Western Wood Products Association is a trade group representing lumber manufacturers, wood treaters, molding manufacturers, wood fabricators, and lumber specialty producers in the 12 Western States. Western Wood Products Association was formed in August of 1964 with the consolidation of the former West Coast Lumbermen's Association and the Western Pine Association. Our member mills are responsible for the production of more than 8 million board feet annually, or 30 percent of the Nation's softwood lumber supply. Fundamental to our association's efforts are quality control and product uniformity. The association maintains a thoroughly trained technical staff and continually expands its engineering and research departments to develop lumber's inherent capabilities. The association fosters and encourages the establishment of enlightened forestry practices so that the region's forests will perpetually remains a permanent and reliable source of raw material for the Nation's building needs. The association serves as a clearinghouse for industry statistics and in the interest of the consumer and producer alike makes the guardianship of a competitive freight rate structure a prime responsibility. The overriding consideration of the association's existence remains a dedication to advancement, to the wise and efficient use of a product, to the comfort and security of the Nation's people. More than a half million carloads of lumber are shipped annually from the western wood region to thousands of major markets, most of them east of the Rocky Mountains. Railroads are the primary source of transportation. It is vital that this important western economic industrial force be assured of an adequate supply of railcars-an even flow of both box and flat cars, if our woodusing industry is to remain competitive in the Nation's marketplaces. I wish to add the support of my industry to House bill 425, and to explain why the lumber industry feels that passage of this bill is necessary for the continued vigorous forward advance of the industry. This statement is presented as a majority view of the association membership. Our western lumber industry has lived with severe car shortages especially during our peak production months since the end of World War II. To do our part to obtain maximum utilization for existing equipment the western lumber industry has increased its average loading per car. For example, in the pine region of the western area the 1961 average weight per car was 58,892 pounds. In 1964, this had increased to 69,805. In the Douglas-fir region the average weight in 1961 was 63,201 pounds while in 1964, it had increased to 79,321 pounds. This has not been the full answer. Despite the increased utilization effort on our industry's part, in recent years the chronic car shortage no longer occurs just during peak production periods. Now it occurs every time that our Nation experiences, for example: (a) Mejor work stoppages such as the recent east and gulf port dock strike. (b) Adverse weather conditions such as prevailed this winter. (c) State inventory tax periods such as California's first Monday in March. (d) Armed Forces movements having equipment priorities. (c) Release of Credit Commodity Corporation grain shipments in large concentrations. (f) Any other condition disrupting so-called normal rail movement. Add to all of these adverse factors a constantly decreasing car ownership on the part of the U.S. railroads: For example, in the past 10 years, the ownership has declined approximately 200,000 cars. Despite continuing efforts on the part of our western carriers to build new equipment designed for forest products hauling, our problems continue to increase due to the fact that western-owned cars are alleged to be used by the eastern carriers because they find it cheaper to rent western-owned cars than to build their own. I submit that our western lumber industry so dependent on the Nation's railroads to get its products to the market has never advocated additional governmental regulations. We feel that many of the railroads' problems stem from overregulation in relation to their competitors. We feel that the chronic car supply situation will continue to deteriorate unless means are found to make it more desirable for carriers to build their own equip ment rather than to rent ownership of other lines. Because of this we support House bill 425. We appreciate this opportunity to make our views known. APPENDIX I Cars owned, installed, and retired by class I railroads, by years, 1955 through 1964 Source: Association of American Railroads, Car Service Division (CS-54A), Feb. 10, 1965. APPENDIX II Summary of car-loading survey, for the Douglas-fir and western pine region Source: Survey, June 19-23, 1961, survey, Jan. 15-20, Feb. 12-17, Mar. 12-17, 1962, survey, Mar. 16-28, STATEMENT OF WESTERN FOREST INDUSTRIES ASSOCIATION, PORtland, Oreg. Western Forest Industries Association appears here in support of H.R. 7165, I have said this problem was not new, Mr. Chairman. With your indulgence, if it may be called that, describes at length an old man by a lumber mill staring down railroad tracks through an ancient telescope. It concludes this way: "He would look 'way off t'ward the sunkist South, The interesting thing, Mr. Chairman, is that this piece of doggerel was first published in 1915-a half century ago, and, as the next-to-last stanza suggested, the problem had existed for 50 years up to then. So what we are dealing with here is perhaps a century-old situation. It is a bad situation almost every year, but this year it seems to be a little worse. Hundreds of mills throughout the West have their yards stacked high with lumber, practically all of it sold to customers