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common carrier industry that already has contract rates with the railroads.

Certainly the forwarders cannot force the rails to allow them rates lower than the rates now offered to the motor carriers.

To conclude, it is our company's view that the freight forwarders are absolutely necessary as a competitive mode of transportation in the small shipments field, and that there is a definite distinction between a forwarder and a shipper association. Also, the forwarders are common carriers and should be treated as such and should be equal with the motor carriers. Presently the Interstate Commerce Act hibits the railroads from treating the freight forwarder the same as they treat the motor carriers, thus placing the forwarders at a competitive disadvantage.

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For these reasons we support the amendment to section 409 of the act and urge the adoption of Senate bill S. 3714.

Senator LAUSCHE. Mr. Quinn, you are the transportation manager of the Canteen Corp.?

Mr. QUINN. That is correct.

Senator LAUSCHE. What type of business is this corporation engaged in?

Mr. QUINN. Canteen Corp. is the largest food and vending company in the United States. Its primary business is operating vending

machines.

Senator LAUSCHE. Which vend food?

Mr. QUINN. Which vend coffee, cold drinks, candy, the whole line of food products.

Senator LAUSCHE. In your business do you use these forwarding companies' services?

Mr. QUINN. We use the forwarders. I would say approximately 20 percent of our business would be shipped under the freight forwarder rates and services.

Senator LAUSCHE. How do you ship the balance of your 80 percent? Mr. QUINN. By motor carrier.

Senator LAUSCHE. Do you find that you get a better rate shipping by a motor carrier who may consolidate the shipment?

Mr. QUINN. No, there is no rate advantage whatsoever. In some cases there is a rate advantage by shipping freight forwarder. However, to the territories where motor carriers and freight forwarders are in competition with one another, their rates are generally identical. We utilize motor carriers, especially to the areas where the freight forwarders cannot offer service because of their tremendous cost of doing business, in operating over short distances.

Senator LAUSCHE. Why don't you get a better rate from the motor carriers than you do from the forwarders? I am putting that question on the basis of what was said this morning, that an unfair competitive favor has been given to the motor carriers.

Mr. QUINN. I would say on that basis, we should. However, motor carriers are not going to establish a lower rate based on their lower operating costs, if it is not necessary. They are just going to continue their rates that are now in effect.

Senator LAUSCHE. All right. Thanks very much. The next witness will be Mr. Philip G. Kraemer, director of transportation, Maryland Port Authority.

STATEMENT OF PHILIP G. KRAEMER, DIRECTOR OF TRANSPORTATION, MARYLAND PORT AUTHORITY

Senator LAUSCHE. Mr. Kraemer, your statement will be fully printed in the record. You may proceed to read it. However, knowing that it will be fully printed in the record, if you want to discuss it extemporaneously and point out the highlights of your views, you can proceed in that way.

Mr. KRAEMER. In the interest of time, let me do it that way and you will have the statement before you.

We are supporting this bill basically on the export-import side of the picture. In other words, we are concerned with the movement and particularly of the containerization movement.

Now, in the containerization movement, the true economies are going to be from a door-to-door, from an inland point in this country to an inland point in the foreign country. Right today there is a lot of back and forth as to who should do what, how it should be operated. We have supported in the past certain forwarders who are in this area or have gotten into this area of activity, and we feel that there should be, in view of the trend of unit movement, the opportunity for the forwarder to negotiate rates with the railroads, so that this through intermodal operation can reach its best potential, because there are numerous of the small shipment shippers who can't make a full container.

I am thinking in terms of a 20-foot container that will handle— they are averaging now 14 to 17 tons per container. The small shipper can't make this. So the question comes as to how he is going to accommodate himself to this new system. We feel this is the role of the forwarder. He has been doing this domestically for many years, but again, the economies of unit operation and consolidation can only be achieved if he can be in a position of a carrier, to not only give a through bill of lading, give a through charge, but be able to negotiate with the railroads as he does with the motor carriers for the through transportation in a unit train or whatever the developments will be that come about.

So, for that reason-of course we have a vital interest in this because we are expending millions to build terminals. The question comes what kind of a terminal do you build to accommodate this system or what systems will eventually work out to be. So that we have a vital interest in this end of the picture, because we want to have the best system of movement of freight, again for not only our own good, but the economy and the movement of freight in foreign commerce. (Mr. Kraemer's full statement follows:)

STATEMENT OF PHILIP G. KRAEMER, DIRECTOR OF TRANSPORTATION, MARYLAND PORT AUTHORITY

My name is Philip G. Kraemer. As Director of Transportation of the Maryland Port Authority, I am here to urge the passage of S. 3714, a bill to permit freight forwarders to enter into contracts with railroads.

