in 1954, their percentage of all ton-miles operated has increased from 6.1 percent in 1939 to 12.9 percent in 1954. Unregulated for-hire and private carriers have undoubtedly benefited by the regulation of both contract and common motor carriers, but the contract carriers have suffered because they have not grown as much as might be expected in an expanding economy such as the Nation has enjoyed for the past 16 years. If the rail carriers get all the business now handled by contract carriers it would not increase the percentage of the whole by as much as one percentage point. Therefore, if the railroads, whose ton-miles transported has almost doubled from 1939 to 1955, consider that they need new legislation to put their competitors out of business, it would seem that the contract carriers are a poor target at which to aim.

TABLE 1. Comparison, ton-miles transported by contract carriers with that transported by rail

1 Includes all traffic as set forth in table I of statement of J. Carter Fort, Esq.

* Revised. Preliminary.

Source: 1939-50. Class I, II, and III motor carrier revenues, ton-miles, and passenger-miles, 1939-51, Bureau of Transport Economics and Statistics, statement No. 531, January 1953, table 3; and 1951-54, data from reports of all class I motor carriers and a sample of reports of class II and III.

TABLE II-Comparison, ton-miles transported by private and exempt carriers with that transported by rail

Includes all traffic as set forth in table I of statement of J. Carter Fort, Esq. * Freitminary.

Foarte 1939-50. Class I, II, and III motor carrier revenues, ton-miles, and passenger miles, 1939-51, Baan of Transport Economics and Statistics, Statement No. 531, January 1953, table 3; and 1951-54, data from reports of all class I motor carriers and a sample of reports of class II and III. Bureau of Transpart Economics and Statistics, statement No. 568, February 1956.

78456-56-pt. 3– -2

Mr. TODD. My name is Clarence D. Todd. I am general counsel of the Contract Carrier Conference of the American Trucking Associations and have held this position since March of 1939. In addition to acting as general counsel of the conference, I am engaged in the private practice of law in Washington, D. C., under the firm name of Todd & Dillon. Our firm specializes in handling cases before the Interstate Commerce Commission, other regulatory bodies, and the Federal courts. I have specialized in handling legal matters for motor carriers since 1937 when I graduated from law school and started to practice law in St. Louis, Mo. A substantial part of our clientele has always been made up of contract carriers. Our experience, therefore, with this type of motor carrier goes not only to their problems on an industrywide basis, which are handled through the trade association, but to their individual problems which we handle on an individual basis.

The Contract Carrier Conference of the American Trucking Associations is a Delaware corporation, affiliated with the parent association as one of the so-called natural divisions of the industry. It is the purpose of the conference to foster and protect the best interests of the contract motor carriers as an industry. These activities the association has been carrying on since July of 1937.

The Contract Carrier Conference is in complete agreement with the position taken by the American Trucking Associations with respect to H. R. 6141, and concurs in the statements made by previous witnesses presented by the American Trucking Associations. The conference, like the parent organization, is opposed to the entire bill. However, my assignment is limited to voicing opposition to those portions of the bill which deal with contract motor carriers, and my statement and testimony will be so limited.

Section 10 (b) of the bill would amend Section 203 (a) (15) Part II of the Interstate Commerce Act by changing the definition of "contract carrier by motor vehicle" to include only those who operate "*** on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage by motor vehicle." This amendment is opposed by the conference for the following reasons:

1. The amended definition, as pointed out by the Interstate Commerce Commission in its statement to the committee, would exclude from the scope of the definition of a contract carrier certain classes of carriers who were formerly included. The common carrier definition has not been amended to include these classes. For this reason, if these amendments were made to the act, there would be certain classes of carriers who would fit neither the common nor the contract carrier definitions and would, therefore, be completely unregulated. The conference is unalterably opposed to this inequitable result.

2. The amendment would limit contract carriers to performing services which are a substitute for private carriage. The contract carrier if so limited would be in direct competition with private carriage and only in competition with common carriage to the same extent as is private transportation. The contract carrier would find it difficult, if not impossible, to successfully compete with private carriage because of the economic regulations imposed upon contract carriers which are not imposed upon private carriers.

