1960 1307** 884 122 68 423 236 32 Does not include coastwise and intercoastal ton-miles, which amounted to 282 billion in 1955, 280 billion Reasons for trends away from common carriage: There are many reasons, of course, for these trends away from common carriage. I shall list only a few of the more important ones and comment briefly on why they have been a handicap to common carriers in the competitive race for both freight and passenger traffic. Competition from unregulated carriers: As already pointed out, existence of literally millions of unregulated carriers, including exempt and private water carriers, exempt trucks and private trucks and automobiles, all have put the rigidly regulated common carriers at a decided competitive disadvantage. The unregulated carriers can pick or choose their traffic and adjust their rates and/or service at a moment's notice as the situation demands. They also have no obligations to the general public, other than to operate safely, so do not worry about such things as serving marginal or unprofitable points and following set schedules regardless of available traffic. As mentioned previously, there is a growing concern about the apparent rapid growth of illegal for-hire trucking operations. Such operations, conducted through such subterfuges as buy and sell and phony leases in an effort to come within the legal scope of private carriage, are estimated to amount to as much as 25 percent of total intercity truck traffic. Unbalanced national transport promotional policies: There is no question that the Federal Government has played an important role in the growth of different modes of transport through its promotional policies. For instance, users of transport facilities provided by the Federal Government, in some cases with no reimbursement, have been placed at an advantage over carriers not benefiting from such programs. Inland waterways, for example, have been built and maintained by the Federal Government without any provision for reimbursement. Outmoded regulation: It is obvious that today's regulation cannot be conducted within the philosophies of regulation developed when almost all for-hire transport was regulated. Of course, the law has been changed over the years but the situation has been changing even faster. Certainly, with the availability of so many means of transportation today, the need to require common carriers to perform unprofitable services is far less important than it was prior to World War II. Yet, such services are still legally required, particularly in the air, bus, and rail passenger field, despite the increasing difficulty of these common carriers in trying to recoup resulting losses from other traffic because of the growth of competition. Discriminatory taxation: From the trends noted previously, it is apparent that common carriers are in no position to be burdened by discriminatory taxes. Yet, for many years following the end of World War II, they were forced to continue charging their users, both freight and passenger Federal excise taxes, despite the fact that most of their unregulated competitors were exempt from such taxes. While the freight taxes, largely through the efforts of the subcommittee's chairman, were finally repealed in 1958, the 10 percent passenger tax still remains and continues to discourage the use of public common carriers for travel. tional, regulatory, and judicial agencies have no clear policy guidance upon which to base their actions in this respect. We seem to want our cake of common carriage and, at the same time, eat it. 2. Overemphasis in regulatory law and practice on "meeting the competition"-which is usually interpreted to mean price competition does not recognize the fact that costs of efficient common carriers may be higher than costs of other efficient carriers of like mode in the same traffic, due to public service costs imposed on common carriers as a condition of their franchise. Price competition by unregulated carriers is permitted to force the common carrier to "meet the price competition" or forgo the traffic. This does not mean that common carriage is inherently uneconomic as compared to other carriers but that the service requirements imposed upon them are often more costly. Policy should be established that, if the public wants common carrier service, the public service costs incident thereto must be met by the public and unregulated for-hire carriers cannot be permitted to undercut just and reasonable common carrier tariffs. exception hereto would exist in the case of regulated contract carriers when justified by lower cost in a dedicated service. 3. Some common carriers, especially by motor, are denied full utilization of equipment and forced to offer incomplete service to customers because of balkanized operating authorizations as to commodities. routes, and points served. Efficiency demands broadening such authorizations on request in the interests of overall national economy. As a first step in this direction, policy should be established that no greater weight should be given arguments opposing broadened authority requested by an existing common carrier than is given to demonstrable cost reduction and improved equipment utilization of the applicant. 4. Unnecessary mixing rule restrictions are imposed by law on common carriers by water who participate in bulk traffic. These restrictions impair efficiency and increase the cost of the common carrier by forcing him to separate barges carrying regulated cargo and barges carrying exempt bulk cargo into separate tows. An immediate action. could be to modify this aspect of the mixing rule. 5. Common carriers by rail have been assisted by passenger train discontinuance provisions of the Transportation Act of 1958 but are still required to maintain much uneconomical branch-line and waystation freight service. Substitution of short-haul trucking incident to a prior or subsequent rail move from the most convenient rail center should be facilitated on application. 6. At all points served by two or more railroads the railroads should be permitted and encouraged through antitrust exemption to operate jointly a single less-than-carload rail freight consolidating facility where such freight could be consolidated by destination regardless of originating railroad, thus improving service and reducing cost. Common carriers by motor, water, and air should be equally so privileged. 