The Maryland Port Authority, as you know, is an instrumentality of the State of Maryland charged with the duty, among others, of protecting and fostering the commerce of the ports of the State of which Baltimore is the most important. In the effectuation of our statutory mandate to promote the port, the Maryland Port Authority owns and operates marine terminals and maintains field offices both in this country and abroad. During the past decade, the Port Authority and

private industry have expended more than $50,000,000 in port improvements to maintain present business and to make it possible to compete for new business. Recently, the Port Authority completed a detailed analysis and study of the traffic handled through the Port of Baltimore over the past decade and the projected needs of the Port in the foreseeable future. This staff study is very comprehensive, setting forth a ten-year program for the continuing development and modernization of the Port of Baltimore to which the Port Authority has committed itself. Included in this program is the expenditure of an estimated $1,000,000 for a bridge crane for the efficient handling of containers and approximately $10,730,000 for the construction of three new berths at the Dundalk Marine Terminal between 1968 and 1971, two of which would be adaptable for use - as public container berths and would have equipment capable of handling railroad "piggyback" service.

Recently, this program has been implemented by the purchase of a bridgetype container crane, which will be in operation by August 1969. The Authority has allocated, for immediate use, two berths of its eight berths at Dundalk, for container operations, to satisfy the initial demands of the "container revolution," and has four more berths designed specifically for container use now under construction. These four new berths will be in operation in August 1970. In addition to the bridge-type container crane, a 65,000 square foot container consolidation shed will be completed by next March. This shed will support the present two-berth container facility. Additional space will be provided by a second larger consolidation shed of 100,000 square feet which will support the four new berths, and is scheduled for completion by January 1970.

As this study evolved, it became increasingly apparent that as a result of the so-called "container revolution" more and more freight would be moved via this method. It has been estimated that eventually approximately eighty (80) percent of the general cargo will move in containers. To keep pace with this change, all phases of transportation will be subject, in varying degrees, to new methods of operations. Perhaps the biggest change will occur in the inland transportation because the economies to be realized will result from door-to-door operation. To perfect door-to-door operation will require, in effect, a new concept under which the inland point of origin of destination will become the export or import origin or destination for billing, customs clearance, etc. Shippers and receivers will, in our opinion, demand such service. This demand is already being satisfied through the movement inland of containers and trailers or bogies owned by various steamship lines. This in and of itself has created great problems, because steamship lines have traditionally never moved beyond the Port Terminal and therefore have now entered the field of inland transportation which is an area unfamiliar to them. The area of billing, rating, as well as operational problems, are far from resolved and various groups, including the Federal Government, are actively studying the problem seeking as an ultimate a new and streamlined system which is adaptable to this mode of transportation. The most serious problem in this door-to-door operation exists in the area of small shipments which, because of their size, do not fill a container. This requires consolidation which can, in our opinion, be most economically done at the inland point of origin. This has been the area of activity of the freight forwarders, some of whom have expanded their domestic operations into the international field. I think, for example, of Universal Carloading; D.C. Andrews and others who have published special tariffs and hold themselves out to provide a thru bill of lading and a thru service from inland origin to foreign inland destinations. Perfecting of such a system requires a clear-cut definition of the status of freight forwarders, as well as delineation of their rights and obligations with respect to other common carriers which must be employed to do the physical handling and movement of the freight. The freight forwarder's position has been recognized by the Federal Maritime Commission in Docket 815, Common Carriers by Water, Status of Express Companies, Truck Lines and Other Non-Vessel Carriers, (6 F.M.B.—245). With regard to water transportation, this decision made the following finding:

"We conclude that a person or business association may be classified as a common carrier by water who holds himself out by the establishment and maintenance of tariffs, by advertisement and solicitation, and otherwise, to provide transportation for hire by water in interstate or foreign commerce, as defined in the Shipping Act, 1916; assumes responsibility or has liability imposed by law for the safe transportation of the shipments; and arranges in his own name with underlying water carriers for the performance of such transportation,

whether or not owning or controlling the means by which such transportation is effected, is a common carrier by water as defined in the Shipping Act, 1916.”

Perhaps the most significant factor in this finding is the determination that the forwarder, in accepting the thru transportation liability, has the status of a common carrier. Insofar as the inland transportation is concerned, the freight forwarder, although regulated, is not given true carrier status, particularly insofar as railroad transportation is concerned. We therefore feel that it is imperative that if the transportation system of the U.S. is to be responsive to the changing needs, that the freight forwarder be permitted to negotiate with other common carriers for the tranportation of his commodities. Essentially, he is negotiating for transportation as a carrier in furtherance of a shipping contract and we feel he should be in no different position than any other transportation mode. It would appear to us that unless this is accomplished, the economies and the full use of true intermodal transportation will not be achieved. There is definite need for organizations such as freight forwarders who operate in an area, namely, the handling of small shipments which are not either attractive or remunerative to railroads or truck lines. This is evidenced by various prohibitions and methods by which both railroads and trucks attempt to discourage this type of freight in their respective services. This however, is a very important segment of our export and import business, and in many cases, if not all cases, involves the high priced goods moving in international trade. Much will be said about the ability of other forms of transportation to handle this business. Our investigations have developed that the consolidation and handling of thru export shipments are a specialty and cannot be handled by mixing the export or import shipments with domestic shipments. It is for this reason that we have in the past supported freight forwarders such as D. C. Andrews, who have secured authority to specifically handle export and import consolidated shipments from inland points to foreign destinations. Additionally, such movements not only expedite the flow of export and import business but minimize the handling at seaboard ports which in turn reflects itself in the economies of more efficient terminal facilities.

