warders have become interested in offering their services to the shippers of household goods, the passage of this bill will have serious impact upon the regulated household goods motor carrier industry in that it will enable the forwarder to "skim the cream" off the traffic through the device of unfair and destructive rate cutting practices. Particularly will this be true in the case of "mass moves" of large industrial, national account personnel.

Of even greater importance and as posing a more serious threat to the regulated motor carrier industry is the fact that the Interstate Commerce Commission has recently seen fit to begin to consider issuance of permits to regulated forwarders of used household goods, used automobiles, and unaccompanied baggage between points in the United States.

A recent such case is Bekins Household Shipping Company-Extension-Nationwide No. FF-85 (Sub. No. 3) a wholly owned subsidiary and affiliated of a system comprising a nationwide motor common carrier of household goods.

Should S. 3714 be enacted into law, representatives of such carriers would have an undue preferential sales tool in that they could quote prospective customers and shippers rates at the motor carrier level or the lower forwarder level, the gap between which rates which would be further widened if the forwarder could negotiate contract rates below published tariff charges applicable to other shippers.

In the interest of adhering to the national transportation policy as above, in preserving the investments and economic integrity of United Van Lines, my own company and that of the agents of United Van Lines, we most strenuously oppose S. 3714 and request that this committee not report said bill favorably.

I thank you for the time you have allowed so that I have had the opportunity to present the position of United Van Lines, Inc.

Senator LAUSCHE. You are in the trucking business; is that correct? Mr. MEYER. Right.

Senator LAUSCHE. How large an enterprise do you have?

Mr. MEYER. I actually wear two hats. I am president of William B. Meyer, Inc., which is my own company, which is rather a large warehouse organization, and a general commodity limited operation, doing about $1,700,000 a year in business. I am also president of United Van Lines, a company doing household goods movement exclusively, about $50 million a year.

Senator LAUSCHE. Does United Van Lines, Inc. enter into contracts for the fixing of rates with railroads?

Mr. MEYER. NO; we don't. We have no agreement with the railroads on rates. No.

Senator LAUSCHE. You do not?

Mr. MEYER. We do not.

Senator LAUSCHE. You are not availing yourselves then of section 409?

Mr. MEYER. No; we are not.

Senator LAUSCHE. Why not?

Mr. MEYER. Well, United Van Lines considers themselves a transportation of household goods by motor van business. We do no shipping by rail by container at this time.

Senator LAUSCHE. Well, anyhow your company is opposed to the adoption of this bill?

Mr. MEYER. That is right.

Senator LAUSCHE. Primarily for what reason?

Mr. MEYER. Well, we feel that this bill opens up another area of competition to the motor carrier. This bill would enable a forwarder of used household goods to negotiate rates with the railroads, which in turn will enable them to walk in at a much lower tariff than we would have.

Senator LAUSCHE. Why wouldn't that be good for the public?

Mr. MEYER. We feel, No. 1, that it will probably be only effective on mass movements. We don't feel that this will affect the small individual mover. It would be effective only on mass movements. Senator LAUSCHE. Well, thank you very much for your help, Mr. Meyer.

The record will be kept open until September 20.

That will conclude the hearings today.

(Whereupon, at 11:35 a.m., the subcommittee was adjourned.) (The following material was received for the record :)

NATIONAL RETAIL MERCHANTS ASSOCIATION,

New York, N.Y., September 6, 1968.

Senator FRANK J. LAUSCHE,
Chairman, Surface Transportation Subcommittee, Senate Commerce Committee,
U.S. Senate, New Senate Office Building, Washington, D.C.

DEAR CHAIRMAN LAUSCHE: We are writing concerning S. 3714, a bill to amend section 409 of Part IV of the Interstate Commerce Act, to authorize contracts between freight forwarders and railroads.

Unfortunately other commitments prevent us from appearing in person at your Subcommittee hearings on September 9-10, 1968.

The National Retail Merchants Association (NRMA) is a non-profit membership association consisting of over 15,000 department and specialty stores located in every State and the District of Columbia, with a combined annual sales volume of approximately $26 billion.

