tions for the extension of operating rights, and I would assume that the cost to the Government could be as much as $3 million a year in addition to what you are already appropriating for the Interstate Commerce Commission. Mr. WILLIAMS. Thank you, sir. Are there any questions, Mr. Dolliver? Mr. HARRIS (presiding). I would like to say this, Mr. Knudson. In the first place, I regret that I was detained and that prevented me from hearing all of your statement. I join with the welcome that you have already received here. I recall your appearance before this committee in the past and when you were serving as one of the important and able members of the Interstate Commerce Commission. The members of this committee are very familiar with your background, experience, and record, and we are glad to have your statement. I might also say that I had the privilege on Monday night of last week of speaking to the graduating class of Southeastern University, with which I believe you have some connection. Mr. KNUDSON. I apologize for not being there, sir. Mr. HARRIS. We missed you. However, your colleague as dean of business administration out there, and former member of Congress, Mr. Jennings Randolph, did very well. Your statement is well received in view of the experience that you have had and the many years of service, both in the Department of Agriculture and as a member of the Interstate Commerce Commission, and in the field of transportation, certainly entitles your presentation of your statement to most careful and deliberate consideration, which it will receive. I want to say I for one am glad to see you again and welcome you to this committee. Mr. KNUDSON. Thank you, Your Honor. Mr. HARRIS. Mr. Wright, does that conclude your presentation? Mr. FOWLER (Henry H. Fowler, attorney, Washington, D. C.). That is all. Thank you very much, Mr. Chairman, for your indulgence of our presentation. Mr. HARRIS. The committee would like to compliment you on the fact that you have presented a very full and complete statement on the subject here with these many associates of yours and you have done so within the time limit this morning. The committee wishes to express thanks and appreciation to you and your entire group for helping us with this record and in coming here this morning and presenting your views in connection with this important transportation policy report. The statements referred to, which you desire to have included in the record, will be included along with your statement, Mr. Wright, and also Mr. Knudson's statement. Mr. FOWLER. Thank you, Mr. Chairman. Mr. HARRIS. The statement of Harry B. Dyer, president of the Nashville Bridge Co., Nashville, Tenn., will be placed in the record at this point. (The statement referred to follows :) STATEMENT OF HARRY B. DYER Gentlemen, I am Harry B. Dyer, president of the Nashville Bridge Co., Nashville, Tenn. I am past president of the Nashville Chamber of Commerce, a director of the Mississippi Valley Association, a director of the American Waterways Operators, Inc., a trustee of the Ohio Valley Improvement Association, a past president of the Propeller Club, Port of Nashville, a member of the American Society of Civil Engineers, and a master and pilot of river vessels. I am appearing before you today in opposition to any extension of regulation of inland water carriers. I believe that any extension of regulation or the rescinding of any presently existing exemptions for bulk commodities would not only tend to impede the progress of technological developments in river transportation but would increase the cost of river transportation to the general public. Under our system of free, competitive enterprise which has been applicable in the movement of bulk commodities on our inland waterways, many new developments have emerged which have increased towing efficiency and reduced or maintained rates on the movement of bulk commodities in spite of tremendously increased costs of equipment, labor, and supplies. Our company pioneered in the development of the streamlined, integrated oil barge fleet in cooperation with small, unregulated carriers who had the opportunity and the initiative to enter the river towing business in a free, competitive market. It was this unrestricted opportunity to compete which motivated technological development for improved efficiency. President Eisenhower pointed this out when, in his January 5 message to Congress, he said: “An integral part of our efforts to foster a strong and expanding domestic economy is keeping open the door of opportunity to new and small enterprises, checking monopoly and preserving a competitive environment." It is generally recognized that American manufactu.ing techniques have far surpassed those in European countries because, not being protected by monopolistic cartels, our manufacturers had the necessity and the incentive for improving their efficiency. There has been the opportunity for men with new and better ideas to enter the business of their choice and compete with the old, established businesses. It is to this free, competitive enterprise system that we owe all the progress that has made our Nation so great. To increase regulation of water carriers or to remove the exemptions on bulk commodities would tend to create a monopoly among the existing carriers and permit them to relax into complacency with the comforting knowledge that no new competition could enter the business. Under such a situation, there would be no urgent necessity for new inventions, and progress would slow down to a snail's pace. Prior to 1940, 21⁄2 miles per hour was considered to be a good average speed for upstream towing on the Mississippi River; but, because of the opportunity for competitive development, this speed has now been increased by as much as three times the old, accepted standard. This remarkable increase in speed was pioneered by the small, unregulated contract carriers who, through their initiative and freedom to compete, developed the streamlined, integrated fleet. The first such fleet was constructed by our own firm for Ingram Products Co., of Nashville, and the second such fleet was for the Canal Barge Co., of New Orleans. Retractable interlocking pins were developed for holding the barges in perfect alinement; and these fleets, which were used in the oil trade, made such records that it began to change the thinking of the entire industry. Soon, many operators and builders were adopting the new trend in order to stay competitive. The barge sizes increased