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It is also a matter of deep concern to us that the Interstate Commerce Commission, with over a half century of experience in ratemaking, and which has earned the respect of shippers for fair and impartial action, should now be subjected to intemperate treatment by those segments of the transportation industry which are actively supporting the legislation proposed by Senators Bartlett and Yarborough. The Commission has consistently established itself in the public mind as a fair and nondiscriminatory body and has invariably shown that it can evaluate the economic consequences of tariff rates regardless of the industry involved.
We strongly urge that your committee disapprove S. 1197 and related bills.
Ever since 1958, when Congress added section 15a (3) to the Interstate Competitive, aggravate further the serious, depressed economic conditions of the railroads, as well as many shippers, and with resultant discriminatory benefits to ther modes of transportation. The approach suggested in such legislation would in truth expand transport favoritism rather than restrain it.
A copy of this letter is being sent to the members of your committee for their information. We also request that it be made a part of the official record of the committee's hearings on this subject which are currently underway. Respectfully,
Lamar, Colo., April 26, 1961. Re Senate bill 1197. Hon John A. CARROLL, Senate Office Building, Washington, D.C.
Dear SENATOR CARROLL: We sincerely hope that you can see the need to do all within your ability to assist the passage of the above captioned bill which will amend section 15a (3)—to the ratemaking rule of the Interstate Commerce Act. Senator Bartlett, one of its sponsors, did a very able job summarizing the need and importance of this bill. His presentation appears in volume 107, No. 38, of the Congressional Record, dated March 3, 1961.
Ever since 1958, when Congress added section 15a (3) to the Interstate Commerce Act, the railroads have been conducting a systematic and selective ratecutting program comparable to their practices during the 1920's. At that time they were cutting their rates where they competed with barge traffic and were sup plementing their loss by higher rates on inland traffic. Their efforts were very successful during the 1920's, until Congress took action to put controls on rate making.
Today, they are successfully "picking off" their competitors with the same method. Specialized carriers, such as ourselves, are especially vulnerable to their selective rate-cutting methods because of our dependence upon such a limited class of traffic. One only has to look at what they have done to the automobile transporters to appreciate the effectiveness of their campaign. The automobile transporters were the first targets of this destructive rate-cutting binge, but the attack is spreading rapidly to other types of freight, and especially other specialized carriers.
We are affected by a reduction in rail rates on liquefied petroleum gas which became effective on April 20, 1961. The reduction was protested by carriers and a number of shippers, but the ICC allowed the reduction to become effective without delay. The ICC indicates they will investigate this reduction, but it will mean the loss of traffic while such an investigation is being conducted, and, judging from past experience, it is questionable whether any results will come from the investigation. The reduction they have taken is drastic. Below is a spot comparison of the rates as they stand since the rail reduction :
(Cents per hundredweight)
200.. 250. 300..
The above rail reduction is based upon 30,000-gallon shipments, and they contend that its purpose is to compete with pipelines. It is our position that any carrier must file rates that will be compensatory to the carrier.
We feel that it is urgent for Senate bill 1197 to be favorably passed. If section 15a (3)—to the ratemaking rule of the Interstate Commerce Act—is allowed to be interpreted by the railroads and the ICC as at present, this destructive trend in competitive ratemaking will engulf and cripple the entire trucking industry.
Aside from our personal interest to continue making a living for ourselves and the people employed by us, we are concerned about the impact a crippled motor carrier industry will have upon the Nation. The importance of a healthy national transportation policy is self-evident and I need not use this space for its defense, but I do wish to emphasize the importance of the motor carrier industry to employment. The Nation's railroads would absorb most all of the present motor carrier traffic, if such a thing were allowed, and still not furnish any noticeable employment beyond their present labor market. A train can pull 100 cars without needing any more help than they use for 50 cars, while it would take 100 truckdrivers to haul the same freight pulled in 50 rail cars. On longer distance hauls, is would furnish jobs for more than the 100 because of the need to relay the trucks. My point is that the railroad's present selective ratecutting program is threatening the very life of an industry second only to agriculture in employment.
