The agreements between REA and several airlines now pending before the CAB, which the Board has tentatively concluded are not authorized, are perfect examples of why REA entry into the airfreight field is contrary to the public interest. In those agreements REA has used its vast economic power to obtain for itself rates for air carriage that are unavailable to any other shipper or surface carrier. With this exclusive rate advantage, which amounts to a rebate, REA would be able to undercut the rates of the airfreight forwarders, the local cartage agents, the long-haul truckers with whom some airlines now have joint rates, and the airlines themselves. This rate cutting could be accomplished by REA without any loss of profits to it; its profits would be assured by the rebates from the airlines. The result soon would be REA control of virtually all freight moving by air-the very undersirable result that the CAB sought to avoid when it broke the REA monopoly on airfreight over 20 years ago. Ever since the enactment of the Panama Canal Act in 1912 it has been a fundamental principle of our transportation laws that the various sectors of the Nation's transportation system are to be independent; no one sector is to be controlled by the interests of another sector. That principle is reflected in the Federal Aviation Act, and the Civil Aeronautics Board has been faithful to the will of Congress in its repeated refusals to let the railroad-owned REA into the airfreight business. Rejection of the REA-proposed amendment to section 4(b) of S. 1062 would be a reaffirmation of the salutary congressional policy that the air transportation system should develop independent of control by surface transportation interests. AMERICAN AIRLINES, INC. STATEMENT OF WILLIAM E. PATTERSON, MANAGER OF LOCAL & SHORT HAUL CARRIERS NATIONAL CONFERENCE ON S. 1061 AND S. 1062 Mr. Chairman and members of the committee, my name is William E. Patterson. I am manager of the Local & Short Haul Carriers National Conference located at 1616 P Street NW., Washington, D.C. It is 1 of 12 such conferences affiliated with the American Trucking Associations, Inc. representing natural segments of the industry. My appearance here today is on behalf of the conference and does not represent the official position of the American Trucking Association. The conference which I represent is composed of truck operators who primarily serve the metropolitan commercial zones and terminal areas of the United States. These carriers operate in all cities, towns of the United States and their suburban areas. In addition, many of our members operate in interstate commerce solely within a single State or over relatively short distances between States. These carriers are the truly small, independent businessmen in transportation. While there is no exact figure as to the total number of such carriers, it has been estimated that there are over 70,000 trucking companies in this segment of the trucking industry. We strongly believe S. 1061 in its present form is a step in the wrong direction. My carriers have directed me to urge that the current full force of regulation by the Interstate Commerce Commission should be extended to those areas of transportation which are not now regulated. We testify from the knowledge that in the years since regulation, the regulated carriers (highway, rail, and water) have enjoyed a far greater degree of stability and prosperity than before regulation. We have, however, in recent years seen our business go downward due solely to the chaos created by the lack of regulation. Our carriers in the commercial zones and terminal areas are operating in competition with each other subject to the various exemptions of the Interstate Commerce Act which are attached as an appendix to this statement. These operations are becoming so chaotic and so highly unstable as to make it almost impossible to achieve the kind of service to which the public is entitled. We are aware that there will always be opposition to any position calling for a repeal of special privileges no matter how outmoded those privileges may be. The situation in these areas is one of terribly depressed rates and difficult business operations. The mortality rate among our carriers is outrageous. It is unfair to burden these people by failure to adequately supervise the competitive situation in which they operate. In addition to the experience of the regulated carriers as an indication of what regulation means, we have our own limited experience to fall back on, too. Our carriers know from their own experience that in those States which have undertaken to regulate their operations (as for example: the States of Massachusetts, Pennsylvania, and Washington) that they have achieved a higher degree of stability. This has not priced their service out of the reach of their customers. As a matter of fact, it has enabled them to operate with a greater degree of economic certainty to the gain of the public. We are absolutely opposed to S. 1061 in its present form. We strongly urge that if the committee takes any action in connection with the President's recommendation for improving the situation of the for-hire carrier, that it be the President's alternative suggestion of full regulation for all. We want those areas of common carriage, not regulated at this time, made subject to regulation. This conference is unalterably opposed to the REA Express Co.'s request for an exemption to section 203(b) (7) (a) of the Interstate Commerce Act which would permit them to make exclusive joint rates with the airlines in certain areas. I thank you for allowing me to appear before you to present the views of this segment of the motor carrier industry. If there are any questions, I will be glad to answer them for you. APPENDIX A list of exemptions and special privileges presently permitted by the Interstate Commerce Act, the repeal or sharp curtailment of which is advocated by the Local & Short Haul Carriers National Conference as a solution to the problems confronting the for-hire transportation system of the country. 