EXPEDITING LOADING AND UNLOADING OF RAILROAD FREIGHT CARS TUESDAY, JUNE 30, 1942 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE COMMERCE, The subcommittee met, pursuant to call, at 10:30 a. m. in room 412, Senate Office Building, Senator Clyde M. Reed presiding. Present: Senators Reed (presiding) and Tunnell. Senator REED. The subcommittee will come to order. Pursuant to his power under the rules of the Senate, Chairman Wheeler of the Interstate Commerce Committee appointed a subcommittee composed of Senator Johnson of Colorado (chairman), Senator Tunnell of Delaware, and Senator Reed of Kansas, to hold hearings on Senate Joint Resolution 147, which the committee reporter will make a part of the record at this point. (S. J. Res. 147 is as follows:) [S. J. Res. 147, 77th Cong., 2d sess.] JOINT RESOLUTION Providing for the more effective prosecution of the war by expediting the loading and unloading of railroad freight cars Whereas railroad freight cars are furnished shippers as a means for transporting freight and not for storage purposes; and Whereas the prompt loading and unloading of freight cars is vital to the successful prosecution of the war effort of the United States; and Whereas it has been reliably reported that shippers and receivers of freight have, in many instances, failed to load and unload freight cars promptly, and that some shippers have used railroad freight cars for storage purposes rather than for transportation purposes: Therefore be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That, except as shall otherwise be provided by appropriate order of the Interstate Commerce Commission, shippers and receivers of freight via railroads shall be allowed thirty-six hours to completely load or completely unload commodities shipped in railroad freight cars. The free time herein provided for shall be calculated from the first 7 antemeridian after the freight car has been placed for loading or unloading, except that there shall be deducted from said free time the number of hours between 1 postmeridian and 6 postmeridian the preceding day during which the car was placed and available for loading or unloading. SEC. 2. A shipper or receiver of freight failing to load or unload a railroad freight car within the time specified herein shall pay a penalty of $5 for the first twentyfour hours following the expiration of free time during which the railroad freight car is detained by reason of failure to load or unload, $10 for the second twentyfour hours following the expiration of said free time, and $25 for the third and each succeeding twenty-four-hour period during which said car is detained by reason of failure to load or unload. SEC. 3. The penalties for failure to promptly load or unload railroad freight cars herein provided for shall be collected by the appropriate railroad company, in accordance with the terms and conditions of the car demurrage rules filed with 1 the Interstate Commerce Commission, and shall become a part of the revenues of the collecting carriers. SEC. 4. The Interstate Commerce Commission is authorized and directed to make such rules and regulations and to take such further steps as may be necessary to insure compliance with the provisions of this joint resolution. Senator REED. The subcommittee has requested the Interstate Commerce Commission, the railroads, and various traffic organizations to appear and give us the benefit of their judgment based on their experience. We will make a letter addressed to Chairman Aitchison of the Interstate Commerce Commission, dated June 22, 1942, a part of the record at this point [reading]: The Honorable CLYDE B. AITCHISON, Chairman, the Interstate Commerce Commission, Washington, D. C. JUNE 22, 1942 DEAR MR. AITCHISON: Senator Wheeler, chairman of the Interstate Commerce Committee, has appointed the following subcommittee to consider Senate Joint Resolution 147: Senator Johnson of Colorado (chairman), Senator Tunnell, Senator Reed. Hearings will begin on June 30. The location of the hearings will be announced later. We have already received an expression of opinion from the Commission on this resolution. However, the subcommittee desires information along the following lines: A. The history of demurrage charges. B. Whether such charges are regarded in the light of revenue or as a penalty for not unloading within a specified time. C. The basis upon which "free time" is fixed. D. The basis, if any, of the amount of charges imposed. E. The lines of commodities in which the greatest delays in unloading have occurred. F. The destinations at which most numerous delays occur. G. The feasibility of imposing extra demurrage charges during seasons when a particular type of car is in the most demand. The Association of American Railroads is being asked to submit to the subcommittee its views on these points. All shippers organizations, including the National Industrial Traffic League, the National Association of Shippers Advisory Boards, all traffic bureaus, chambers of commerce, boards of trade, etc., and all individual shippers are invited to appear before the subcommittee and give it the benefit of their experience. The hearings will open with the views of the Interstate Commerce Commission, to be followed by the Association of the American Railroads and any individual railroad that desires to be heard. If those desiring to