are unable to work out a contract arrangement with a railroad, they may require the railroad to haul their trailers at a published rate.

And, of course, motor carriers are always free to make joint rates with railroads for the movement of trailers in through piggyback service.

There are five basic "plans" of piggyback, called plan I through V. There are variations of the plans, such as plan II2. Briefly the five basic plans are:

Plan. I. Trucker substitutes a rail haul for a highway movement. The trucker issues the bill of lading and pays the railroad a contract charge.

Plan II. All rail, door-to-door in rail equipment.

Plan III. Shipper (or freight forwarder) furnishes trailers and railroad hauls them ramp-to-ramp at a flat charge.

Plan IV. Shipper (or freight forwarder) furnishes trailers and flat cars and railroad hauls them ramp-to-ramp at a flat charge.

Plan V. Truckline and railroad make a joint rate for movement of trailers partly by highway and partly by rail.

For purposes of this discussion we may disregard plan II, the allrail plan. That leaves four plans. Motor carriers are permitted to use all four of those plans that is, plans I, III, IV, and V. Freight forwarders have available to them only two of the plans-plans III and IV.

S. 3714 would authorize forwarders to use piggyback service on a basis comparable to plan I. It would not authorize forwarders to use plan V. But at least the bill would partly close the gap that exists today between the motor carriers and the forwarders in the utilization of piggyback service.

In its order authorizing plan I (Ex Parte 230; 322 ICC 301) the ICC ruled that

Tariffs embracing rates or charges covering such service may provide for the performance of TOFC services for the entire line-haul movement.

This means that a trucker operating between New York and Chicago may pick up shipments in the New York City terminal area, consolidate them into trailer loads, turn them over to a railroad for movement to Chicago, and there deliver the shipments to the consignees within the Chicago terminal area.

The trucker has performed no line-haul service; indeed no service that is subject to regulation under part II as motor carriage. He is actually operating precisely as a forwarder. But he purchases his linehaul transportation from the railroad at substantially lower charges than the forwarder must pay.

Just how much less do motor carriers pay under plan I than forwarders are required to pay for the identical service under plan III? Nobody knows for sure because the plan I charges are not published. But American Trucking Associations submitted an exhibit in ex parte 230, the proceeding in which the ICC approved plan I as a joint-rate arrangement, which consisted of a comparison of plan I and plan III charges submitted in another ICC proceeding by a witness for the Pennsylvania Railroad. That exhibit is attached to my statement at appendix A.

The charges shown on appendix A have undoubtedly changed in the several years since it was submitted. If anybody has more current

figures, he should bring them forward. Take just one example from the exhibit. The plan III charge from East St. Louis to New York (Kearny, N.J.) is shown as $578.90. That is what a forwarder would pay. The plan I charge for the same movement, with 50,000 pounds of lading in two trailers on a flatcar, ranges from $399.60 down to $355.60, depending on how many trailers per month the mother carrier tenders to the railroad. Thus at the time the exhibit was prepared motor carriers were paying as much as $233 per car less than forwarders for the same service between New York and St. Louis. How in the world can the forwarders compete when the truckers can buy their transportation from the railroads at such a discount under what the forwarders must pay? Forwarders and motor carriers tender piggyback trailers to railroads under exactly the same circumstances and conditions. Both the forwarders and the truckers are the bill of lading carriers insofar as the shippers are concerned. Why should both not be able to deal with the railroads on the same basis? The Interstate Commerce Commission recognizes that barring freight forwarders from TOFC arrangements that are open to truckers may have a very serious adverse effect on the forwarding industry. In a letter to Senator Lausche dated June 9, 1967, reproduced at page 155 of the printed hearings on S. 751, the Commission said:

We recognize that the present inability of freight forwarders to participate in all TOFC plans or other types of joint arrangements with railroads while such arrangements are, however, available to motor carriers may cause serious economic harm to the forwarding industry.

The Commission made the same statement in its letter of July 12, 1968, to Chairman Magnuson, commenting on S. 3714.

The word "may" in the quotation is out of place. There cannot be the slightest doubt that this inability of freight forwarders to obtain piggyback transportation on as favorable a basis as their competitors, the trucklines, will cause serious economic harm to the forwarding industry. The law in its present state of interpretation and application directly conflicts with the national transportation policy's mandate to provide fair and equal regulation. Unless the law is promptly changed, it will not preserve the inherent advantages of freight forwarding, as national policy demands-it will destroy those advantages.

The freight forwarding industry is an essential industry, providing transportation service in a vital area of our economic life. Everyone agrees that forwarders provide an important service. But whenever legislation is proposed to equalize the opportunity of freight forwarders with that of their competitors, great pressure is inevitably brought against such legislation.