The Association of American Railroads through its spokesman, the late J. Carter Fort, attempted to justify the change in the definition of contract carrier by contending that the contract carrier obtains its authority from the Commission considerably easier than does the common carrier. While it is true the statute provides that a contract carrier need only prove a proposed service "consistent with the public. interest and the national transportation policy," and that a common carrier must prove that public convenience and necessity requires the proposed service, the Commission by administrative decision requires a showing of inadequacy of existing facilities to sustain a finding of "consistency with the public interest," which is tantamount to requiring proof of public convenience and necessity. To illustrate the type of showing which a contract carrier must make to obtain new authority, we quote from Walter C. Benson Co. Extension-New York, New Jersey and Pennsylvania No. MC-73613 (sub. No. 3), 61 M. C. C. 128, 130:

While shipper professes a need for the proposed service it has not tried all of the existing services and has made no investigation to ascertain the extent that single-line and interline motor carrier services are in fact, available in the territory. It fully admits that there has been no failure by existing motor carriers to transport less-than-truckload shipments and in the only instance that it has employed a motor common carrier to handle truckload traffic the service performed was satisfactory. It seems apparent that applicant proposes nothing in the way of transportation that is not available over the lines of existing carriers. It is not material that none of these carriers can perform the proposed service in its entirety in the absence of any convincing showing that the inerchange service is inadequate to handle the traffic involved.

The proposed service would be limited to a single shipper, but that degree of specialization alone is insufficient to justify a grant of contract carrier authority where, as here, there is no real defect in the common carrier services available to the shipper.

From the above quotation of the Commission, it is quite apparent that a contract carrier, to obtain new authority, must show that the available transportation services are inadequate. Since the private. carrier need have no permit it does not need to make such a showing.

The showing required of a contract carrier must be made at a public hearing and existing carriers given an opportunity to defend their services. In addition to a hearing, several subsequent procedural steps must be taken to afford all parties "due process." This takes considerable time with the result that very often as much as three years are required for a contract carrier to obtain authority to serve a shipper. To illustrate this point, our office in March of this year obtained an extension of a contract carrier's permit, whose service were a true substitute for private carriage. The application was filed on March 13. 1953, and it was not until March 29, 1956, that the permit was finally issued. The shipper who needed the service could not wait 3 years and 16 days, for the extension was sought to meet an existing competitive condition. The shipper, therefore, leased a fleet of trucks which it operated in private carriage. These trucks were used not only in the extended territory, but in the territory which the contract carrier was authorized to service. The contract carrier, therefore, not only lost the business in the extended territory while the application was being processed, but lost some business in the territory it was authorized to serve. Obviously, the economic regulation, which requires a permit to operate, places the contract carrier at a real disadvantage in competing with private carriage.

The amendment would not only limit contract carriers to a substitute for private carriage, but would make it necessary for them to only substitute their services when the private transportation was sepecialized or individualized. There are innumerable private carrier operations which are neither individualized nor specialized. For example, one of the Nation's largest textile firms operates a fleet of over-the-road vehicles in excess of 200, which do nothing but transport truckloads of cotton piece goods from their plants to their warehouses; and, on return trips, transport raw materials into their plants. There is nothing specialized or individualized about this transportation service. For this reason, under the definition set forth in the bill, a contract carrier could not perform this type of service.

There is further objection to the use of the terms "individualized” and "specialized" in defining contract carriers. As the Commission pointed out in its statement, there are many common carriers who perform specialized services, such as carriers of automobiles, carriers of liquid freight, carriers of household goods, and many others. Therefore, the specialized nature of the service is not a distinguishing feature of contract carriage. Furthermore, in the motor-carrier industry there is a constant change in the types of services performed, so that what may be a specialized service today may be a commonplace one tomorrow. For example, less than 10 years ago the furnishing of mechanically refrigerated vehicles for the transportation of perishable products was considered to be a specialized service and was performed primarily by contract motor carriers who specialized in this type of transportation. This is no longer true today, for many of the regular-route general-commodity common carriers own and operate vehicles which are equipped with mechanically refrigerated devices and are used in the transportation of perishable commodities. Under the new definition those contract carriers who pioneered this form of service would have to discontinue performing the same as contract carriers.

