan 5 the motor carrier and the railroads get together and stretch out the operations that each of them can serve by going together, putting together. That is what I referred to earlier as an endto-end operation as distinguished from simply substituting the service of one carrier for another between the points involved.
Mr. FRIEDEL. Do you have the sole privilege to do that, the truckers rather than the forwarders?
Mr. BEARDSLEY. The water carriers would have it if their operations physically lent themselves to that operation.
The water carriers would have it. Any common carriers, water, motor, or rail, are privileged to join together and make joint rates for through routes. In fact there is quite a movement on now not only to allow them to do it as a matter of privilege but to require them to do it as a matter of mandate.
Mr. FRIEDEL. Mr. Kuykendall.
Mr. KUYKENDALL. Does a joint rate have to originate with the trucker?
Mr. BEARDSLEY. Either carrier can originate the movement under a joint rate.
Mr. KUYKENDALL. In other words, the railroad may contract to haul from A to B to C by truck on his rail freight, is that right?
Mr. BEARDSLEY. No, sir. What is actually done under joint rate is that the two carriers get together, and I am not a technical tariff man, let me be the first to confess that, but they agree between themselves—I am not talking about plan 1 piggyback, that is a little bit different- but they agree between themselves that the rate between here and there will be so much money. They also agree as to how they are going to divide that rate.
Mr. KUYKENDALL. May a shipper deal only with the railroad even though the last 150 miles of the trip will be by truck?