appear will notify the chairman, arrangements will be made for sufficient time and a program of appearance will be planned. Sincerely yours, EDWIN C. JOHNSON, Chairman of the Subcommittee. Senator REED. I want to call attention to the fact that in this letter a request was made for a discussion of the subject under these headings: A. The history of demurrage charges. B. Whether such charges are regarded in the light of revenue or as a penalty for not unloading within a specified time. C. The basis upon which "free time" is fixed. D. The basis, if any, of the amount of charges imposed. E. The lines of commodities in which the greatest delays in unloading have occurred. F. The destinations at which most numerous delays occur. G. The feasibility of imposing extra demurrage charges during seasons when a particular type of car is in the most demand. Identical letters were written to the Association of American Railroads, the Office of Defense Transportation, the National Association of Shippers Advisory Boards, the National Industrial Traffic League, and perhaps others. I want to say in the beginning as the author of this resolution it would be utterly useless to consume any time in discussing the advisability, relatively or otherwise, of congressional action upon demurrage and things like that. Everybody knows my position in that regard that we have a minimum of congressional legislative action and a maximum of administrative action. The situation is that last year the railroads collected in demurrage charges about $9,000,000. Roughly speaking that is the equivalent to an average detention beyond free time of 11,000 or 12,000 freight cars every day. It is the intent of this resolution to reduce that detention. This subcommittee is going into every phase of this matter, the full history of it, and make a complete record of the situation, and desires to hear everybody who wishes to be heard. I might explain that after our hearings are closed the record made will be held open for about 3 or 4 months, and after that lapse of time we are going to ask the Commission and the railroads to make a check of the improvement the shippers are now promising. I am referring particularly, but without any criticism, to the use of refrigerator cars, whose users have been notorious offenders; the users of grain cars and having had 15 years' active experience as chairman of a shippers board in the greatest grain State in the country I know something about that situation; also in the matter of coal cars. At this point, in order that the gentlemen present representing the coal interests may have the matter definitely in mind, I wish to call attention to this very important fact: This is the month of June, normally one of the light coal-shipping months. Fortunately this year, with admonitions that have been given from all sources for people to buy coal early, there seems to be a larger shipment of coal than usual. I hope to have information from the coal interests definitely upon this point; there is more coal moving at this time of year than ever before, but the situation in regard to coal cars is that as of June 20, 1942, there was only a surplus of 4,724 gondola cars and 3,875 hopper cars. These figures are taken from the carloading statements of the Association of American Railroads for the week ended Saturday, June 20. Anybody familiar with transportation and car service knows that with such a situation in June there will be a terrific shortage of opentop cars next October. I discussed this matter with Director Eastman, of the Office of Defense Transportation, and embodied that discussion with him in a speech I made on the floor of the Senate, June 12, if I remember correctly the date. Mr. Eastman told me- or at least I think it was Mr. Eastman who told me that there would be 16,000 cars delivered to the railroads this quarter, if my memory serves me right, of which 12,000 would be coal cars, but 12,000 are not enough if the present car supply of the railroads, I mean of open-top cars, are being used to as near capacity as this report shows. This is a serious situation. This subcommittee does not want the coal people to come in and tell about their merits and what good work they are doing to win the war, when all we ask is that cars be loaded and unloaded promptly. So we are going to hold this record open to see how well the promises made are kept. Then, if every other means fails, this resolution will be brought to the full committee for its consideration and such action as the full committee may see fit to take. Let me explain that, naturally, we are all busy, but it is the plan to run these hearings, beginning at 10:30 every morning, as long in the day as we can. Senator Tunnell and I have an ear cocked toward the Senate floor where a number of important matters are coming up for consideration Senator TUNNELL. And the Senate convenes at 11 o'clock this morning. Senator REED. That is right. We will sit as long as we can each day. When we conclude this morning and recess we will try to make a program so as to adjust these hearings to suit everybody's convenience. After we have heard Chairman Aitchison, we may ask the railroads to defer their discussion of the subject so as to permit outof-town folks to be heard next. The subcommittee desires to meet the convenience of everybody just as far as we can. As the author