The amendment to the definition of the term "contract carrier," as set forth in H. R. 6141, is unworkable in that it would relieve from regulation classes of carriers now subject to regulation. The use of the terms "specialized" and "individualized" to modify the type of private carriage which may be conducted by a contract carrier would cause undue confusion and make it impossible for contract carriers to substitute their services for many types of private carriage. To limit contract carriers to substituting their services for private carriage and making it necessary for such carriers to obtain permits on the basis of the inadequacy of existing services would impose a tremendous hardship on contract motor carriers, for they would not be in a position to compete for private carriage business. The conference, therefore, is unalterably opposed to section 10 (b) of H. R. 6141. Section 12 (a) of H. R. 6141 would amend section 218 (pt. II of the Interstate Commerce Act) in such a way as to require contract carriers to file their "rates or charges" instead of "minimum rates or charges actually maintained and charged." In support of this amendment, a representative of the Association of American Railroads stated

the actual charges of contract carriers may be concealed, since only their schedules of minimum rates are required to be filed and published.

This is not true under the law as it now exists. Under the Motor Carrier Act of 1935, prior to the amendment of September 18, 1940, it is true that a contract carrier was only required to publish and keep open for public inspection its minimum rates. However, the amendments to the act, passed September 18, 1940, made it necessary for contract carriers to file minimum rates "actually maintained and charged." Under the present statute, if a contract carrier transports the same commodities for two or more shippers between the same points, he is required to publish in his schedule, filed with the Commission and available for public inspection, only the lowest charge which he actually makes to either one of the shippers for the services. The instances where this actually occurs are rare.

My associates and I have represented contract carriers for the past 17 years and are familiar with the published schedules and the supporting contracts of numerous contract carriers, both large and small. The charges set forth in the published schedules, with very few exceptions, are the only charges made to any shipper for the described transportation. There are occasions when a contract carrier, serving 2 shippers of the same commodity between the same points, is able to negotiate a new contact for a higher rate with 1 of the shippers before a similar increase can be negotiated with the other shipper. Since the Commission will not accept a schedule naming two different rates for the same service, the contract carrier is not permitted to show the increase in his schedule until both shippers have executed contracts covering such increase.

Since the charges set forth in the schedule are those actually charged some shipper, there are no hidden charges. Many contract carriers publish a separate schedule for each contracting shipper, because they find it makes for better customer relations to keep the schedule provisions current with those in each contract. We know of no contract carrier who uses the minimum-rate provision to conceal his actual charges and thus gain an advantage over a common carrier competitor. As a matter of fact, such concealment would be in direct conflict with section 218 (a) of the Interstate Commerce Act, as interpreted by the Supreme Court of the United States. (See Auto Transport, Inc. v. United States, et al., 101 F. Supp. 132 (D. C. Okla.) affirmed per curiam 343 U. S. 923; 72 S. Ct. 763.)

The Commission in commenting on the proposed amendment said: contract carriers presently are required to publish and file in schedules open to public inspection, the minimum rates which they are actually charging. The schedules also list the names of shippers with whom the carrier has contracts, but this listing is not connected with any rates. If any competing carrier or shipper is of the opinion that the published minimum rates are below the level of reasonableness, they may challenge those rates in a complaint proceeding and the Commission may require them to be raised. The raising of the minimum rates will require the changing of any contract which provides rates below the prescribed minimum. If other contracts contain rates above this minimum, the complainant is not harmed. Under the present law, as well as under the proposed amendments, the Commission would have only minimum-rate powers over contract-carrier charges, and the publication of the minimum rates actually maintained and charged would seem sufficient without disclosing the business transactions of shippers.

The only reason which has been advanced for the change in section 218 (a) is that the contract carriers, under existing law, have an opportunity to conceal their rates to the detriment of common