In 1950, when the Senate Commerce Committee reported the bill authorizing contracts between forwarders and motor carriers-that is, the law as it now stands the committee said in its report:

On the average about 5,000,000 tons of freight moves annually in forwarder service, consisting of 18,000,000 to 20,000,000 individual shipments. This is a very important service to the shippers of the Nation, and especially to the small shippers, or shippers of small lots of freight. (S. Rept. 1285, 81st Cong., p. 2). And the committee went on to say:

The Committee is convinced that the bill is necessary in order to carry out the purposes of the regulation and to preserve forwarder coordinated service for the public. (Id. p. 11).

That the legislation adopted then did not go far enough to accomplish the purposes which Congress had in mind, is evidenced by the fact that in the year 1967, the forwarding industry handled only 4,347,000 tons of freight consisting of 16,481,000 shipments-less than the average referred to in the foregoing committee report.

A comparison of the forwarders' volume of business with the gross national product during the 25-year span that forwarders have been federally regulated, dramatically emphasizes the need for improving the competitive status of the forwarders. The chart that is before you shows the tonnage and number of shipments handled by freight forwarders, and the gross national product of the country, from 1943 through 1967. It will be observed that the forwarders are doing less business today than they were 25 years ago when they were regulated and brought under the national transportation policy which calls for the preservation of the industry. In that same period, the gross national product has risen from $192 billion to $785 billion. Although it is not shown on the chart, the business done by motor carriers has increased from 57 billion ton-miles in 1943 to 378 billion ton-miles in 1967.

We ask no special consideration for our industry. We ask only the opportunity to compete under fair and equal ground rules. The forwarding industry has been given less than equal treatment and the unfair advantage which motor carriers now have in piggybacking their customers' freight is bound to have a devastating effect on the future of the forwarding industry.

S. 3714 is a bill to provide equal regulation for freight forwarders. It will permit freight forwarders to improve and expand their service. This will benefit the national transportation system and be in the best interest of the shipping public.

(Attachments to prepared text follow :)

Senator LAUSCHE. Senator Moss?

Senator Moss. Thank you, Mr. Chairman.

Have the freight forwarders been excluded from using the railroads on these less-than-carload shipments for the last 25 years?

Mr. MOIR. Under contractual arrangements, yes. We have had to continue our operations under published tariff rates, which is the big problem here. If I may take just a moment, because the freight forwarders combine and coordinate the best of motor trucking for the pickup and delivery with the use of rail service for the line haul from terminal to terminal, we have since legislation referred to by Mr. Morrow, the freight forwarders have been permitted to make contractual service at either end, the pickup and delivery, assembly, and distribution, but they have not had the right to do this with the railroads for the line haul portion to move the cars from terminal to terminal.

Now as all types of costs, particularly labor costs, have gone up over this 25-year span, it has put more pressure on the portion of the charges paid by the forwarders to the railroads for the line haul portion and as that has become a more difficult burden on the total cost of producing the total service, the forwarder's only out has been to restrict his service to the long hauls, cut out the short hauls, because economically the charges just would not come out and enable us to be competitive with the motor carrier industry.

Senator Moss. But have you been endeavoring during all of this time to get some modification or expansion of authority? The thing that I was asking about that strikes me is that this has been in existence for such a long period of time and the case you make for it sounds pretty reasonable to me.

Mr. MOIR. What has made it more critical is the introduction of piggybacking into the transportation picture. At that time, or up until that time, we competed with the motor carriers as a separate and distinct industry that operated over the highway. Now, once piggybacking came into the picture, and motor carriers began to enter into contractual arrangements with the railroads to move their trailers over railroad, and obviously the only reason they would do this would be because the railroad would haul the trailer from point A to point B for less money than the trucker himself could move it on the highway. So he has sustained a substantial reduction in his cost of doing business, whereas the freight forwarder's costs have stayed up where they were years ago, despite the fact that the freight forwarder pioneered in the developing of long haul piggybacking. But the prime benefits of it in an economic sense have gone to the motor carrier competitors rather than to us and this has widened the cost advantage that the motor carriers have vis-a-vis the forwarder now. Because you see the piggyback picture has really had its full development within the last 6 or 7 years.

Mr. MORROW. May I make an additional comment with respect to Senator Moss' question? When the piggybacking movement was just getting underway in 1956, bills were introduced in Congress at our request to expand section 409 just as this pending bill does. The Senate bill in that regard was S. 3366 and hearings were held on that bill along with a number of others. Hearings were held on a comparable bill in the House. But there was a great deal of opposition from truck