Once carriers like ourselves are put out of business, we would never be able to recover, even after the rail rates were raised back to a normal level. If we had the financial ability, we couldn't bounce back until and unless we had protection such as will be provided by Senate bill 1197. Without such protection, we would not have the courage because we would expect them to turn around, cut rates, and run over us again.
We have already felt the results of recent rail rate slashes to the extent that we are being used by some shippers for "standby" service. The shortage of rail tank cars, and the slowness of their service, causes a need to fall back on us when prompt delivery becomes more desirable than the savings by lower rail rates. We have always had this problem with “private carriers" during peak seasons, and can absorb a certain amount of "standby' service. An increase of this shipper requirement naturally throws our efficiency and utility of equipment out of balance in direct relationship with the requirement. How can we afford to keep 20 propane trucks parked on our lot 9 months of the year to help the railroads with the peak requirement during December, January, and February?
We recognize the need for healthy railroad systems, but we sincerely believe that the railroad promoters are deliberately attempting to mislead lawmakers and the general public in their cry for help. Especially in their efforts to rid themselves from rate control.
We in the trucking business, the general public, and-in my opinion—the railroads themselves, will have reason to be forever grateful for your earnest efforts to pass Senate bill 1197. Very truly yours,
T. C. BRIDGE, Partner.
COMMONWEALTH OF VIRGINIA,
Richmond, July 20, 1961.
DEAR SENATOR MAGNUSON: I respectfully refer you to Senate bill 1197 which is now pending in the U.S. Congress.
We vigorously oppose this legislation because we believe it is not in the best interests of farmers. The progressively narrowing margin between prices received for farm products and those paid by farmers is one of the outstanding reasons for the present farm problem. Higher frieght rates which will result, if this bill is enacted, will definitely add to the farmer's burden.
In our opinion, the ratemaking provisions contained in the Transportation Act of 1958 have worked well for the public, including agriculture, and have afforded to the railroads no more than a reasonable opportunity to compete for traffic. This they urgently need in order to maintain their facilities, preserve their ability to provide good common carrier service, and strengthen their financial status.
We endorse and approve the present rule of ratemaking which includes "rates of one mode of transportation, giving due consideration to the objectives of the national transportation policy declared in the act."
Farmers and other shippers of the country should not be called upon to subsidize any transportation group since all of these organizations were established for profitmaking purposes. The best mode determined by charges and services prevails, and the best must prevail if our economy is to be improved. As you are no doubt aware, freight rates which are too high have never helped the economy of this country.
It is our understanding that many conflicting and confusing claims have been made that the Transportation Act of 1958, while agreeable to the various modes of transportation at the time of enactment, does not now satisfy some of the transportation interests. It is further claimed that the intent of the 1958 legislation has been misinterpreted, and aggressive efforts are not being made to amend the Interstate Commerce Act by changing the so-called rule of ratemaking.
We understand that technological developments, subsequent to the passage of the 1958 act, have provided progressive and constructive operating improvements permitting rail carriers to profitably recapture some lost tonnage from other modes of transportation. These occurrences evidently have stimulated the desire for competing modes to support changes in the statute.
In addition to our reluctance to see any change made in the 1958 act, as proposed in S. 1197, we are convinced that if the Interstate Commerce Commission were obligated to consider all the new factors under the provisions of this bill, it would be obligated to consider controversies involving rate deductions growing out of intensely competitive circumstances, which would make the Commission's regulatory functions very difficult and time consuming.
It appears that S. 1197 would require the Commission to consider and forecast in advance whether a rate would be lower than a reasonable minimum rate, to determine the effect upon the earnings of the carriers to which the proposed rate would be applicable as well as such other factors as the competitive necessity for the proposed rate, the future effect of it upon a lawful rate structure or ad. justment, and the tendency of such rate to place an unjust burden upon other traffic. It is believed that it would be virtually impossible for the Commission to forecast the impact of the inauguration of lower competitive rates and to measure these factors.
Should the Commission investigate each proposed competitive rate and attempt to measure the impact of these factors, those opposing the adoption of the newer rates could engage in delaying tactics either through appeals to the Commission itself or before the courts. Such delaying actions would virtually withdraw from every carrier, rail, truck, and water, the opportunity to initiate rates re flecting its inherent advantage, and would, in fact, deny the public, including agriculture, the benefits of lower transportation rates that would reflect the effect of keen competition among the carriers.