to a maximum of 290 feet in length, and the beam was more or less standardized at 50 feet. The capacity of these 290- by 50-foot barges is in excess of 3,000 tons, as compared to the 1,000 to 1,500 tons capacity for the standard or jumbo barges generally used by the common carriers. The first company to build 290- by 50-foot integrated coal barges was Potter Towing Co., an unregulated contract carrier. As these integrated fleets became longer, the desirability of bow steering became apparent; and, again, it was an unregulated contract carrier (Jordan River Line, Inc.) who pioneered bow steering for an integrated fleet. It was also the unregulated contract carriers who pioneered the development of spcial winches and deck fittings for quickly making up tow. These proved to be so successful that winches have now become standard equipment on most large, integrated barges, not only for quick connecting, but also for the final connection as a substitute for the old steamboat ratchets which are still being used by most of the common carriers. The most powerful diesel towboat yet contemplated for the Mississippi River system is now under construction for Nashville Coal Co., an unregulated carrier. A dramatic illustration of the total improvement in the efficiency of barge transportation can be found in the statement of the Corps of Engineers, United Stats Army, which cites these facts: In the period from 1945 to 1955, the total ton-mileage of inland water traffic rose from 29.7 billion to an estimated 87.5 billion, or nearly 300 percent, but the total capacity of barges grew only from 9 million to 11.4 million tons, or 27 percent. Thus, the loaded mileage for the average barge was increased from 3,300 to 7,700 miles per year, indicating an improvement of 133 percent in the productivity of each ton of barge capacity. These are but a few illustrations of the progress which has come to the towing industry of this Nation through freedom to compete. Gentlemen, I am opposed to any extension of regulation in the interest of maintaining our tradition of American progress through our free, competitive system. I hope you will not jeopardize our progress by permitting increased regulation to preclude enterprising competition. Two copies of each of the following photographs [not printed], illustrating some of these technical developments, are submitted with this testimony: 1. Nabrico seminozzle. 2. Two-barge integrated fleet. 3. Three integrated barges. 4. Special 90-foot streamlined bow for integrated fleet. 5. Retractable interlocking pin for holding integrated fleet in perfect alinement. 6. Socket for retractable interlocking pin. 7. Largest integrated coal barges-290 by 50 by 12 feet-capacity, 3,300 tons. 8. Bow steering unit (extended). 9. Bow steering unit (retracted). 10. Winch for connecting integrated barges. 11. Winch and special deck fittings. 12. New types and arrangement of deck fittings and winches. 13. Advertisement of most powerful river towboat. Mr. HARRIS. Also a statement of John H. Frederick, professor of transportation and head of the department of business organization in the College of Business and Public Administration at the University of Maryland, will be placed in the record at this point. (The statement referred to follows:) STATEMENT OF JOHN H. FREDERICK My name is John H. Frederick. I am professor of transportation and head of the department of business organization in the College of Business and Public Administration at the University of Maryland. I hold the degrees of B. S., A. M., and Ph. D. from the University of Pennsylvania. I am the author of numerous books and many articles on various aspects of transportation and distribution. My address is the University of Maryland, College Park, Md. I appear before your committee to discuss provisions of H. R. 6141 and H. R. 6142 which would change the present section 303 (b) of the Interstate Commerce Act so as to eliminate the so-called bulk commodity exemption which now, applies to carriers on our inland waterways. In considering the necessity of removing this exemption I am sure that this committee is interested in the experience of shippers in paying rates for the transportation of the various classes of commodities referred to today as "unregulated" and those which fall within the "regulated" category insofar as such experience can be compared. I was retained about a year ago by the Waterways Council Opposed to Regulation Extension to make such a study of rates on the Mississippi River system during the period 1942-55. The unregulated rates, on the basis of available evidence, are not shown to be unreasonable. There has been an idea or line of thinking in transportation circles that free competition within any particular segment of the transportation industry, or intra-agency free competition, makes for lower and more stable rates to shippers than does regulated intra-agency competition. Water transportation offers a field of investigation to determine whether this is true or not since there are the so-called regulated operators and the unregulated operators, both of whom, exclusive of petroleum and petroleum products, are carrying the same commodities. The unregulated commodity carriers are contract carriers while the regulated, who carry both bulk or unregulated and the so-called regulated commodities operate on the basis of published tariffs. Usually, however, the rates of both types of carriers are the same for the same commodities and the same hauls. Only in the motor carrier field do we find a similar situation as between contract motor carriers not subject to close rate regulation and common carriers subject to maximum rate regulation. As shown in table 1 and chart 1, contract motor carrier ton-mile revenues, reflecting rates, have been more than common motor carrier ton-mile revenues. Such revenues reflect a steadier rate situation for the contract carriers than for the common carriers, something of considerable importance to shippers. Unfortunately similar ton-mile revenue data are not available for water carriers. Therefore a comparison between the two types of waterway operators has had to be made on the basis of average rates for the same distances in the same years. Table 2 shows the average barge rates on the unregulated commodities selected for this study because they moved in large volume over various lengths of haul from 1942 to 1954. These are coal, sulfur and grain. Perhaps you will wonder how rates could be obtained for the unregulated commodities