The NRMA Transportation Committee, composed of representatives from many of these retail organizations, has carefully reviewed the proposed legislation, and wishes to state its position that it is undesirable to remove such a broad and significant group of rates governing freight forwarders from ICC regulation, which enactment of this bill would permmit by allowing freight forwarders to negotiate unregulated piggy-back rates with railroads.

Supporters of the bill point to the fact that this privilege is now permitted to motor carriers, and that passage of the bill will create a more equitable competitive climate between the motor carriers and freight forwarders. We feel that, rather than add to the non-ICC regulated charges it might be preferable to consider the possibility of restricting current practices in order to accomplish the same end, i.e., improved and more equitable competitive conditions for the two types of carriers involved.

If, in the opinion of your Committee, the bill has merit, then certainly all users of the service should be extended the privilege of entering into special rate contracts with the railroads, not only freight forwarders and water carriers. In addition, the ICC recommendations for amendment should certainly be included. Extending the bill to include all users of the service can be effected in the last portion of the Sec. 1(4) amendment by inserting the underlined phrases below: "*** it is hereby declared to be unlawful for any such common carrier by railroad to fail or refuse to enter into a similar divisional or contractual arrangement with any other motor carrier subject to Part II or water carrier subject to Part III or freight forwarder subject to Part IV of this Act, and others who employ or utilize the instrumentalities or services of such common carriers under like conditions, upon reasonable request and within the limits of its equipment and facilities, or to charge or collect or receive from any such motor carrier or water carrier or freight fowarder any greater or lesser amount than it charges or collects or receives from any other motor carrier or water carrier or freight forwarder or others who employ or utilize the instrumentalities or services of such common carriers under like conditions for a like and contemporaneous service between the same points."

In addition, there are other considerations which mitigate against passage of this legislation:

A. It will give freight forwarders excessive and unnecessary economic power to obtain purchased transportation at dangerously low levels.

B. It will result in excessive pressures on rail carriers to provide transportation services to freight forwarders at levels which are inconsistent with economically sound operations.

C. The deficiencies in rail revenues from freight forwarder traffic will have to be made up on higher rates paid by the public.

D. Shippers other than freight forwarders will be paying susbtantially more than the freight forwarders for the same transportation services from the railroads.

Thank you for your attention to this letter and we appreciate any consideration which you give to our position.

Respectfully,

CHARLES A. BINDER, Vice President.

NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS,

Washington, D.C., September 11, 1968. Re S. 3714, a bill to amend section 409 of part IV of the Interstate Commerce Act, as amended, to authorize contracts between freight forwarders and railroads.

Hon. FRANK J. LAUSCHE,

Chairman, Subcommittee on Surface Transportation, Committee on Commerce, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: The Executive Committee of this Association, on March 7, 1968, unanimously adopted a resolution opposing the enactment of H.R. 10831, a companion bill to the above bill, which has been the subject of hearing this week by your Subcommittee. A copy of the resolution is enclosed.

Since opposition to one is tantamount to opposition to the other, we would appreciate very much your incorporating this letter and the enclosed resolution in the record of your Subcommittee's hearings on S. 3714 so as to reflect our opposition to its enactment.

Consideration of this resolution by you and your colleagues is greatly appre

ciated.

Sincerely,

PAUL RODGERS, General Counsel.

RESOLUTION OPPOSING H.R. 10831 RE FREIGHT FORWARDERS

Whereas H.R. 10831 which is now before the House Committee on Interstate and Foreign Commerce would amend Section 409 of Part IV of the Interstate Commerce Act to authorize freight forwarders to enter into contracts with railroads for the movement of freight and for other services at rates less than those available to the general public, which rates would not be published in open tariffs and would not be subject to suspension by the Interstate Commerce Commission; and

Whereas freight forwarders have always been considered shippers in their relationship with rail common carriers; and

Whereas this Association opposed the legislation giving freight forwarders the preferential status of being able to make contracts with motor common carriers for movement of inter-city freight for distances up to 450 miles at rates lower than the published tariff rates paid by the shipping public; and