We are fully aware, of course, that unrestrained rate cutting might lead to the destruction of the weaker carriers and create a monopolistic situation for the survivor. We firmly believe the Interstate Commerce Act, as it now stands, gives the Commission adequate power to prevent this situation and to protect the shipping public, as well as prohibit undue loss of transportation capacity through destructive competition.
We would like to emphasize that the Virginia Department of Agriculture favors no particular transportation agency. Our support will be given to those that maintain their services upon a competitive and equitable basis. We are, however, unalterably opposed to the enactment of legislation that will ultimately lead to higher transportation costs by all forms of transportation. This would be the farmers' lot if S. 1197, now pending, is allowed to be enacted into law.
On behalf of the farmers of the Commonwealth of Virginia, it is respectfully urged that favorable action on this proposed legislation not be taken.
In order that the various members of your committee may be fully cognizant of our views on this pending legislation, we are taking the liberty of sending each of them a copy of this communication. Respectfully yours,
PARKE C. BRINKLEY, Commissioner,
TRAFFIC BUREAU OF SIOUX FALLS,
Sioux Falls, S. Dak., June 23, 1961. Hon. WARREN G. MAGNUSON, U.S. Senate, Washington, D.C.
DEAR SENATOR: We had hoped that I would be permitted to appear before your Senate Commerce Committe and speak for the majority, the public. So far it seems the testimony has all been very biased, either motor carrier, water carrier, rail carrier, and their employees. Press reports indicate the hearings are over, so will you take a few minutes to learn what some of the Midwest public thinks.
The Traffic Bureau of Sioux Falls is strictly a shippers association and we have no railroad, motor carrier, or any other kind of transportation company members. We are not railroad minded or truck minded. Our purpose is to maintain reasonable transportation rates and adequate transportation services, each compatible with the other, by all forms of transportation, particularly railway, highway, and airway. We are landlocked and have no waterway services.
South Dakota is midway between the Atlantic and Pacific Oceans. We are an agrarian State producing a large surplus of grain, livestock, and potatoes, an an almost complete shortage of fresh fruits, fresh vegetables, and manufactured articles, all of which must be shipped long distances, probably averaging 600 or 700 miles. Therefore, our transportation agencies are of major importance to us and we need and must keep all of them,
Our interstate trucking began in earnest in about 1929 some 30 years ago. In the past 30 years our loaded rail-car miles are reported by the rails to our South Dakota Public Utilities Commission, has dropped 32 percent and the total cars, loaded and unloaded in South Dakota has dropped 83,859 cars per year, not including the increment in business which I believe will make the total loss 100,000 cars each year that the railroads are not hauling.
The truck registration in South Dakota in the last 30 years has risen from 25,000 to almost 93,000 an increase of 270 percent. I will agree that most of these trucks are private trucks such as farm trucks, merchants delivery trucks, etc., but the relationship is clear and common carrier trucks have increased at least 270 percent. The Automobile Manufacturers Association estimated for the Interstate Commerce Commission that the ton-miles of intercity for-hire carriers in the United States increased 375 percent in the 20 years 1939 to 1959. My estimate of 270 percent appears very conservative.
Generally speaking the motor carrier rates in the Midwest were made in direct relationship to the rail rates, frequently just enough under the rail rates so as to get the business. The truck service is usually faster than rail. The truckload minimum weights are usually lower than the rail carload weights. The truckers usually furnish labor to load and unload the trucks which the rails don't do. The trucks give door-to-door movement whereas the rails, prior to piggyback, could only do that to or from industries located on rail trackage. Because of these and numerous other lesser reasons many of our shippers found it very expedient to move their freight by trucks.
