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carriers in transportation properties, etc., furnish a substandard incen. tive to provide and maintain for the public a permanent and stable service, and as a result their control of forwarding operations should be to insure to the public a greater permanency of service than if forwarding operations were only in the hands of those who have no real substantial investment. This reasoning obviously would not apply to forwarder control of carriers (R. 292-293).
The basic considerations which governed Congress in passing section 411 (a) have not changed. To permit forwarders to acquire such control would open the way to opportunities for discrimination not only with respect to rates and charges, but also in respect of practices which would be difficult to control.
The Commission regards the bill as contrary to the public interest. If it should receive favorable consideration, it is suggested that in view of the broad language of the bill which would permit the acquisition of control “through stock ownership or otherwise,” consideration be given to amending the bill so as to incorporate therein the pertinent provisions of section 5 (2) of the Interstate Commerce Act, entitled "Combinations and Mergers of Carriers" (R. 293).
NATIONAL INDUSTRIAL TRAFFIC LEAGUE
(William H. Ott)
The proposal to make it lawful for a forwarder to control one or more carriers under part I, II, or III of the act is in conflict with section 410 (h) which prohibits direct transportation operations by a forwarder, and is contrary to the original concept that forwarders should pay tariff rates published for all other shippers. While they have been successful in changing the latter with respect to motor rates, the 450-mile limitation on contract rates and the fact that the bulk of forwarder traffic moves over 450 miles, has preserved effective competition among rails and trucks, and between the two, for much forwarder traffic. If forwarders are permitted to acquire any substantial number of direct carriers, open competition will be lost. They will no longer deal with each other at arm's length. Traffic volume of the controlling forwarder may be diverted to the controlled carrier, and the control of routing would expand the forwarder's economic influence (R. 950-951).
NEW ENGLAND MOTOR COMMON CARRIERS (VARIOUS)
(Francis E. Barrett, Jr.)
The proposal of H. R. 9771 to permit the acquisition and control of motor carriers by freight forwarders, would place them in a position to dry up service at small communities, and, in conjunction with H. R. 9548, would enable them to drive down rates of existing carriers. The motor-carrier industry in the New England area is presently suffering financially. Passage of the two bills will result in the diversion of traffic and revenues from existing motor carriers. Congress should protect the interests of the public and not those of a specific group, as the freight forwarders (R. 521-522).
SEARS, ROEBUCK & CO.
(John C. Allen) Ownership of another carrier by a freight forwarder, as proposed in H. R. 9771, is not per se objectionable, but it is feared that difficulties will develop unless it is explicitly provided that rates applicable to a forwarder using the service of an owned carrier will be available to all shippers, consolidators, or other freight forwarders, under otherwise like conditions. It is doubted that ownership of a common carrier by a forwarder could exist without unduly restraining competition (R. 1458-1459).
SOUTHERN TRAFFIC LEAGUE
(C. B. Culpepper) H. R. 9771 is illogically conceived. Freight forwarders, while having a technical common-carrier status, are nothing more than shippers in their relation to the transporting agencies. They now propose to further develop a monopoly in the transportation of small shipments of freight. If they controlled a railroad, they could determine that their plant would not permit the handling of shipper-association freight and could thereby hamper, and finally eliminate, the valuable type of service (R. 1231-1232).
(A substantially similar statement was presented by the witness in behalf of the Atlanta Freight Bureau (R. 1239).) Additional opponents H.R. 9771 :
Bureau of the Budget, Percy Rappaport (R. 37).
Traffic Managers Conference of Southern California, L. C. Wolfe (R. 1002).
BROTHERHOOD OF RAILWAY CLERKS
(Carl H. Bier) One of the controls which for many years has been imposed on common carriers is a limitation on the number in the field. As a result of the ease with which permits can be obtained, the number of forwarders in any given area has continued to increase, followed by curtailed service to many parts of the country and the displacement of employees. It is not in the public interest to grant licenses indiscriminately, and those provisions should be tightened up as soon as possible. The law does not now permit the Commission to reject an application because of adequate and efficient service already available, and the available traffic is being sliced too thin (R. 1466–1467).
FREIGHT FORWARDERS INSTITUTE
(Giles Morrow) H. R. 9772 is proposed to amend section 410 of the present act, changing the requirements for obtaining freight-forwarder permits. In general, the standards required for obtaining freight-forwarder operating rights are the same as those required under part II of the act, governing the issuance of permits to contract carriers by motor vehicle. The bill would eliminate subsection (b) of section 410 which provides that the Commission shall not deny authority to engage in the proposed service solely on the ground that such service will be in competition with service performed by any other freight forwarder.
The Commission for some time has been recommending and advocating the changing of section 410 so as to require the obtaining of cer. tificates of public convenience and necessity by freight forwarders, instead of permits to engage in forwarder service. Freight forwarders have been regulated as common carriers, and are subjected to all of the restrictions and burdens normally imposed by regulation on common carriers. It is, therefore, both unjust and unrealistic to withhold from forwarders the normal protection from uneconomic and wasteful competition which regulation affords other carriers. Whatever the reasons may have been for initially adopting a "freedom of entry" policy with regard to freight forwarder operating rights, no reasons for such a policy exist today. The advantages and economies of freight forwarders' service stem largely from the ability of the industry to concentrate and consolidate traffic. When the available traffic is dispersed among too many companies, there is an adverse effect upon the overall service and important economies are lost (R. 1186-1189).
