(The information requested follows:) Monthly summary, CCC grain releases Mr. PERLMAN. I think it would be very helpful, Mr. Chairman, because every fall during the grain and harvest season when they clean out their elevators, that is when they put the peakload on the transportation system. And if that can be leveled out it would be very helpful. It would be one of the greatest reliefs to the grain car shortage in the country, actually. This new application of a systems approach to grain transportation made it possible for us to justify the investment of $7.5 million in 100ton covered hopper cars. In steady, year-round service each one of these cars is equivalent to at least four 40-foot boxcars employed under the old system of peak harvest movement to storage elevators. Our experience to date indicates that when the application of similar rates becomes widespread, thus encouraging the movement of grain more evenly throughout the year and permitting the replacement of boxcars with high-capacity covered hopper cars, the "chronic” grain car shortage will disappear. Southern Railway has made great strides in this work with their Big John car. We believe that the eastern and southern railroads have made far greater progress in this direction than the western railroads, whose grain transportation system is still geared primarily to the peak harrest movement of grain from country areas to terminal storage elevators, a concept which stems from the horse and buggy days of more than 60 years ago. On the subject of grain car supply, the committee will be interested in the results of a study made of the interchange of cars between the New York Central and its western connections, who incidentally, are the proponents of H.R. 7165. The study covered the period from October 1, 1964, through February 28, 1965. During those 5 months, the New York Central received from the Santa Fe, C.B. & O., Milwaukee Road, Chicago & North Western, Illinois Central, Rock Island & Soo, 35,928 loaded boxcars, 9,102 empty boxcars, or a total of 45,030 boxcars. In the same period the New York Central delivered to these lines 41,061 loaded boxcars; 21,254 empty boxcars, or a total of 62,315 boxcars. Thus, we delivered to these western lines 38 percent more boxcars than we received from them. In the same period, from these same lines, we received 6,370 New York Central System, loaded and empty boxcars, but we delivered to these same lines in this same period 8,554 New York Central System boxcars. In the same period from these same lines we received 25,064 loaded and empty foreign boxcars, but we delivered in the same period to these same lines 36,625 loaded and empty foreign boxcars. Thus, in this period of alleged boxcar shortage, the New York Central delivered to its western connections substantially more loaded and empty boxcars, both system and foreign boxcars, than it received from these same western connections. Now, it is rather interesting-you talk about the order that was received just the other day. This order requires us to deliver 350 boxcars a week, empty boxcars to the Santa Fe Railroad. I have here the total cars that were received from the Santa Fe and delivered to the Santa Fe from October 1 to February 28. This was the last record we had. And it showed that the Santa Fe delivered to us 2,834 cars, but we delivered to them 10,232 cars. And under this car service order now we must short our customers like Frigidaire, who are making refrigerators, and other of the eastern customers of ours to deliver 350 ears a week to the Santa Fe, empty cars-and we are the bad guys. The CHAIRMAN. Do you have that same figure from the Burlington? Mr. PERLMAN. Yes, sir; I have from the Burlington. The Burlington delivered to us 6,119 cars. We delivered to them 13,704, more than double. The CHAIRMAN. That was October 1 to February was the last record that we had Mr. PERLMAN. Well, now, on top of it, besides the disparity in interchange, we are forced besides that now as of this last order to deliver to them besides this 350 additional empty boxcars a week to the Santa Fe. The committee may question, as we did, why, during a "car shortage," there should be any significant movement of empty boxcars to the Central from our grain originating connections, who are crying so bitterly for cars. It was possible that the cars were unsuitable for grain loading. In order to find the answer, we made specific checks of empty boxcars received on sample interchange dates, selected at random. Our sample of these car records showed that the boxcars received were not only suitable, but were in fact loaded with grain on our line within 2 to 5 days. It is perfectly apparent that the western lines were loading their own cars in preference to foreign cars, even at a time when the "car shortage" was supposedly so acute that strict car distribution orders had been issued by the Interstate Commerce Commission. Central's proposed and proved effective solution to the grain distribution problem is an eloquent example of the economics of competition at work, as distinguished from the dead hand of Government regulation. In the case of the jumbo hopper grain rates, the competitive economic force sprang from the necessity to turn crippling losses in handling grain and grain products into profitable hauls, while reducing costs of transportation and the ultimate cost to the consumer. At the same time it enabled us to recapture traffic lost to other forms of transportation. Another example is cement, which a few years ago moved almost exclusively by rail in covered hoppers. The great convenience of jobsite delivery by truck, and the difficulty and expense of transfer from rail hopper to storage, thence to truck for jobsite delivery, led to widespread decentralization of the cement industry, despite the fact that centralized cement production offered great production cost advantages. If these production cost savings were to be passed along to the consumer, a new transportation tool had to be found. The Central met that challenge by the development of the Flexi-Flo car, a covered hopper of 125-ton capacity with a pressure differential device. The car moves from production point to terminal, where it is unloaded, as the cement is needed, into pressure differential-equipped trucks. Differences in pressure within the truck's hopper and the rail car hopper permit loading the truck in a matter of minutes. Flexi-Flo reduces the cost of basic transportation, eliminates the need for storage in transit, and permits the ultimate consumer to share in the benefits of all these cost reductions, including that of centralized production of cement. And I should like to have this Flexi-Flo-here is the other onepresented for the record. (The information referred to will be found in the committee