Whereas, as predicted by this Association, such authority for freight forwarders to so contract with motor carriers has resulted in a serious derogation of motor carrier revenues on this traffic; and

Whereas the effect of this bill would be to place freight forwarders also in the role of privileged rail shippers and subject the railroads to excessive pressures to contract with freight forwarders for the movement of freight at rates substantially less than other shippers pay for the same transportation services;

and

Whereas the shipping public will have to make up such deficiencies in revenues received by the railroads from freight forwarders: Now, therefore, be it

Resolved that the Executive Committee of the National Association of Regulatory Utility Commissioners opposes enactment of H.R. 10831 as contrary to the national transportation policy and the public interest; and be it further

Resolved that copy of this resolution be forwarded to the Chairman of the House Committee on Interstate and Foreign Commecre and that the Association's legal representatives in its Washington office be authorized and directed to appear at any committee hearing on H.R. 10831 for the purpose of opposing such legislation.

FURTHER STATement of Giles Morrow, General Counsel, FREIGHT FORWARDERS INSTITUTE, REGARDING S. 3714

Without undertaking to answer or rebut all of the numerous inaccurate and wrongly premised arguments that were advanced by the opponents of S. 3714 during the hearings on September 9-11, it seems desirable, in the interest of accuracy and understanding, to correct certain inaccuracies and misconceptions that were introduced into the record.

First, the purposes of the bill were misrepresented or misjudged by some witnesses. A number of witnesses referred to a suit challenging the legality of Plan I piggybacking which is pending in District Court. That suit is Lone Star Package Car Co. v. U.S., C.A. 4-355, N.D. Tex., pending before a specially constituted three-judge court in Dallas. The suit was filed by certain freight forwarders, and the Southern Railway Company and its affiliated lines plus the Freight Forwarders Institute interviewed as plaintiffs. The case was argued in November, 1965 and has been pending since. The issue is whether the Commission's finding that Plan I is a valid through route and joint rate arrangement is supported by the law.

The Chairman of the I.C.C. testified that:

"*** the issue of lawfulness of Plan I piggybacking is pending before a Federal District Court, and, if in that litigation, the views of the forwarders should be upheld, the competitive necessity for this legislation would largely evaporate." Other witnesses also, suggested that the result of the Texas litigation might remove any necessity for the bill.

Minimizing the unfair advantage which motor carriers obtain over forwarders through the instrumentality of Plan I is certainly an important reason for the bill, but it is not the only reason. Even if Plan I should be declared unlawful by the District Court, and that finding should ultimately be sustained by the Supreme Court where the matter undoubtedly would be taken, there would still be not only a competitive necessity but a very real and practical necessity for the bill. Mr. G. R. Moir, principal witness for the bill, explained at great length the numerous reasons for the bill, over and beyond the achievement of a measure of equality between forwarders and motor carriers in the use of rail piggyback service. Even without Plan I motor carriers would have available to them not only all of the plans based on published rail tariffs-the plans now available to freight forwarders-they also would continue to be able to make joint rates with railroads as they do under Plan V.

Without repeating everything that Mr. Moir said, the major considerations are that in the course of changing times the carload rate structure of the railroads, which must be constructed based on the costs of handling the general run of miscellaneous shipper traffic, is not now suitable to forwarder traffic. He analyzed the numerous respects in which forwarder traffic, when it is placed upon the railroads, differs from ordinary shipper traffic, and the many economies to the railroads which are inherent in forwarder traffic. Mr. Moir pointed out that forwarders are, in essence, the L.C.L. arms of the railroads today and that with few exceptions the only way a shipper may obtain rail service for his less-carload shipments is through the instrumentality of the forwarders. He stated that if these economic considerations could be taken into account the forwarders and railroads, working together, could make it possible for shippers to again obtain freight forwarder-rail service in the short distances as well as the long hauls, as they did in years gone by.

