We do not oppose any strict enforcement of the present law or any changes necessary to redefine a contract carrier so as to eliminate from this category any operations which are truly common carrier in nature. As to the rates charged by contract carriers, we believe they should not be automatically raised to those of common carriers, but, as in other parts of the act, should be just and reasonable for the services performed. Under our proposed amended rule of ratemaking, the American Retail Federation believes that the rates of contract carriers should be predicated on the service they perform, under the contract approved by the Interstate Commerce Commission. To consider the effect of such rates upon the rates of common carriers is in complete contradiction to the ratemaking rule and the entire basic concept of the Cabinet Committee report. VI. SHIPPERS ASSOCIATION The present Interstate Commerce Act in section 402 c under the subject of shippers association reads: The provision of this part does not apply (1) to the operation of a shipper, or a group or association of shippers, in consolidating or distributing freight for themselves or for the members thereof, on a nonprofit basis, for the purpose of securing the benefits of carload, truckload, or other volume rates. For the past few years, some agitation has been aroused in this country toward shippers associations, their right to operate and the possibility of section 402 c opening the way to nonregulate freight forwarder operations. The American Retail Federation maintains with all sincerity that American business has the right to ship its own merchandise as it so desires so long as it is a lawful enterprise and not a service to the public subject to regulation. While we are certain it is not the intent of this proposed legislation, the language can have but one effect and only one-the complete outlawing of all shippers associations. It is contrary to the entire concept of our American way of doing business. We are definitely opposed to this provision of H. R. 6141 and H. R. 6142 and will continue to oppose in the future any legislation that will curtail, by statute or by administrative action, the right of shippers, groups of shippers, or nonprofit cooperative organizations of shippers to consolidate for themselves or for their members quantities of freight for the purpose of securing the benefit of quantity rate and services. VII. SUSPENSION RATES, FARES, OR CHARGES The Cabinet Committee recommends and H. R. 6141 and H. R. 6142 provide, in keeping with its proposed revisions for a greater reliance on dynamic competition in ratemaking and a greater freedom in the exercise of managerial discretion, a more restrictive basis for the suspension of proposed rates. It recommends that the suspension period should be shortened from 7 months to 3 months; the burden of proof should be placed on the carrier proposing the rate change, except when another carrier files a protest, in which case the burden of proof will be on the protesting carrier; and— the power of suspension should be exercised only after the Interstate Commerce Commission determines on the basis of factual information supplied by the protestant or as a result of its own investigation that the proposed rates or related matters are probably unlawful, and that making the rate effective would result in injury to the complainant and that in the absence of suspension, the complainant would have no adequate remedy. The American Retail Federation is strongly opposed to the provision in the recommendations shortening the suspension period from the present 7 months to 3 months. The Commission has not in the past and undoubtedly will not in the future be able to thoroughly review and render a decision in most cases within the proposed 3 months limitation. As a result, the proposed rates will automatically go into effect and sometime later, perhaps many months, the Commission will render its decision. The shipping public is then left with the entire burden of securing refunds if the decision is in their favor. This is an undue and costly responsibility to place upon the shoulders of the members of the American Retail Federation. Most of its members are small merchants located in the smaller communities without the know-how, facilities, or personnel to process such traffic matters. There would be only one answer to such a procedure-refunds would never be requested or made by thousands of small shippers and receivers and the result would be a windfall to the carriers. The American Retail Federation sincerely feels that the best interests of its members, particularly the small ones, are being protected under the present regulation and that any drastic change as proposed would be injurious and costly. However, in the spirit of cooperation and deference to the underlying basic policies of this proposed legislation, it did approve a reduction in the suspension time from 7 months to 6 months, and also generally approved with little discussion the other recommended changes. VIII. LESS-THAN-CARLOAD SHIPMENTS The American Retail Federation, while subscribing to a limited degree to the theories and statements expressed in the report of the Presidential Advisory Committee on Transport Policy and Organization, with objectives such as permitting greater reliance on competitive forces in ratemaking and the necessity for maintaining a modern and financially strong common carrier transportation system, is very deeply concerned and indeed is very disappointed that this report and the legislation before your committee did not touch on or even consider the very important problem of transportation services available for small shipments such as are shipped daily to hundreds of thousands of retail merchants located in every hamlet, village, town, and city in this country. The small shipper and the small retail merchant make up the very backbone of our economy, yet the Presidential Advisory Committee completely ignored this important segment of our national economy. The American Retail Federation, as already stated, represents some 700,000 retailers and it naturally has been concerned with the obvious inadequacy of our common carrier transportation service on less-thancarload freight. Today the retailer