Approval of this bill will, in our opinion, improve the transportation system of the country. Since 1942 the freight forwarders and motor carriers have had the right to contract with one another and I know of no problems which have resulted from this provision of the freight forwarder act. Certainly, the needs of shippers and the commerce of the nation have not been adversely affected. Recent innovations, such as intermodal transportation, containerization, etc., would therefore require this amendment to Part IV of the Interstate Commerce Act.

In view of this growing need for new concepts in true intermodal transportation, we support this Bill which, in our opinion, will perfect one of the missing links in the new and approved methods of handling foreign commerce and therefore urge the early adoption of this proposed legislation.

Senator LAUSCHE. I suppose your facilities, port facilities, are used both by truckers and freight forwarders?

Mr. KRAEMER. Oh, yes.

Senator LAUSCHE. Is it your opinion that the failure to give the freight forwarders the right to contract for rates with the railroads works to a disadvantage to the freight forwarders and an advantage to the truckers and the railroads?

Mr. KRAEMER. I would say from the viewpoint of containerization and an intermodal picture, it will, because there is a large amount of paperwork, there is consolidation and so forth, that must be done. We have found by experience that a truckman, for example, cannot give on an export shipment the same good service he would on a straight domestic shipment, when he mixes, because there are different processes to go through for the domestic and the export. And when they mix them up, then the breakdown and so forth results in less efficient service, less successful service, than if the man concentrates directly on the export movement and consolidates a full load for through

movement.

Senator LAUSCHE. I think that is all, Mr. Kraemer. Thanks very much.

H. L. Graham, supervisor of shipments, Hobart Manufacturing Co., Troy, Ohio.

STATEMENT OF H. L. GRAHAM, SUPERVISOR OF SHIPMENTS, HOBART MANUFACTURING CO., TROY, OHIO

Senator LAUSCHE. Welcome from Ohio, Mr. Graham.

Mr. GRAHAM. Thank you, sir.

Mr. Chairman, my name is H. L. Graham, manager, shipping services for the Hobart Manufacturing Co., 711 Pennsylvania Ave., Troy, Ohio.

Our corporate headquarters is located in Troy. We have manufacturing facilities in Troy, Dayton, Greenville, and Medina, Ohio; Chicago, Ill.; Louisville, and Mount Sterling, Ky.; Minneapolis, Minn., and Clearfield, Utah. Shipments also move from Kew Gardens and Manhasset, N.Y., and St. Johnsbury, Vt., under our name and on our shipping documents.

We manufacture food store and kitchen equipment. This equipment consists of scales, meat choppers, meat slicers, meat saws, food cutters, potato peelers, food waste disposers, tenderizers, wrapping machinery, dish and glass washers. In addition we manufacture Kitchen Aid dishwashers, mixers, and coffee mills for home use.

We are appearing in support of Senate bill 3714 which will permit the railroads and freight forwarders to make agreed or contract rates. Our transportation costs for 1967 were in excess of $22 million on our Troy, Dayton, Louisville, Mount Sterling, and Clearfield shipments. Approximately $286,000 was paid to the various freight forwarders. These figures represent only a portion of the transportation costs on shipments from these plants because a number of our products move on a collect basis. Neither are freight costs included for our subsidiary companies located in Chicago, Medina, and Minneapolis. With the exception of our household dishwashers, which move as volume shipments we are basically a less than truckload or less than carload shipper. Consequently we are vitally interested in seeing the freight forwarder industry remain healthy and competitive.

We urge passage of Senate bill 3714 because the motor carriers already have this authority under the Interstate Commerce Act. The freight forwarder industry will be placed at a competitive disadvantage and in serious jeopardy if this bill is not adopted. We do not believe this should be allowed to happen. There should be competition for LTL or LCL freight and it will cease to exist if the future of the freight forwarders is imperiled. Competition is important from the standpoint of service and rates.

My company needs the freight forwarders because of the excellent service provided by these carriers.

We need their package rates and benefit of their dock rates when we consolidate shipments.

We ask and urge you to support and pass Senate bill 3714. We feel as a large less than truckload shipper it is vital the freight forwarder industry remain competitive with the motor carriers. We need their service and competitive rates.

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