in the Midwest and East, who are, themselves, marking time on construction projects waiting for the shipments to arrive. Without the cars, the lumber cannot move. Mr. Chairman, with a still-expanding economy, dependent in part upon a steady supply of lumber, the diminishing supply of railroad cars that plagues the industry does not make sense. Production that cannot be transported to the markets is semiworthless. The resulting losses to the national economy are not small. Mr. Chairman, the western lumber industry has done everything within its power to help alleviate the car shortage. In 1961 the industry submitted an incentive program to the western roads and then successfully negotiated out the details. The intent of the incentive rate arrived at was for the purpose of increasing average car loading, thus lowering the number of cars needed. The shipper then received a slightly lower rate if he exceeded the minimum poundage required by the railroads. The program has been successful. Since its inception car loadings have increased by about 20 percent, which means that approximately that fewer number of cars were needed to carry the product to market. I should point out that the lumber industry did not benefit very much from this arrangement. The 7 cents per hundred pound reduction in rate was quickly eaten up by the higher loading and unloading costs. The railroads on the other hand not only benefited from the reduced need to construct and maintain cars, but also gained substantial benefits in increased car revenues-about 30 cents per hundred pounds. In brief, we believe that the lumber industry has done more than its share to help solve this problem. None of us, Mr. Chairman, want to see any unnecessary regulations passed. But the evidence is ample and conclusive that the voluntary way is not working. For some decades now the record is clear that the eastern railroads find it cheaper to rent western cars than to build their own. The Association of American Railroads issues all sorts of orders requiring the return of cars. The Interstate Commerce Commission issues orders. The cars do not get properly returned and the eastern roads refuse to build their share of cars. The prompt passage of H.R. 7165, Mr. Chairman, will be an important step in alleviating this situation and breaking the logjam of freight cars in the East that belong in the West, loading lumber products for market. Thank you for your courtesty, Mr. Chairman and members of the committee. STATEMENT OF NATIONAL COUNCIL OF FARMER COOPERATIVES The National Council of Farmer Cooperatives, whose membership represents approximately 5,700 of the farmer marketing and purchasing cooperative associations in all parts of the country, supports legislation currently before your committee designed to insure the adequacy of the national railroad freight car supply. Although the council views favorably the bill H.R. 7165, introduced by Chairman Oren Harris, of your committee, on April 6, 1965, we believe the amendment added to the similar Senate bill 1098, passed by the Senate on June 30, 1965, is a strengthening and helpfully clarifying provision and is worthy of your careful consideration. We support the pattern of authority granted by either of these bills to the Interstate Commerce Commission and defer to the judgment of your committee as to the exact language that will most effectively and fairly accomplish the purpose of the legislation. The council's authority for support of this legislation is contained in a policy resolution adopted by the council delegate body in 1964 reading as follows: "Rail car utilization: There is a public obligation upon railroads to provide an adequate car supply to meet the needs of agriculture and industry. There is also a mutual responsibility upon railroads and rail shippers and receivers, including Government agencies, to make efficient use of rail equipment. The council will support appropriate action designed to require a discharge of these obligations and responsibilities." Increased demurrage charges have been imposed to insure prompt loading and unloading in discharge of the obligation of shippers and receivers for an efficient use of railroad equipment. The authority vested in the Interstate Commerce Commission, however, has proven wholly inadequate to encourage or require the railroads to meet their public obligation to provide an adequate freight car supply. We entertain no delusion that this or any other legislative action will immediately or with certainty by some magic produce an adequate freight car supply. But approval of this legislation will be a first step in the right direction and will supply action where for years there has largely been only discussion and delay in effective action accompanied by a sharp division within the railroad industry itself. The substance of the council's recommendation is that now after the years of discussion and recognition of the fact of annually recurring freight car shortages, your committee and the Congress take action to alleviate these shortages and set in motion regulatory procedures designed to insure at least a more adequate national railroad freight car supply. Farmer cooperative business organizations of the country are large and important users of rail freight services. The Nation's farmers through their cooperatives pay many millions of dollars annually to the railroads of the country, The marketing and distribution burdens incident to freight car shortages fall heavily upon the agricultural segment of the economy which has to bear a large share of the resulting costs and which cannot pass these costs on to others. The council, as a general policy, supports reliance on competition rather than regulation as