is literally "hanging on the ropes" because of the tremendous and fantastic increase in transportation costs on small shipments since the termination of World War II, and what is infinitely more serious is the prospect of further increases. The railroads have virtually priced themselves out of the less-thancarload field of service through the imposition of the many horizontal increases in rates since June 1946, and through the cancellation of so-called less-than-carload exceptions ratings. Because of the terrific loss in less-than-carload tonnage, the railroads have curtailed service to such a marked degree that retailers cannot afford to use railroad facilities if they wish to get delivery of their merchandise in time for their requirements. While the several horizontal increases in less-than-carload rates on retail merchandise have been on the same percentage basis as carload traffic, yet the increase in dollars and cents on less-than-carload traffic has been much greater than on the carload traffic. This has increased the spread between the carload and the less-than-carload rates to such an extent that the small merchant who does not have sufficient capital and a large enough business to warrant purchasing in carload lots finds himself in the unenviable position of being unable to compete successfully with his larger competitors who can and do buy in carload lots. Merely as illustrative, I call attention to the spread between the less-than-carload and carload rates in effect in June 1946 on chairs, and the spread in effect today. In June 1946 the less-than-carload rates on chairs from Gardner, Mass., to Chicago was 51 cents per 100 pounds in favor of carload shipments. Today, however, the spread in favor of carloads is $5.47 per 100 pounds. This maladjustment between less-than-carload and carload rates was brought about by the cancellation of the exceptions ratings and the many horizontal increases in rates since June 1946. Obviously, small retailers, paying more than their share of the transportation burden, are crippled competitively. Small manufacturers find themselves in much the same position as the small retailers with the result industry is becoming more and more localized. Obviously, this is not in the best interest of the public. A real reworking of less-than-carload rates is clearly overdue, yet the Interstate Commerce Commission, the railroads, and the Presidential Advisory Committee on Transport Policy and Organization completely ignore this important problem. At this point, I should like to offer an exhibit (my exhibit No. 1) which should be enlightening. It will be observed that in 1946 the railroads handled 24.4 millions of tons of less-than-carload traffic, while in 1953 the railroads handled 8.3 millions of tons, and in 1954, 6.9 millions of tons. The decline, 1946 to 1953, a better business year than 1954, was over 66 percent. For this class of traffic, tons and revenue in the first 6 months of 1955 were 3.8 and 0.05 percent lower than in the same period in 1954. I now should like to offer my exhibit No. 2. This is a comparison of tons of less-than-carload revenue freight originated with gross freight revenue on less-than-carload traffic. It will be observed that the railroads' revenue per ton in 1954 reached an alltime high of $39.27, while in 1946 the freight revenue per ton was $19.67. In 1948 the railroads gross less-than-carload revenue reached an alltime high of $523,677,000 while in 1954 it had dropped to $273,541,000, a shrinkage of $250,136,000. Obviously the railroads gained nothing by increasing less-thancarload rates to such fantastic proportions as they have done with the sanction of the Interstate Commerce Commission since June 1946. The less-than-carload problem is a great and important one and should be solved promptly if we are to maintain an adequate transportation system. It is not an insurmountable probelm; and in the public interest and in the interest of the railroads, action should be taken without further delay. (The exhibits referred to are as follows:) EXHIBIT No. 1 Comparison of cars of merchandise less-than-carload lot loaded with number of tons of less-than-carload lot revenue freight originated, showing tons per car [Base figures authority, Railroad Transportation, a Statistical Record, 1911-51, by AAR Bureau of Railway Economics, except that 1952 and 1953 figures are taken from ICC freight commodity statistics statement Q-500 for the years 1952, 1953, and 1954] EXHIBIT No. 2 Comparison of tons of less-than-carload lot revenue freight originated with gross freight revenue on less-than-carload lot traffic, showing revenue per ton on less-than-carload lot freight originated NOTE. The increase in revenue per ton, 1953 over 1945 is 111 percent. That is, the 1953 figure is 211 percent of the 1945 figure. Over 1946, 1947, and 1950, the increases are 99, 69, and 20 percent respectively. Base figures authority, Railroad Transportation, a Statistical Record, 1911-51, by AAR Bureau of Railway Economics, except that 1952 and 1953 figures are from ICC freight commodity statistics statement Q-500 series. Comment This exhibit shows that despite the increases in rates since 1946, the total revenue on less-thancarload lot freight dropped substantially. Revenue per ton in 1954 reached an alltime high of $39.27. APPENDIX NATIONAL ASSOCIATIONS American National Retail Jewelers Association Associated Retail Bakers of America Association of Family Apparel Stores, Inc. Institute of Distribution, Inc. Limited Price Variety Stores Association, Inc. Mail Order Association of America National Appliance & Radio-TV Dealers Association National Association of Chain Drug Stores National Association of Music Merchants, Inc. National Association of Retail Clothiers & Furnishers National Association of Shoe Chain Stores National Foundation for Consumer Credit, Inc. National Industrial Stores National Luggage Dealers Association National Retail Farm Equipment Association National Retail Furniture Association National Retail Hardware Association National Retail Tea & Coffee Merchants Association National Shoe Retailers Association National Sporting Goods Association National Stationery & Office Equipment Association Women's Apparel Chains Association, Inc. |