of this resolution I wish to say I am very much in earnest about this subject. Primarily the resolution is for the purpose of doing just what we are doing today, bringing this acute transportation situation to the attention of the country, in an earnest effort to aid in an improvement of the service. I would ask the railroads and I see Mr. Kendall back there so I will address my question to him. Mr. Kendall, I do not know how close contact you have with this matter as chairman of the car-service division of the Association of American Railroads. How close contact has your division with the efficiency boards and the various regional shippers' boards? Mr. KENDALL. We have weekly reports from them. Senator REED. I did not know that, but hoped you might have. Would you be good enough, either yourself or Mr. Clark, or Mr. Betts, to make those reports available to the subcommittee? We want to see what is being done through the voluntary efforts of the shippers, and wish to encourage that work to the limit. Mr. KENDALL. Very well. Senator REED. Chairman Aitchison is here at the invitation of the subcommittee and we will now be glad to hear him. STATEMENT OF CLYDE B. AITCHISON, CHAIRMAN, INTERSTATE COMMERCE COMMISSION, WASHINGTON, D. C. Mr. AITCHISON. I will deal with the first four matters mentioned in the letter from Senator Johnson, which letter has been placed in your record. I will be followed by Commissioner Johnson, who will deal with the remaining matters, and Director King of the Bureau of Service of the Commission. The Commission, through its legislative committee, expressed its views with respect to the above resolution in a letter dated May 26, 1942, to Senator Wheeler, chairman of the Interstate Commerce Committee. By letter of June 22, 1942, Senator Johnson, chairman of the subcommittee appointed by Senator Wheeler to consider this resolution, requested further information as to the following matters: A. The history of demurrage charges. B. Whether such charges are regarded in the light of revenue or as a penalty for not unloading within a specified time. C. The basis upon which "free time" is fixed. D. The basis, if any, of the amount of charges imposed. E. The lines of commodities in which the greatest delays in unloading have occurred. F. The destinations at which most numerous delays occur. G. The feasibility of imposing extra demurrage charges during seasons when a particular type of car is in the most demand. Dealing first with those specific matters, in the order named, the following may be stated: A. The history of demurrage charges: "Demurrage" is a term used with respect to both marine and rail transport. In marine transportation, it is a charge made by the owner or operator of a vessel for the detention of the vessel at dock for loading or discharge of cargo beyond the number of lay days provided for in the charter party or contract of affreightment. In railroad transportation it is a charge, partly in the nature of compensation for use of the cars and partly as a penalty, charged to shippers and consignees by railroad carriers for the detention of cars for loading or for unloading beyond the period of free time allowed for these purposes, or for the detention of cars en route awaiting diversion or reconsignment orders. Demurrage charges are now subject to regulation by the Commission within the jurisdictional limits of section 1 of the Interstate Commerce Act (Turner, Dennis & Lowry Lbr. Co. v. Chicago, M. & St. P. Ry. Co., 271 U. S. 259). They apply to private cars as well as to railroad-owned cars when such private cars are in railroad service (Procter & Gamble Co. v. United States, 225 U. S. 282). The carrier's common-law duty to transport includes affording the shipper a reasonable time within which to load or unload carload freight. After the lapse of such time referred to in the demurrage tariffs as "free time," shippers have no inherent right to hold freight in the cars. For any such detention and use of cars by shippers for their own purposes or their own account demurrage charges are assessed, as separate and distinct from charges for the actual transportation. As previously stated, demurrage, in maritime law, originally represented damage to the carrier for the shipper's detention of a vessel but, as applied to railroad transportation, has long been recognized as appropriately being for the purpose not merely of compensating the carrier for the use of the cars and tracks but also of increasing car efficiency, which latter purpose is important to the public interest and becomes particularly so in periods of traffic congestion. (See T. M. Kehoe & Co. v. Charleston & W. C. R. Co., 11 I. C. C. 166; Investigation and Suspension Dockets 83 and 83-A, 25 I. C. C. 314; American Wholesale Lumber Asso. v. Director General, 66 I. C. C. 393; Balfour, Guthrie & Co. v. Chicago, M., St. P. & P. R. Co., 235 I. C. C. 437; Chrysler Corp. v. New York Central R. Co., 234 I. C. C. 755; Pennsylvania R. Co. v. Kittaning Iron & Steel Mfg. Co., 253 U. S. 319.) Demurrage appears to have been first applied to the detention of railroad cars in the early 1860's. Even before the Civil War the New York & Harlem Railroad Co. applied a charge of $1 a day running 48 hours after notice of arrival of the cars (Crommelin v. New York & H.R. Co., 4 Keyes 90). The Pennsylvania Railroad during the Civil War |