Pier 1 Imports, Inc., Ft. Worth, Texas Ray-O-Vac Division, ESB, Inc., Madison, Wisconsin Jos. T. Ryerson & Son, Chicago, Illinois SCM Corporation, New York, New York St. Charles Manufacturing Company, St. Charles, Illinois A. O. Smith Corporation, Milwaukee, Wisconsin Swimrite, Inc., Van Nuys, California Sylvania Electric Products, Inc., Danvers, Mass. Time, Inc., Chicago, Illinois Triangle Publications, Inc., Philadelphia, Pennsylvania Union Carbide Corporation, New York, New York U.S. Plywood-Champion Papers, Inc., Hamilton, Ohio Vick Manufacturing Division, Richardson-Merrell, Inc., Philadelphia, Pa. Walgreen Company, Chicago, Illinois West Chemical Products, Inc., Long Island City, New York Western Electric Company, New York, New York Westinghouse Electric Corporation, Pittsburgh, Pa. Wood-Mosaic Corporation, Louisville, Kentucky Woodward, Wight & Company, Ltd., New Orleans, Louisiana APPENDIX B ITOFCA, INC., 1967-68 Officers President: William F. Cassidy, Jr., Traffic Mgr., Joanna Western Mills 2141 S. Jefferson St., Chicago, Ill. 60616 Vice President: George A. McElroy, General Mgr., Traffic & Transp., Ceco Corp. 5601 W. 26th St., Chicago, Ill. 60650 Secretary: William C. O'Connor, Ass't Gen. T.M., The Anaconda Company 25 Broadway, New York, N.Y. 10004 Treasurer: Robert J. Tyler, Traffic Mgr., Chemetron Corporation P.O. Box 987, Louisville, Ky. 40201 Directors Boyd, Don A., Commerce Counsel, E.I. duPont de Nemours & Co., Inc. 10th & Market St., Wilmington, Del. 19898 Fenaroli, Al J., Mgr. Dist. Services, Union Carbide Corp. 270 Park Ave., New York, N.Y. 10017 Harmon, Lou B., Dir. of Traffic, Kaiser Aluminum & Chemical Corp. 300 Lakeside Drive, Oakland, Calif. 94604 Hillenbrand, George Jr., TM, Time, Inc. 330 E. 22nd St., Chicago, Ill. 60616 Krause, Frank, Dir. of Traffic, P. Lorillard Company 200 E. 42nd St., New York, N.Y. 10017 Lacey, Hugh, GTM, Jos. T. Ryerson & Son, Inc. P.O. Box 8000A, Chicago, Ill. 60680 Lewis, Sheldon R., Mgr. Traffic Service, General Electric Co. 570 Lexington Ave., New York, N.Y. 10022 Moore, Allan N., Dir. of Traffic, Interlake Steel Corp. 135th & Perry Ave., Chicago, III. 60627 O'Neill, Frank L., Dir. of Traffic, Minnesota Mining & Mfg. Co. 2501 Hudson Road, St. Paul, Minn. 55119 Reed, John R., TM, W.W. Grainger, Inc. 5959 W. Howard St., Chicago, Ill. St. Amant, Julius C., Secy.-Treas., Geo. H. Lehleitner & Co., Inc. P.O. Box 52409, New Orleans, La. 70150 Scharoun, Fred A., Mgr. of Transportation-West, Western Electric Co. 222 Broadway, New York, N.Y. 10038 Sutherell, Kenneth J., Gen. Mgr. of Traffic, Sherwin-Williams Co. 101 Prospect Ave., N.W., Cleveland, Ohio 44113 Senator LAUSCHE. I want to explore for the moment in detail the services which you render. Are you able to tell for the record how many different items you might consolidate into one shipment made by various small industrial enterprises, members belonging to your association? Do you consolidate let's say item A in one trailer, item B in another trailer, thus having two items in two trailers occupying one car? Or are there instances where you put into one trailer item A, B, C, D, E, and F, and into another trailer G, H, I, J, K, L, and M? Mr. ALLEN. I will attempt to answer that, Senator. In the first place, we do not load any of these trailers. Each of these trailers are loaded by each of our individual members at their own shipping docks. Now, one member may put in a straight load of steel, another member may elect to consolidate 1,500 of his own small shipments which he may feel that he can consolidate better than any outside agency can consolidate, and he may move those as one trailer. Senator, we never see the trailers. We have no terminal facilities. These trailers move from individual shippers' docks by modes, means, employed by the individual shipper with our assistance, and help and suggestions. He may use his own tractor to run over the highway, he may use his own contract with a local trucking company, he may select his own over-the-road carrier. He moves the way he sees fit to a railroad terminal specified by us where we take shipments coming from numerous shippers, from numerous locations and utilize the railroad plan II and one-half or plan IV, but basically, plan II and one-half piggyback rates which in general are all freight rates. They are not applicable on just one commodity or two commodities. They are all freight rates applicable to all commodities with certain specific restrictions as to commodities. Senator LAUSCHE. Are the items consolidated before they reach your terminal? Mr. ALLEN. Yes, sir. And usually by the individual members, or maybe the member may elect to use a local trucking company to accomplish the consolidation. It would seem to me in many instances a company has found that they can accomplish a better consolidation from their point of view than having this done on the outside and they may do it themselves. They may not have room to do it and go outside to do it. Senator LAUSCHE. Is there a consolidation into one trailer