7. Recognition of the right of private carriage has been stretched to permit a private carrier who so desires to subsidize his private operation, conducted without obligation to the public, and over public rightof-way by entry at times and places of his own choosing, and under conditions which he dictates, into for-hire carriage. Rationalization of exemptions from regulation, control of leasing, and effective en Mr. Hershey commented on an article in the Harvard Business Review, and with another hat on, as a professor at the school which puts out that publication. I might say that I know the author of that article well, Professor Flood, and admire him but I think I should say that I associate myself with Mr. Hershey in regard to his reaction to it, rather than Mr. Flood. In the TAA operations I do come in contact with shippers, with users who do take the longer run. There could be many, many more of them. And I think that the shortrun view which simply looks ahead a very short time and looks for the shortrun gain and forgets the kind of longrun interest that the shipper has in the preservation of available common carrier service, is the wrong one. Users and the general public: The users of common carrier service must share part of the responsibility for its decline because of the willingness of many of them to take advantage of shortrun gains to themselves by using unregulated carriers despite the effect on common carriers. In recent years, transportation has become a "buyers' market" because most transport users have an abundance and wide selection of carriers eager to handle their traffic. Shippers also have not been sufficiently aggressive in pressing for changes in our national transportation policies which will strengthen our common carrier system. The general public, possibly through no fault of its own, is nevertheless partly responsible for the plight of the common carriers because it has taken these carriers for granted and complained only after the situation has become bad enough to affect service. Then, as in the local transit field, it insists on common carrier service even if the Government has to provide it. I might add, in regard to my previous remarks as to the editors of that review, they long ago ceased to pay any attention to professors in the Harvard Business School. Specific proposals: TAA has some specific policies to recommend to deal with the problems which we have enumerated. For the record, the TAA board normally reaches its positions through its cooperative project on transportation policy as follows: Proposals are made by one of TAA's eight panels-permanent committees user, investor, air transport, freight forwarder, highway, pipeline, railroad, and water carrier. Approximately 250 men voluntarily serve on these 8 panels. Occasionally a proposal is suggested by the TAA board, or by the policy committee of the TAA board which handles the project's activities. All eight panels take positions on all proposals; if disagreement develops, peacemaking is carried on through a coordinating committee under the chairmanship of the cooperative project moderator-and for the most part, workable areas of agreement are found and the policy committee can recommend to the board, positions that are approved or not opposed by the eight panels. I am not going to present to you a number of these recommendations which have ended up as TAA positions. In a few other cases, which I shall explain specifically, I shall mention subjects which are of importance to the common carrier industry but on which TAA's panels, policy committee, and board have not yet taken cooperative positions. tem, which I submit historically has been always that the program of public aid to transportation was to give this country good common carrier service, and therefore the historical purpose is being challenged by the failure to develop, as Dr. Baker just pointed out, a unitary Government program. The time has come, as it is, that the unitary program must come. I think that is the basic conclusion. We have made that entirely clear and convincing. The corollary of that is that the direction of our policy is an important matter. It takes a long time to work out the specifics, but the direction has got to be changed now. And that to approach this thing you cannot take specific issues individually, separately, what a user charges, or the desire to get into other modes of transportation, diversification, as they call it, separately. The public interest is common carriage as a whole and the public as a whole will not be served unless it is approached on a very broad basis. I am hoping legislation won't be quick coming but that it will be broad and have an adequate basis. I believe that is all that I have to say. Senator SCHOEPPEL. Thank you very much, Dr. Fair. Senator SCHOEPPEL. The next witness is the Honorable Everett Hutchinson, Chairman of the Interstate Commerce Commission. STATEMENT OF HON. EVERETT HUTCHINSON, CHAIRMAN OF THE INTERSTATE COMMERCE COMMISSION; ACCOMPANIED BY COMMISSIONER LAURENCE K. WALRATH Mr. HUTCHINSON. Thank you, Senator Schoeppel. With me at the witness table is a witness for the Commission from the State of Florida, Commissioner Laurence K. Walrath. Senator SCHOEPPEL. We are delighted to have you two gentlemen here. Mr. Chairman, I note that you have a statement. You may proceed in your own way. We will be glad to hear you. Mr. HUTCHINSON. My name is Everett Hutchinson. I am the present Chairman of the Interstate Commerce Commission and have served in that capacity since January 1 of this year. I am appearing today to present the Commission's views on the general subject of the factors responsible for the decline of the Nation's essential common carrier industry. In order to fulfill its intended purpose of meeting the needs of the commerce of the United States, of the postal service, and of the national defense, our Nation's transportation system must be strong, stable, and progressive. With this in mind I will try to describe briefly the current situation of our transportation system, and it is as it is, and to suggest some possible remedies. There is evidence that there has been a general decline in the regu lated carrier industry. It is necessary to distinguish, of course, between relative decline and absolute decline if the picture is to be accurate. Considered on an absolute basis, regulated freight transportation has either grown or, as in the case or railroads, has remained fairly constant over the past decade, with the exception of rail passenger service which has experienced a sharp decline. The distinetion between absolute and relative decline is necessary to make it clear |