1. Section 202(c)1 and 202 (c) 2. (These are the two exemptions giving railroads, water carriers, freight forwarders, motor carriers, and express companies terminal areas in which they can operate without motor carrier authority or regulation of rates.) 2. Section 203 (a) 14. (This is another exemption granted to express companies from motor carrier regulation.) 3. Section 203(b)8. (Commercial zone exemption.) 4. Section 217(b). 5. Section 203(b)5. 9. Section 203(b)9. 10. Section 204 (a)4a. (This makes sec. 22 rates applicable to motor carriers.) (Transportation incidental to transportation by air (Casual or occasional exemption.) (Single State transportation not of such a nature, character, or quantity as to impair uniform regulation.) 11. Section 204 (f). (Trip-lease exemption.) 12. Section 408. (Permits motor carriers to publish special distribution rates for freight forwarders.) 13. Section 409. (Allows motor common carriers to make special contract rates with freight forwarders for moving traffic up to 450 miles distance.) (Letters and resolutions submitted for the record :) ACF INDUSTRIES, INC., Hon. WARREN G. MAGNUSON, DEAR SENATOR MAGNUSON: I understand that hearings are now being held on S. 1061, and its House equivalent H.R. 4700, proposing to eliminate minimum rate regulation on transportation by railroad of bulk commodities and agricultural and fishery products. The effect of the proposed statute, if adopted, would be to extend in part to the railroads certain exemptions from regulation already enjoyed by water and motor carriers. Speaking as a citizen and as president of one of the largest manufacturers of railroad freight cars, I wish to record my belief that the proposed legislation is sound and should be enacted. In view of your well-known and long-continuing interest in transportation problems, I know that you are familiar with the desperate plight of the railroads. It can, also, I think, be assumed that you know that suppliers to the railroads, particularly manufacturers of freight and passenger cars, have also suffered greatly. I am not familiar enough with the history of rate regulation to discuss the history of the present system, and I do not even pretend to be familiar with all present problems in that field. It does seem clear, however, that the rules intended to be abolished by S. 1061 serve only to put an umbrella over the less efficient carriers. The net result is that the shipping public is subsidizing the inefficient carriers while severely penalizing the railroads and their suppliers. I cannot believe that such a result is consistent with sound public policy. It is certainly inconsistent with the economic principles of free competition that have contributed so much to the growth of this country. I would appreciate it if this letter could be made a part of the official record of the hearings on the bills. Very truly yours, R. C. TAYLOR. ALABAMA CATTLEMEN'S ASSOCIATION, Hon. WARREN MAGNUSON, Chairman, Senate Committee on Commerce, Washington, D.C. DEAR SENATOR: The Alabama Cattlemen's Association, the largest State cattlemen's association in the Nation, representing some 7,000 cattlemen, would like to go on record as favoring S. 1061, now pending before your committee. Not only will cattlemen and farmers benefit from lower freight rates on agricultural products but the lowering of freight rates on materials which they must purchase would decrease the delivered cost of these materials. Also, as a matter of principle, we feel there should be no restrictions on the lowering of rates of any kind, on common carriers or otherwise. How else can the benefits of lower operating costs be passed on to the consumer? The Alabama Cattlemen's Association urges that your committee give favorable report to the above bill and we respectfully request that this letter be made part of the record of the hearings on this bill. Very truly yours, RICHARD H. ARRINGTON, Immediate Past President, ACA, CHAMBER OF COMMERCE, Hon. Senator WARREN G. MAGNUSON, DEAR SENATOR MAGNUSON: The following is a resolution adopted by the Albertville Chamber of Commerce, Albertville, Ala., supporting President Kennedy's recommendations to legislature regarding more equal regulation of railroads and improving the national transportation system. It is respectfully requested that this resolution be included in the hearings on Senate bills 1061 and 1062. RESOLUTION Whereas this organization is interested in a strong and efficient transportation system in the United States; Whereas certain recommendations submitted to Congress, by the President, in the form of Senate bill 1061, which proposes to remove minimum rate regula tion for transportation of passengers and bulk commodities, agricultural, and fishing products, and Senate bill 1062, to strengthen and improve the national transportation system; Whereas the aforementioned proposed legislation will provide a basis for a competitive and efficient transportation system beneficial to agriculture, commerce, industry, and the consuming public: Now, therefore, be it Resolved, That the Albertville Chamber of Commerce goes on record urging full support of this proposed legislation included in Senate bills 1061 and 1062, and requests favorable action at this session of Congress. THE ALBERTVILLE CHAMBER OF COMMERCE. ALLEGHENY REGIONAL ADVISORY BOARD, The Allegheny Regional Advisory Board is a voluntary association of 1,450 shippers who are interested in the maintenance of an adequate and efficient common carrier transportation industry under private ownership and management. We are deeply disturbed that a large segment of the common