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this particular piece of legislation was that to my knowledge and in many instances, the rail carriers have been concerned with the amount of our tonnage that is moving in private truck operations. Perhaps more so than the amount of our tonnage that is moving in commercial truck, or by barge. They have watched that movement. In 1957 the rail carriers proposed--and these are the rail carriers in all of the territories-proposed an established high minimum rate on our products, our paper products particularly, with the idea of capturing that tonnage from our trucks. They established 70,000 and even 80,000 pounds per car minimum rate on those products, to all of 28.300 territory, and they did capture some of them. I reduced my truck fleet from 1956 to today, to one-half of its size at that time. It isn't all because the rails reduced these rates, it is because the commercial trucks themselves vie for this traffic and found ways of going after some of it. But speaking for a moment about the high minimum rate of 70,000 pounds per car, it was determined that the railroads received more per-car revenue out of the 70,000 car, than they did the prior lower minimum higher rated rates. That was some 36,000 pounds at the higher rates.
Their revenue per car was higher for the same movements, to any and all points, within the 28.300 territory.
Now the 70,000-pound-per-car movement, it isn't advisable to put the 70,000 pounds in my truck, because it would take two trucks, at twice the cost, nor is it advisable for any other truckline to try to meet that type of traffic.
Now we speak of selective rate cutting here. Here is a case where the rail carriers found a way, with managerial discretion and with their inherent advantages in rail operations, to increase their revenue by reducing their rates. Now they were thinking about private trucking more than commercial trucking. I think it is important we think about that when we speak of the competitive trucks versus rail in these proceedings.
I wouldn't want to see anything done that would remove that opportunity to the rails and to me, I wouldn't want to see any type of legislation that would prevent that, or prohibit that.
Senator BARTLETT. Does that conclude your statement ?
Mr. GRINSTEIN. With respect to your private carriers, do you have a two-way haul ?
Mr. EASTERLING. We have considerable inbound movement of our own materials that we warehouse at strategic points where we have trucks calling every week, such as starch and many other ingredients that we use in the manufacture of our paper products.
Mr. GRINSTEIN. In other words, on your outgoing haul and your return haul you carry your own products only?
Mr. EASTERLING. It's a two-way haul; the same as a commercial truckline, in our operation. I would say very near one-half of our trucks bring back a return load of revenue freight.
Mr. GRINSTEIN. Have you run cost accounting of your private operation to find out exactly the costs?
Mr. EASTERLING. I have; but I am sorry, I don't have it with me. Mr. GRINSTEIN. I wondered if you had it.
Mr. EASTERLING. Yes, we keep a record of that. Mr. GRINSTEIN. You only use it in your private carrier operation, in those situations where you can effect a savings?
Mr. EASTERLING. That is true. It is our determination whether to use our trucks or another type of transportation.
Mr. GRINSTEIN. Do you like the method of private carriage ?
Mr. EASTERLING. No, we don't like to be in the transportation business. I say that at times when I am not in a hearing of this sort, but I say it again, we don't like to be in the transportation business. We are manufacturers, shippers, and sell our product; and it has always been with me that if in any manner we can improve the condition of our commercial carriers—they are the lifeblood of our Nation in peace as well as in war—it is our policy to promote that.
We don't believe in rate cutting. We believe in a fair rate, a fair return for any carrier. It isn't our policy to attempt to negotiate rates lower than they should be.
Mr. GRINSTEIN. I take it you got into the private carriage situation, because your competition is in it, in order to maintain your position.
Mr. EASTERLING. That is true.
Now of course our private carriage operation began back even during World War II to some extent, but principally the immediate postwar years, when we were faced with the round of ex parte general increases by the railroads. Our trucks were not adequate to take care of the overflow of the rail traffic; they didn't offer us anything better or as good as the rail did in rates. But we were forced into the private truck operation.
Mr. GRINSTEIN. You believe this situation is a growing trend to private carriage in order to meet the competition, and is probably one of the things that has caused a downtrend in railroads, the environment that calls for a proposal such as S. 1197?
Mr. EASTERLING. I think the rails should have begun their selection of treatment of rates to promote increased volume, larger volume to improve their revenue picture long before they did. I honestly do. I think they are late in this program. I think they should be encouraged, the commercial carriers themselves should be encouraged by legislation, rather than handicapped.
Mr. GRINSTEIN. You think S. 1197 would handicap the railroads, as well as trucks, in their competition with private carriers ?
Mr. EASTERLING. I definitely do. I started to add that; as well as trucks. I can't understand at all that the commercial trucks can feel that there is anything good in this for them other than the fact that it is further restrictions against the rail carriers.