the foundation for national transportation policies. The accumulated experiences and evidence of the years, however, convince us that the area covered by this legislation is one in which there is need for Congress to vest additional authority in the Commission to deal effectively with this problem of national scope which has adversely affected all segments of the economy. The council, therefore, respectfully urges prompt and favorable action by your committee on this legislation. STATEMENT ON BEHALF OF THE NATIONAL LUMBER & BUILDING MATERIAL DEALERS ASSOCIATION Mr. Chairman and members of the committee, my name is Thomas T. Sneddon. I am executive vice president of the National Lumber & Building Material Dealers Association with headquarters at suite 302, Ring Building, Washington, D.C. Our national association is a federation of 29 regional and State lumber and building supply associations with a membership of over 15,000 independent business firms engaged in distributing building materials to builders, industries, and retail consumers. Ours is the only association speaking for this important branch of the distribution industry. The dollar volume of the building materi 54-899-65- 17 als distribution industry approximates $7,022 billion per year according to 1963 census. This statement is in support of H.R. 7165. The committee is doubtless familiar from prior testimony with the difficulty this legislation seeks to alleviate; namely, the hoarding of boxcars during substantial periods of the year by railroads other than the owning roads. This legislation would arm the Interstate Commerce Commission with the authority to fix rental rates for such cars so as to discourage such hoarding. The problem is particularly acute with respect to wide door and double door cars especially adaptable to facilitate the handling of plywood and lumber. The economies of our industry require maximum use of mechanical devices for loading and unloading of such materials. Hand loading and unloading of old style cars results in higher costs which, in turn, must be passed on to the consumer. There is an inadequate supply of wide door cars, which unfortunately for our industry, are also of great utility for shipping other products. As the recipients of the shipments of lumber products from the mills, we, as distributors, are keenly aware of the need for such legislation as your committee has under consideration, and the ICC regulations we would hope would result therefrom. Many of our members yards are wholly or substantially dependent on rail shipments, particularly of materials originating on the west coast. In order for us to buy advantageously, it is important for our industry and, in turn, important to our customers, that transportation bottlenecks be held to a minimum. Otherwise, unnecessary distortions occur both in supply and price. Presumably, we need not elaborate on the consequences of inadequate shipping facilities in peak construction periods or in specific locations in terms of costly construction delays as well as escalation of prices during shortage periods. The principles of time and place economics are clearly operative under such circumstances. It is axiomatic that consumers eventually pay these extra costs. Aggravating this problem is the net decline in boxcar supply in the order of 3 percent per year. Your committee has without doubt been adequately supplied with figures on this score. Unless something is done to increase the total supply of properly designed, modern boxcar rolling stock, we can anticipate an even greater and costlier dislocation of our lumber distribution system. Our Nation is now aspiring to transport several tons to the moon, and has the technology within its grasp to do so; it would not seem unreasonable to expect more efficient management methods and facilities to transport plywood and other lumber products from Oregon to Ohio. The first step would appear to be the striking off of outmoded boxcar rental shackles. As distributors we are keenly aware of lumber production disruptions caused by car shortages engendered by the practices of distant roads hoarding a limited supply of cars. When mills operate at high capacity, with their production moving smoothly over the rails to our distribution yards, and we, in turn, distribute promptly to users, the maximum economies of automated and efficient plants can be passed on to the consumer in both service and price. Conversely, when production must be either curtailed or frequently interrupted due to car shortages, our yards quickly feel the effects-again in service and price. Our dealers report many instances of mill production reduction or shutdowns resulting from this boxcar situation. In the case of use of small-door cars, the practice sometimes utilized of charging increased unloading costs back to the mill in one form or the other is an illusionary and temporary solution to a basic economic situation. It takes no mental giant to conclude that over a period of time such costs will find their way into the price of the product—and again, eventually to the consumer. Our membership normally prefers to avoid the necessity of seeking governmental agency intervention to any greater degree than necessary. In this instance due to the economics of the boxcar and railroad situation, to the manifest inequalities of the car-rental system and to the hoarding practices, we feel that authority should be given the Interstate Commerce Commission to issue corrective regulations. It would be our hope that, if given such a mandate, the Commission would take the necessary steps to correct these inequities which are and have an unnecessary and costly impact on the ultimate consumer of building material products. |