carrier transportation industry, so necessary to the national economy and vital to national defense, is at this time in such serious financial difficulty that it is possible that essential services may be lost. We feel that the financial health of the Nation's railroad industry can be improved by legislation which will permit carriers to operate at maximum efficiency with a minimum of regulation consistent with the public interest. President Kennedy has resubmitted to Congress recommended legislation which would implement his transportation program. The Presidential call for action states "if action is not taken to establish a transportation policy consistent with the new demands upon the economy, we face serious problems of dislocation and deterioration in both the transportation industry and the economic life of the Nation which it affects." To implement the President's request there have been introduced S. 1062 and H.R. 4701, the so-called Transportation Act of 1963, and S. 1061 and H.R. 4700, to remove the ICC's minimum rate regulation in the transportation of bulk commodities, certain agricultural and fishery products. Members of this board strongly urge that section 5A protection or the conference method of ratemaking be retained in the above legislation. While they also may have differing views on certain aspects of the above bills, they are in accord with the basic philosophy of more liberal ratemaking latitude and possible increases in efficiency, which can be achieved through more effective exercise of managerial discretion under decreased Federal regulation. Sincerely yours, JACK E. HENDERSON, General Chairman (elect), Allegheny Regional Advisory Board. AMERICAN ASSOCIATION OF NURSERY MEN, INC., Hon. STROM THURMOND, U.S. Senate, DEAR SENATOR THURMOND: The purpose of this letter is to place the American Association of Nurseymen on record in favor of extending the agricultural exemption contained in the Interstate Commerce Act to this Nation's railroads. Members of the nursery segment of agriculture sincerely believe that railroads should have the same privilege for making rate reductions in order to meet lower freight rates on agricultural commodities offered by other carriers. At this time, Mr. Chairman, we would also like to record the members of this association as unalterably opposed to any diminution of the economic exemption provided for in section 203(b)(6) of the Interstate Commerce Act. This exemption provides for a flexibility and economy in the marketing of agricultural and horticultural products which cannot be provided by any other means of distribution. Nursery stock is an extremely perishable commodity. It often requires special handling, such as plants with balls of earth attached to the roots. Loading at the nursery farm with direct and rapid delivery to retail outlets avoids delays which are bound to be occasioned by freight or express transportation and even by a certified motor carrier. Delays occasioned at transfer points by regulated motor carriers and the breakage of the balls of earth oc casioned by repeated handling by inexperienced personnel are detrimental to the survival of our industry's plants after they reach the consumer. The nursery industry, Mr. Chairman, which does not have and which does not seek any Government subsidy is very strongly in favor of economic deregulation of this Nation's transportation media when it is engaged in hauling agricultural commodities. Indeed, Mr. Chairman, it is our contention that extension of economic regulation into the field of agricultural commodity transportation would necessitate serious modifications in our marketing procedures and would in all probability cause the failure of some nursery firms and certainly a raise in prices which would have an undesirable effect on every facet of the nursery industry. We strongly urge the exemption of railroads from minimum rate regulation and oppose any diminution of the agricultural exemption contained in the Interstate Commerce Act. We request that this letter be made a part of the printed hearings now being held before your committee. Sincerely yours, CHARLES H. BALDWIN, Chairman, Transportation Committee. Executive Associate. Hon. WARREN G. MAGNUSON, AMERICAN NATIONAL CATTLEMEN'S ASSOCIATION, Chairman, Senate Committee on Interstate and Foreign Commerce, Senate Office Building, Washington, D.C. DEAR SENATOR MAGNUSON: The American National Cattlemen's Association representing 37 State cattlemen's and cattle feeder's associations and thousands of individual members and local and regional associations passed the following resolution at our annual convention in January in Las Vegas, Nev., of this year. Resolved, That we support Federal legislation which would free railroads to make competitive rate reductions on bulk and agricultural commodities in a manner which can better serve the cattle and agricultural industry. This legislation must preserve prohibition against unjust discrimination, undue prejudice, preference, and monopoly. The legislation should also contain provision for a proper relationship between live animal rates and dressed meats rates. Since your bill, S. 1061, is in line with this resolution, we respectfully ask that this correspondence be made a part of the record when hearings are held on your proposed bill. We would hope that your committee would establish the outlined safeguards embodied in our resolution. Cordially, C. W. MCMILLAN. AMERICAN STEAMSHIP Co., BOLAND & CORNELIUS, Buffalo, N.Y., May 27, 1963. Hon. WARREN G. MAGNUSON, Chairman, Senate Committee on Commerce, Senate Office Building, Washington, D.C. DEAR MR. CHAIRMAN: We are writing you at this time to express our apprehension concerning bills S. 1961 and H.R. 4700 now under consideration by the Senate Committee on Commerce and House Interstate and Foreign Commerce Committee. |