It seems to me that they want to take the worst of the lot. I can't see anything good in this for the trucklines, either.
Mr. GRINSTEIN. That is all.
Mr. Clevenger, do you care to read the letter you have written to the chairman, or do you want to submit it for the record ?
STATEMENT OF M. A. CLEVENGER, EXECUTIVE VICE PRESIDENT,
CANNERS LEAGUE OF CALIFORNIA, SAN FRANCISCO, CALIF.
Mr. CLEVENGER. Since I presented to counsel this morning two copies of a letter in opposition to S. 1197, in order to save time I would just as soon make this time available to proceed with others.
Senator BARTLETT. Thank you. It will be placed in the record at this point.
(Full text of letter follows:)
DEAR SIR: I am appearing before your committee today on behalf of the Canners League of California and the Northwest Canners & Freezers Association. The Canners League of California's membership produce approximately 75 percent of the 140 million cases of canned foods packed annually in California while the Northwest Canners & Freezers Association represents members who pack approximately 93 percent of the fruits and vegetables produced annually in Oregon, Idaho, and Washington.
I feel sure that there is no one present here today who would be willing to refute the conclusion that the interests of shippers and reecivers of freight, as well as the economy of the Nation as a whole, demand that our country possess the most efficient transportation system possible. This goal was prominent in the thinking of congressional leaders when in 1958 they proposed and enacted revisions to section 15a (3) of the Interstate Commerce Act. The specific legislation was embodied in the Transportation Act of 1958. The general tenure of the change as far as section 15a was concerned was to give more freedom and responsibility to carrier management in competitive ratemaking.
The proponents of Senate bill 1197 seek to reverse this step forward, and instead shackle carrier management with new standards designed to restrict their ratemaking prerogatives under the guise of preventing destructive competition. In actuality, under present law, there are adequate provisions to protect all carriers from such destructive competition. This protection is very clearly embodied in the statement of national transportation policy which is the preamble to the Interstate Commerce Act itself.
Shippers of canned foods have had adequate opportunity to see the beneficial effects of the 1958 amendments to the act. There is little doubt in my mind that it has encouraged the freer flow of commerce within the States. Western canners have been able to take advantage of rates which permitted them to reach eastern markets with their products, and to make purchases from eastern sources for use in the West. To reverse this favorable situation would not only raise consumer prices throughout the United States but would be detrimental to the canning industry in the Western United States.
Shippers have clearly discerned a changed attitude on the part of carrier management. The latter have displayed new vigor in analyzing segments of their traffic to determine whether or not they can logically expect to participate in individual transportation movements. This rebirth of free enterprise thinking has affected all phases of transportation management. Alertness to provide new types of equipment, to offer improved service, and to analyze shippers' needs have been as apparent as more flexible ratemaking freedom. There is no doubt in my mind that the change in approach brought about by the amendment of section 15a (3) in 1958 created a new and vigorous attitude on the part of carrier management and I am not restricting this opinion to railroad management.
In the past 2 or 3 years, we have certainly moved in the direction of having each mode of transportation move more easily into areas of transport in which it enjoys inherent advantage? Proponets of Senate bill 1197 would reverse this progress and substitute guides to ratemaking which at best are vague and vulnerable to extended litigation and inflexibility. Costs of transportation to shippers, consignees, and consumers would inevitably rise beyond what would be economically justifiable.
For these reasons, the Canners League of California and the Northwest Canners & Freezers Association strongly oppose Senate bill 1197. We re spectfully request that your committee give consideration to our viewpoint Very truly yours,
CANNERS LEAGUE OF CALIFORNIA,
M. A. CLEVENGER, Executive Vice President. Senator BARTLETT. Mr. Haynes, do you have a statement. Mr. HAYNES. Yes, sir.
Senator BARTLETT. Mr. Haynes, do you want to present your statement orally, or would you present it for the record ?
STATEMENT OF JAMES P. HAYNES, MANAGER, TRANSPORTATION,
LOUISVILLE CHAMBER OF COMMERCE, LOUISVILLE, KY.
Mr. HAYNES. I would like to make a few remarks, Mr. Chairman, if I may.
Senator BARTLETT. Why don't we put the statement in the record, then, and you highlight it?
Is that your desire? Mr. HAYNES. Yes, sir.
(Full text of statement follows:) I am appearing in behalf of the Louisville Chamber of Commerce, 300 West Liberty Street, Louisville, Ky., in opposition to Senate bill, S. 1197.
By action of its board of directors at regular monthly meeting held June & 1961, I was authorized to appear before your committee and present formal objections to this bill.