Mr. Moir emphasized that the business of forwarders, vital as it is, particularly to the small-lot shippers, is lagging far behind the economy and that in many, many areas of the Country the only service still available to the shippers of lessthan volume lots is that of the motor carriers. Competition is the cornerstone of our economic system, and there is a competitive necessity for the bill, as well as an economic necessity.

Another area in which some confusion may have been introduced is in reference to piggyback statistics. The Chairman of the Commission said that they have "no data" indicating that the decision in Ex Parte 230 has resulted in a significant change in the competitive situation between forwarders and motor carriers.

Various witnesses made reference to I.C.C. statistical releases covering piggyback movements. Mr. Baxter, representing the Eastern Failroads, said that piggyback movements were such a small portion of motor carrier business as to be negligible. These matters deserve comment.

The I.C.C. does collect data showing the number of trailers moved in piggyback service by all common carriers-rail, motor, water and forwarder. The latest release of such data was contained in "Monthly Comment" published by the Commission's Bureau of Economics in October, 1967 covering the years 1964 through 1966, the 1966 figures being preliminary. We have been informed that a later release is due soon.

The figures in the above release show that in 1966, a total of 270 Class I motor carriers, or 22 percent of the total, used rail piggyback. About 40 forwarders, or two-thirds of the companies, reported piggyback movements in 1966.

In 1966 the 270 Class I motor carriers reported 346,000 trailers moved in piggyback service. The 41 forwarders reported a total of 201,327 of their trailers moved in rail piggyback. Obviously it makes no difference what percent of the motor carriers' total business is represented by piggyback movements. If it was only one millionth of one percent, it is still greater than the total forwarder movements. These statistics of total movements do not tell the full story. The meaningfull inquiry is: How much did the motor carriers pay for the piggyback service they purchased as against what the forwarders paid? The Commission's figures show that motor carriers shipped 237,500 trailers by rail under Plan I in 1966. We do not know what the motor carriers paid to have those trailers transported in Plan I service, but it may be conservatively estimated that they obtained the transportation for at least a third less than the forwarders paid for having their trailers moved under the various open tariff plans. We suggest that if the Commission wants to get at the roots of the competitive picture, it should obtain the figures showing how much motor carriers and forwarders are paying respectively, for identical services.

The witness for the Eastern Railroads, Mr. Charles S. Baxter, may not have understood the legislation. He said that the "secrecy and uncertainty" with respect to the charges being offered "privately" by competing railroads could only lead to a chaotic price structure and "reduction in over-all railroad revenues." The charges would not be secret because the law would require that they be filed with the I.C.C., and the Commission, on complaint or on its own motion, could require the compensation to be adjusted. Of course, the Plan I arrangements which the railroads, and particularly the Eastern roads, make with truck lines are secret. The charges under Plan I are not filed with the I.C.C. as the forwarder charges would be under the bill. The railroads handle far more trailers for motor carriers under Plan I charges than they handle for freight forwarders under all of the plans available to forwarders.

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.

I point out that the contracts proposed to be authorized by S. 3714 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.

Only one other matter need be mentioned. All opposition witnesses, including, most regretfully, the I.C.C., indicated a woeful misconception of the status of freight forwarders. Perhaps enough has been said on this subject in our direct testimony. All this Committee needs to do is to read its own prior reports, cited in our testimony, to see that the "dual status" or "shipper status" arguments were rejected long ago. But one specific argument deserves brief mention. When pressed as to why motor carriers should be permitted to make contracts with railroads and forwarders should not, the witnesses, to a man, responded that the motor carriers have the physical facilities and the authority to move the traffic all the way by highway. That is not an answer. After the motor carrier trailers have been put aboard a rail flatcar the fact that the trucker has a tractor back in his garage with which he could have pulled the trailer over a highway, and the fact that he has a certificate saying he could have used the highway, are completely irrelevant. The fact is that in Plan I, as well as in Plan III or IV movements which truckers now are authorized to engage in, the motor carrier never uses his over-the-road motive power or his I.C.C. certificate. He leaves the entire line-haul to the railroads, just as the forwarders do. And if this makes the forwarder a shipper, how can it fail to have the same effect on the motor carriers?