since these rates as charged by the unregulated or contract carriers are not published. Rates charged by the regulated carriers for the commodities carried by the contract or unregulated carriers are, however, on file with the Interstate Commerce Commission in various tariffs covering the period under study. (These tariffs are listed as the authorities for tables 2 and 3.) Certainly, in the various years, these rates would not have been any greater than the rates charged by the bulk contract or unregulated carriers of the same commodities. In other words, intraagency competition, would tend to make the rates virtually the same by both types of carriers on the commodities and over the distances involved. Table 3 shows the average barge rates over various lengths of haul for the same years on the regulated commodities, those carried solely by the barge lines coming under the common carrier classification and regulated as to rates by the Interstate Commerce Commission under the Transportation Act of 1940. The commodities in this category, selected for comparative purposes, were iron and steel articles, sugar, and newsprint. The carriers whose tariffs were examined to obtain rates used in the tables and charts of this study were: Mississippi Valley Barge Line Co.; Union Barge Line Co.; American Barge Line Co., and Federal Barge Lines. Now, having obtained the actual average barge rates for each year under study for various distances, as shown in tables 2 and 3, I charted them so as to pictorially reflect the comparative performance in terms of rates in the regulated and unregulated areas of inland water transportation. I thought the committee would be interested in: First: A comparison as to the cost to the shipper in terms of cents per net ton at various points of time and for various lengths of haul. Second: The comparative steadiness or fluctuations of regulated and unregulated rates. Third: The effect on rates of the demand for transportation occasioned by the Korean emergency. This is indicated by the changes occurring after 1951. Chart 2 for distances of 200 to 500 miles shows the two types of rates at about the same level until the influence of newsprint is felt by the regulated group and presumably the great demand for transportation caused by the Korean situation. For this distance the unregulated rates fluctuated more than the regulated. Chart 3 for hauls of 500 to 1,000 miles, a more realistic distance for inland water transportation, than the 200-500 mile bracket, shows unregulated rates consistently lower and steadier than the regulated. Chart 4 also shows the unregulated commodities carried at lower and more stable rates on the average than the regulated for hauls of over 1,000 miles. The latter two charts also show a considerable acceleration of regulated rates after 1951 due in part to the emergence of newsprint and the demand situation cause by Korea. It would appear that the influence of the unregulated contract bulk carriers on the general water-rate structure supports the current idea mentioned earlier that free intra-agency competition makes for lower and more stable rates to shippers than does regulated intra-agency competition in that— (a) Average rates on unregulated commodities were held down over a considerable period of time. (b) Average rates on unregulated commodities were less variable from year to year over a considerable period of time. From experience to date it would seem that the users of inland water transportation have had available transportation for dry-bulk commodities at rates or charges as cheap as or cheaper than those which have characterized the regulated commodities; and that, therefore, from the shippers point of view there is no need for extending regulation. In connection with my study of the regulated and unregulated commodities, which I have been discussing, I also made a study of spot barge rates for petroleum products shipped in bulk during the period 1943-55 which brings out something I believe will interest your committee. These rates were obtained for the period under study from a broker and a number of carriers all of which appeared typical. Petroleum products in bulk are unregulated traffic and are, therefore, subject to the free play of competition and the incentive to develop new, cheaper, and better methods of handling. The comparison of long haul lower river rates with the short-haul pool water hauls in the Mississippi and Illinois Rivers, tables 4 and 5 and chart 5, plainly shows what will happen when carriers are left to themselves to work out rate situations with bulk shippers. From 1941 to 1945 costs and, therefore, rates per ton-mile were less in the pool waters above Alton lock on the Mississippi and Illinois Rivers-for example, on the voyage between St. Louis and/or Wood River, Ill., and Chicago, Ill., than they were on long hauls on the lower Mississippi. This was reflected in the OPA ceiling rates then prevailing. When World War II broke out there were only a few integrated and articulated barge units in operation. However, research and experiments had been made by an increasing number of operators and shipyards. Such activities were accelerated during the war so that the experiments resulted in improved design, larger barges, and more horsepower per ton of cargo. This all meant that larger tows could negotiate the lower Mississippi River faster against the current than they could the pool waters above Alton lock and on the Ohio and Illinois Rivers because of the time lost through locking. Hence, since 1949, instead of rates in the pool rivers being less than the lower river rates, a complete reversal has taken place. Had the bulk petroleum carriers been subject to rate regulation there is some question whether the situation above discussed would have prevailed. Based upon the evidence in the tables and charts presented as part of this statement it seems clear to me that if the dry-bulk exemption in the present law is removed the future rates on this type of cargo will very likely be less stable than in the past which will work to the disadvantage of bulk cargo shippers. Moreover, it can be seen that shippers of petroleum products have benefited from savings resulting from technical improvements as well as unregulated rate competition among these special types of carriers resulting in the payment of lower rates. TABLE I-Ton-mile revenues motor common and contract carriers, class I Source: Interstate Commerce Commission, Bureau of Economics and Statistics. |