INTERSTATE COMMERCE COMMISSION
(Anthony F. Arpaia) H. R. 9772 would amend section 410 by changing the requirements for obtaining a freight forwarder permit. It would eliminate 410 (d), which restricts the Commission's authority to deny an application, and redesignate the remaining subsections. The act of December 20, 1950, designated freight forwarders as common carriers. The Commission, in its 69th annual report recommended that since freight forwarders are classified as common carriers, they should be required to secure certificates of public convenience and necessity. The ease with which permits may be obtained under the present section 410 (d) could result in general impairment of the efficiency of forwarder service and harm the general public. While it appears that the elimination of section 410 (d) is desirable so as to remove the restriction on the Commission's authority to deny applications, it is believed that the act should be further amended so as to give effect to the aforementioned annual report recommendation. However, the Commission has no objection to enactment of H. R. 9772 (R. 293–294).
WESTERN FREIGHT ASSOCIATION
(Carl E. Anderson) The proposal to allow the Commission to consider whether a new forwarder service will be in competition with service already ex. isting is approved. There is a limit to the amount of business avail. able to forwarders anywhere, and the more forwarders there are in the field to divide the business the more difficult it becomes for any of them to give adequate service (R. 1425).
AIRCRAFT INDUSTRIES ASSOCIATION
(Harry R. Brashear) H. R. 9772 would eliminate from the Interstate Commerce Act section 410 (d) which forbids the Commission to deny authority to enter into freight forwarder operations, solely on the ground that the proposed service would be competitive with existing freight forwarders. The objective of this bill is definitely and clearly opposed to the free enterprise principle (R. 1324).
(Fred Carpi) H. R. 9772, a proposal to eliminate section 410 (d) of the Interstate Commerce Act must be viewed against the background of the original legislation embodied in part IV which, while recognizing that freight forwarders bore a conimon carrier responsibility to their own patrons, definitely regarded them as shippers in their relation to the common carriers whose services they employed at the published rates of such carriers. Forwarders also were treated in such original legislation as not entitled to any rate advantages over any other shipper availing itself of such carrier services. Since freight forwarders were so regarded there was no reason to prevent any responsible person from engaging in the business. As they customarily provided no facilities of physical transportation on which the shipping public might be expected to pay a fnir return, there was no reason to require a certificate of convenience and necessity as a prerequisite to their operation as in the case of railroads, or motor or water common carriers.
Also reflected in the original legislation, was the fact that certain of the freight forwarders were controlled by or affiliated with certain railroads. Other railroads had not acquired forwarders, which had been held to be shippers. However, they desired the right to establish a forwarder if that should appear necessary or desirable. In this they were affected in part by the fact that freight forwarders, having the right of shippers to transfer their traffic to another railroad or transport agency, could deprive a railroad of a forwarder service previously maintained over its lines.
In view of this situation the eastern railroads oppose this bill unless amended so as to fully preserve their present right freely to establish a new forwarder operation as now permitted by subsections (c) and (d) of section 410. This could be done by restricting the scope of subsection (d) so as to apply only to common carriers subject to part I of the Interstate Commerce Act.
The forwarder has the shipper's advantage of being able at any time to withdraw its traffic from one carrier and to give it to another. Physical facilities provided by the railroad may cease to be used and the railroad be injured in its business. It is therefore of prime importance to the railroads that they shall not be denied opportunity to establish a new forwarder operation to fill the vacuum (R. 1214-1216).
MEMPHIS FREIGHT BUREAU
(O. A. Mitchell)
With reference to the statement of witness Morrow for the Freight Forwarders Institute, in connection with this bill, that the 1955 tonnage of freight forwarders was below that of 1943, it should be noted that 1943 was a peak wartime year when rails and trucks also handled more tonnage than in 1955. The earning sof forwarders in 1955 were more than double the earnings in 1943. Revenue in the former year increased 112.5 percent over 1943. In addition, since 1943, forwarders have greatly curtailed their short-haul services (R. 1262–1263).
NATIONAL INDUSTRIAL TRAFFIC LEAGUE
(William H. Ott) The proposed elimination of section 410 (d) would give the Commission authority to deny an application to operate as a forwarder solely on the ground that it would be in competition with another forwarder. Such a change would not be consistent with the position of forwarders under the act and should not be made. Because of the wide territorial coverage of the permits now in effect, it would be almost impossible to secure the issue of any new authority.
The public interest is best served by limited entry into the business of actual transportation; contrariwise, it is best served by relative freedom of entry into business which acts as an intermediary between actual carriers and the shipping public. In 1953, 65 percent of the gross revenue of 61 class A forwarders was received by the 4 largest. This degree of concentration demonstrates the desirability of maintaining freedom of entry for new operators (R. 946–947).
R. H. MACY & CO.
(E. J. Derenthal) H. R. 9772, eliminating section 410 (d) which prevents the denial of forwarder-operating authority solely on the basis of competition with existing services, is protested. Coupled with the proposal to restrict shippers associations, an association would not be in a position to apply for a permit as a forwarder to continue operations. (R. 1037).
SEARS, ROEBUCK & CO.
(John C. Allen)
The effect of H. R. 9772 is to restrict entry into the freight-forwarding field, contrary to the public interest. The Commission has said that overcrowding in the field could result from the ease with which permits may be obtained, but it is not shown that it has actually happened. "Statistics indicate a concentration of business in the hands of three companies. This bill is not consistent with the dynamic competition theory (R. 1457).