The rails, I think, because of legal redtape and much of their own cumbersome procedure, were a little slow to react to the situation. Most of our highways were unpaved. Many trucks were undependable. Many truckers were unreliable and financially irresponsible all of which may have helped lull the rails into a sort of complacency. However, by the time that the rail situation became critically dangerous, all of these conditions had materially improved, the motor carrier industry had become firmly established and thoroughly organized, consequently when the rails tried to regain their lost traffic by rate adjustments they ran into the strong opposition of organized motor carriers and strict application of section 15-A of the Interstate Commerce Act. Since the Transportation Act of 1958 the situation has been much improved, and it is this change in the act of 1958 that these current Senate bills are intended to nullify. May I point out that there still are numerous legal controls to safeguard and protect the interest of the public and to prevent either mode of transportation from going too wild.
Our members believe we need all modes of transportation, we believe we should be free, whatever be our reason to select that mode which best meets our needs. requirements, or desires. We believe each mode should be free to solicit our business and to furnish us efficient and economical service. We don't expect any transportation company to transport our commodities at a loss neither do we want them to make an excessive profit off of us. We want them to be free to make any operating economies possible and to be able to pass some of the results of those economies on to us. If either mode can transport a commodity at a lower cost and at a profit, then we want either or both of them to be able to pass those lower costs by means of rate adjustments on to us and not be required to hold up their rates and lose the business or be unable to regain the business merely because the other mode can't or won't make similar economies and rate adjustments.
There are two things that we would like to ask of both the railways and the motor carriers. Instead of constantly carping and sniping at each other they should give some thought to their customers and should clean their own doorsteps. First, they should improve their services, and second, they should adjust their rates to the lowest possible level compatible with their own costs and not their competitors costs.
We want to be able to have both modes available and we want to be able to exercise our freedom of managerial discretion to choose between them. We are opposed to passage of S. 1089 and S. 1197. Yours truly,
S. W. W. CARR
FREIGHT FORWARDERS INSTITUTE,
Washington, D.C., June 22, 1961. Senator WARREN G. MAGNUSON, Senate Office Building, Washington, D.C.
DEAR SENATOR MAGNUSON : In connection with the hearings that are being conducted with regard to bill S. 1197, I have developed certain information which I think will be of invaluable assistance to the committee in its consideration of this entire subject. It is my purpose to prepare a somewhat comprehensive statement explaining the data I have collected and its significance to the questions being considered, and to submit such statement, together with a copy of the study I have had made, for inclusion in the record of the hearings.
However, it occurs to me that the committee should have the benefit of the inormation contained in the study while the hearings are still in progress. Accordingly, I attach hereto copy of a pamphlet entitled "Average Haul Per Car rier, Class I and II Motor Carriers of Property, Reporting to the Interstate Commerce Commission, Years 1959 and 1946." A copy is being sent to each member of the committee.
All of the attached data were taken from the reports of class I and II motor carriers filed with the Interstate Commerce Commission for the years 1959 and 1946, as reported in Trinc's "Blue Book of the Trucking Industry." It includes all reports of such carriers which contained usable data.
The significance of this study is that it shows, if used in conjunction with certain rail figures that I have but which are not included in the pamphlet, that rail piggybacking does not affect a substantial segment of the motor carrier industry.
I have rail figures, which I will submit in more comprehensive form at a later date, to show that the railroad industry has not been publishing piggyback rates for distances less than 300 miles. An actual study made by one large eastern railroad, the New York Central, shows that 90 percent of the piggyback traffic of that road moves for distances over 500 miles. There are other figures which I will not mention for purposes of this letter.
Now, looking at table I-A of the attached, it will be observed that more than 75 percent of the tonnage of motor carriers in the year 1959 had an average haul of less than 300 miles. Bear in mind that the railroads publish practically no piggyback rates for distances less than 300 miles.
It will further be observed, from the same table, that approximately 89 percent of motor carrier tonnage had an average haul, in 1960, of less than 500 miles. As I have said, 90 percent of the piggyback traffic of one railroad has an average haul in excess of 500 miles. Since the railroad is in the East, I would judge that the average piggyback rail haul for the Nation would be even longer.
I realize that the attached figures are subject to the criticism that they are based on averages, rather than absolute or mixmum and minimum lengths of haul, but even allowing a reasonable margin for error they still would prove that the area of competition between motor carriers in general and rail piggyback rates is limited to the longer haul.