The Louisville Chamber of Commerce's (with membership of 2,500 companies and individuals) objectives are to foster and promote the agricultural, commercial, industrial, and civil interest of the Louisville metropolitan area, embracing the corporate limits of Louisville, Clark, and Floyd Counties in Indiana, and embracing the corporate limits of New Albany and Jeffersonville, Ind.
The population of the metropolitan area is 725,139 embracing 942 manufacturing firms employing 91,244 employees.
In addition to manufacturers there are larger numbers of jobbers, distributors, warehousemen, processors, forwarders, and others commonly classified as receivers and shippers, in constant need of transportation facil.
As a trading center, Louisville ranks high on a regional and national level with
Eight trunkline railroads.
Numerous private and contract carriers by airways, highways, and waterways. Louisville is commonly known as a leading gateway to the Southeastern and Mississippi Valley States, including South Atlantic and Gulf of Mexico, as ports of entry on exports and imports.
There is no city larger or smaller with any greater interest in transportation and its cost to receivers and shippers than is Louisville.
Section 15a (3) of the Interstate Act, as amended by the Transportation Act of 1958, has been useful to the railroads in that they were able to provide the receivers and shippers with transportation service at the lowest cost consistent with the furnishing of such service.
An important provision of section 15a (3), as enacted in 1958 reads in part as follows:
"Rates of a carrier shall not be held up to a particular level to protect the traffic of any other mode of transportation, giving due consideration to the objectives of the national transportation policy declared in this Act."
It should not be overlooked that the positive directive page 2, lines 5 to 9 inclusive, of the bill reads:
“Rates of a carrier shall not be held up to a particular level solely to protect the traffic of any other mode of transportation, giving due consideration to all the objectives of the national transportation policy declared in this Act."
The positive directive"shall not,” has been enacted which prohibits rates being held up to a level in order to protect the movement of traffic by a carrier that cannot provide the lowest cost transportation.
Section 15a (3) of the Interstate Commerce Act is clear and is satisfactory in its application to conditions within its scope, and receivers and shippers approve it as presently enacted.
The greatest need of the day is less regulation and controls, the more we can reduce regulation, the better will be equality to compete among different modes of carriers and treat equally in regulation.
Previous witnesses have pointed out the percentage distribution of ton-miles of intercity freight traffic, public and private, by transport agencies within the past decade.
Rail revenue ton-miles decreased from 58.38 percent in 1949 to 44.97 percent in 1959.
With such decrease it was clear the Transportation Act of 1958 was inevitable. We can see no justification for its repeal or modification since its enactment.
Trucks and water carriers usually base their charges on railroad rates, and they generally object and protest as unfair or destructive any reduction in rail rates.
There is no justification for denying the railroads the right to make their rates on railroad economies. There is no stated differential basis to apply due to different units of carriage by different forms of transport.
The time has passed for using an umbrella for or against any form of shipping. We, therefore, believe the enactment of the Transportation Act of 1958 clearly puts each form of transportation on its own basis regardless of the early history of their start with motor regulation in 1935 and water regulation in 1940.
After all, transport is a service paid for by receivers, shippers, and the general public which is adequately protected by the present law.
It should be borne in mind that when the motor carriers were brought under regulation in 1935 that the only course they could take was to adopt the railroad rates and methods of publication.
They literally followed this method until 1958 notwithstanding the shippers constant urge that they set up their own rate structure on their own cost formula and not depend on the railroads to hold an umbrella over their rates
Concurrently, when the water carriers were put under regulation in 1940 the formula for inland water rates was 20 percent under the rail rates. This recognized differential was generally observed notwithstanding the unit of operation was generally minimum of 200 tons per barge, while the minimum of operation by rail varies from 30,000 pounds to 100,000 pounds dependent on commodity and equipment used.
The need for rate construction on cost by the different forms of transport was not observed until the Transportation Act of 1958 took effect, regardless to the differential such rates heretofore bore to different forms of movement.
The low-cost operator was not known until the effect of its rates was known to other modes of shipping.
The shipping public was denied the benefits of the low-cost operator account of the effect it would have on other forms of transport.
This paternalism was removed by the act of 1958 and gives more latitude to competitive forms of transportation with reduced cost to receivers, shippers, and the general public. We respectfully urge Senate bill No. 1197 be disapproved.
Mr. HAYNES. Mr. Chairman, in presenting the statement of the Louisville Chamber of Commerce in opposition to S. 1197, I would like to add that from a more or less personal point of view I have followed all of these transportation changes, having been engaged in transportation continuously since 1906, and in the last 20 years as representing the Louisville commercial and industrial interests; and from 1922 to 1942 I was traffic director of the Chicago Association of Commerce and represented the commercial interests of that city. I have had continuous experience in the evolution of these various changes.