of the products of different companies? Mr. ALLEN. No, sir. Senator LAUSCHE. The consolidation is only of the products of one company and those products may be of a different character and destined to different consignees? Mr. ALLEN. There is one exception in our handling which I would like to mention in just a minute. But first, coming to your question, a member loads a full trailer going to a specific consignee. It may be his warehouse, it may be his customer. He loads it completely. He seals it. We don't touch the seals. We never see the trailer. Now, maybe when he gets to the destination, or excuse me, maybe in loading the trailer going to a community, he may have three customers within the commercial zone of that area and he may elect to load the three customer's shipments in sequence and effect that delivery. Now, there is one exception, Senator, a very small exception to what I have said, and this now frankly is in an experimental area with us at the request of our directors. We are experimenting with a possibility of putting two members' shipments on the same trailer without subjecting either shipment to the physical handling involved in a freight terminal. We accomplish this by having one trucking company agreeable to both members handling the shipments completely at origin and another one handle it completely at destination. Senator HARTKE. The Department of Transportation contends, let me read this, this is a letter to the Chairman, the comments of the Department of Transportation of August 25, 1967, "supporting S. 751, we noted in passing that this ***" I'm quoting "this legislation would at long last bring greater equality of regulation among all of the various surface modes of transportation subject to the Interstate Commerce Act except freight forwarders, an omission from the bill the Department regards as unfortunate." That is a quote from their previous letter. They go on to say, "The Department of Transportation continues to be of the opinion that freight forwarders should be included within the scope of S. 751." Here is the nub: Forwarders perform a much-needed public service, paticularly for shippers and consignees of small shipments. In this regard, it should be emphasized that one of the primary purposes of S. 751 is to aid in the movement of such traffic. Moreover, with the rapid development of trailer-on-flat car movements by the railroads, we believe that as a matter of competitive equality freight forwarders should be permitted to participate to a greater degree in the different TOFC plans and other types of joint arrangements with railroads since many of these arrangements are now available to motor carriers. For example, with the decision of the Interstate Commerce Commission in Ex Parte 230. Substituted Service-Piggyback, 322 I.C.C. 301, recently affirmed by the Supreme Court, the so-called "open tariff" regulations of the Commission permit motor carriers to share in plan III TOFC operations. Forwarders, however, are excluded from participating in plan I arrangements. Now, you do not deal with small shipments, do you? Senator HARTKE. And the freight forwarder does. And he contends he performs this service and therefore is entitled to this difference, he is entitled to this difference in his procedure and therefore entitled to the right to make a contract. What is your answer to that? You do not perform that service. Mr. ALLEN. I don't think you can compare, Senator, the two services. Senator HARTKE. I understand that. But I am asking you why is he not entitled to consideration for the fact that he does handle these small shipments? Is that not a service? Mr. ALLEN. Yes, it is a service, but I still don't think he is entitled to it unless he is a carrier. Senator HARTKE. Isn't he a carrier to some extent? Mr. ALLEN. He is in relation to the shippers, but in my honest opinion, in relation to the underlying carriers, he is a shipper. And the courts I think have so decided. Senator HARTKE. But he has a dual relationship. Mr. ALLEN. That's right. Mr. SINGER. I think it is the position of ITOFOCA that the evils that will result from that far outweigh any need or benefit resulting from it. In other words, it is our position that those savings would not be passed on to the shipping public, but on the other hand, would result in a dissipation of revenue from the railroads, which would eventually increase the cost of all shippers, so that the person that would benefit would be the freight forwarder and no one else. Senator HARTKE. In other words, you think that even though there is a proviso contained in the second page of the bill, that that proviso in and of itself is not sufficient to protect the revenues? Mr. SINGER. That is correct. Senator HARTKE. That is your contention? Mr. SINGER. Yes. Senator HARTKE. But the proviso is there to meet that specific objection, is it not? You know what I'm talking about, do you not? Mr. SINGER. Yes. It won't meet the objection of the dissipation of the revenue from the railroads, because