files.) These are but five of many examples where marketing research, focused on a particular problem, has forced a solution of that problem by the carrier itself. In each case, the solution to the problem benefited not only the carrier seeking to protect his traffic but benefited even more the users of the transportation service. This is competition under the free enterprise system at its best and its most productive. While each of the foregoing examples dealt with market research in specific commodity groups, expenditures running over $5 million per year by our railroad in the field of cybernetics has also amazingly increased the productivity of our car fleet. And I wish Mr. Watson were here to hear this. We now have the ability within one twentyfive-thousandths of a second to locate any freight car on our system. This is done by the use of electronic memory systems, a large communications network, and closed circuit television. The magnitude of this achievement will be realized when one takes into account that these records must include any of the 1,800,000 cars in the entire national fleet. And I would like to put in an exhibit of this transportation commuter center that is doing so much to get better car utilization. (The information referred to will be found in the committee files.) Certainly if one is seeking increased freight car productivity these positive methods can be much more helpful to the shipper than penalty per diem, which is a negative rather than a positive approach to the problem. If more railroads, including some of the roads who complain the loudest, would spend some time and money on these modern techniques, the benefits in increased car productivity, which is the equivalent of more cars, would accrue to the entire national railroad system. Freight car utilization improvements can only be brought about by a systems engineering approach to transportation. This was best exemplified by our grain program, by our multilevel program, by our cement and integral train programs. We have many other similar programs in progress at the present time, all designed to accomplish the result of better car utilization, better and more appropriate cars and lower costs to the shipper and at a profit to the railroad. Even though our railroad, as shown by the figures, has a greater ownership of freight cars than the number it uses, we firmly believe that this is not the only answer to the problem. The answer must come from this Systems engineering approach to the entire use of the national fleet. This technique, widely used in other industries, must be more widely used in the railroad industry, and again some of the railroads complaining the most are the ones doing the least. Nevertheless, the figures will show that great progress in productivity has, in fact, been made. In the Senate report on the Senate counterpart of this bill, the following figures are cited showing the decline in freight car ownership. And I must say many people have viewed with emotion and alarm the so-called decline in ownership, but they have not analyzed the increase in capacity and utilization. And they say that-here are their figures: 1926, cars owned or leased, 2,427,000-they use that as an index of a hundred percent. In 1964, 1,482,000. They use that and show that the index is 61 percent of the car fleet of 1926. But what was not shown in the report are the following figures: In 1926, when they used a hundred percent for the 2,400,000 cars, the revenue ton miles at that time were 443,700 million. And let's use that as a hundred percent for the revenue ton miles that year. The revenue ton miles in 1964 were 659,327 million, or an index of 148.6 percent of the ton miles in 1926, and they were handled with a fleet of 61.7 percent of the 1962 fleet, but it is not the same kind of fleet. It is not the same kind of utilization. It is not the same kind of railroading. So the decline in car ownership considered alone is completely misleading. The fact is that better equipment with greater capacity and with better utilization has permitted the Nation's railroads to achieve the highest level of revenue ton miles in history. It is significant that 1964 revenue ton miles exceeded the average of World War II years for the first time. The legislation before you would stifle the sort of creative competition which produced jumbo hopper cars for grain, Flexi-Flo, the multilevel car, Flexi-Van, the integral coal train, and many other examples of constructive progress throughout the rail industry. Wide, almost arbitrary, discretion in the imposition of penalty per diem charges would surely take from rail management the ability to channel its working capital into needed and productive new tools of the sort I have described. Instead, that capital would be literally thrown away, wasted in a vain effort to perpetuate obsolete, inefficient, and nonproductive means of distribution. A few months ago, President Johnson forecast the tenor of his awaited 1966 transportation message. He stated that a guiding principle of that message would be greater reliance on competition rather than on regulation. And that is a guiding principle of my plea to you today. We must recognize, we must welcome this transportation revolution, which is once more creating in the railroads a growth industry. Finally, the intercity ton-miles of the railroad as compared to the intercity ton-miles of the trucks is showing an upturn in the last 2 years. In my considered judgment, this transportation revolution promises great benefits to every citizen of our country. The bills before you today represent one effort to hold back that revolution, and I urge you not to consider them favorably. And why I say this, gentlemen, is, this 40-foot boxcar everyone is so concerned about and the 50-foot boxcar are obsolete. When we were talking a couple of years ago about financing a freight car program, some of the insurance companies told us they didn't want our equipment trust equipment under those kinds of boxcars. Now, it is about time some of these other railroads that have come in and wanted the Interstate Commerce Commission to do what they didn't have the intelligence to do-and the Burlington Railroad was one of the strongest railroads in opposition to the car ownership principle that was studied by the Association of American Railroads when we spent a million dollars in having an outside consultant firm trying to set up a carownership principle, because that is the important thing, unless you can decide how many cars a railroad should own, it is pretty hard to penalize them because they don't own them. And this is what this kind of a penalty bill would try to do. First you have got to say, this is what our ownership should be, and if it isn't that, we will penalize you. |