the only reason why they want the contract rates is the ability to get a lower charge than is now published. Senator HARTKE. That is quite obvious. Mr. SINGER. It is our position that with that loss of revenue to the railroads on a very substantial basis, not only on the piggyback but the boxcar, that somebody has to pay for it and it is going to be ITOFCA's members, either as members or individually. So we are saying that any benefits to the freight forwarders in increasing their profits is contrasted to the detriment to the public generally. And that is why we are here. We are here speaking on behalf of the association and its members and they feel that without any gain to them that this legislation shouldn't be passed because of the detrimental effect on the shipping public generally. Mr. ALLEN. Mr. Chairman, if I might make one other comment, and I'm reminded of it when Senator Hartke read from the report of the Department of Transportation, and I have reference to the alleged discrimination which the freight forwarders are subjected to now because of the existence of plan 1. I can't testify directly as to what these plan 1 rates are, because frankly we can't find out what these rates are. I would hope, particularly after listening to some of the questions you asked the previous witness, that maybe something out of this hearing would develop whereby an investigation or review might be made as to the level of the plan 1 rates that are in effect, the extent to which they are not changed every day, the extent to which they are growing. I think I am sympathetic to the freight forwarders' position as far as the existence of these particular rates are concerned. I have one other thought. I think people refer to these as joint rates. In my opinion, they have some characteristics which are not typical joint rates. For example, a motor carrier having rights to run from Chicago to Los Angeles can, I believe, perform only the pickup and delivery service in Chicago, or the pickup service in Chicago and only the delivery service in Los Angeles, and use the railroad for the through movement. To me this is a little different than what we have always known as joint rates, where a specific through rate was developed between two carriers, with divisions worked out of the through rate by the carriers (plan 1) therefore becomes to some degree a combination of movements, and a contract arrangement. I think the fact that these arrangemtns are not known presents a problem. I pointed out the railroads came to the Commission and wanted increases in Ex parte 256, and Ex parte 259. We don't know whether they asked these of the motor carriers, we don't know how they adjusted their rates. I notice that the Commission in docket 35019 has asked the class 1 railroads to supply certain information in conjunction with the development of piggyback. I am hoping that maybe one of these days this might go further and they would take a real look into the level of the rates. There is one other point Senator LAUSCHE. Just a moment, please. How many members are in your association? Mr. ALLEN. 129, sir. Senator LAUSCHE. Does your association own stock in the railroads? Mr. ALLEN. No, sir. Senator LAUSCHE. Does it own bonds of the railroads? Mr. ALLEN. No, sir. Senator LAUSCHE. Is it a profit association or nonprofit? Mr. ALLEN. It is a corporation organized not for profit under the laws of the State of Illinois. Mr. SINGER. All of the savings are passed on back to the members. Senator LAUSCHE. I didn't hear you. Mr. SINGER. I say all of the savings resulting from this transportation are passed back to the members. Senator LAUSCHE. Yes. The purpose of my question is to find out what interest you may have financially in opposing the bill. What, if any, interest do you have? Mr. ALLEN. The only interest we have, Senator, is a sincere belief that this is not good legislation which is the position we have taken, which I have taken since 1942 and during each and every one of the hearings since that time. I do not believe and my organization does not believe that the freight forwarder is a carrier. We believe he is a shipper. Senator LAUSCHE. Now then, would it be to the financial interest of your members if the privilege that is sought to be granted to the freight forwarders were also granted to you? Mr. ALLEN. Senator, I endeavored to answer that by saying that we do not advocate that this same privilege be granted to shipper associations or shippers. Senator LAUSCHE. Well, would it be profitable to you in the short run as distinguished from the long run to have that privilege granted to you? Mr. ALLEN. I would think there could be some temporary economies for our shippers, but over a period of time I question whether they would be overall economies. Senator LAUSCHE. In what way would the impact be different upon your shippers than it is upon the shippers who use the freight forwarders? Mr. ALLEN. Because our shippers in our arrangements, our organization, pay the actual cost of transportation. |