EXHIBIT B

ACTUAL BOXCAR SHORTAGES AT 10 SOSTA MILLS, WEEK OF SEPTEMBER 7-10, 1965 This was a 4-day week because of Labor Day, and the car supply should have been better than usual because the Southern Pacific had an extra day in which to build up and supply empties.

NOTE.-All these mills had greater than usual order files and back orders for boxcars due to the severe car shortage in August. However, these figures are based on the regular loading ability providing cars had been furnished as ordered.

Mr. STEWART. And regardless of what Mr. Perlman or anyone else says about this grain, and so forth, I want you to know that my exhibits show that we do have a shortage out in Oregon. And if Mr. Perlman has 10,000 or 8,000 boxcars that he wants to get rid of, then it appears that somebody is not doing their job, because we need those

cars.

The CHAIRMAN. Thank you, Mr. Stewart.

Mr. Younger.

Mr. YOUNGER. May I ask one question, Mr. Chairman?

The CHAIRMAN. Yes.

Mr. YOUNGER. Is it true that some shipments are routed to the market, and then you sell it in transit?

But none

Mr. STEWART. I would say that there are some cases. of my mills are what you call transit shippers. We sell our product first because we like to know what we are going to get for it. I think if you will check with the ICC it will show that our transit shipping in lumber and plywood is practically nil any more, it is going out more and more every year. There are some instances where a mill has no order when it will ship a few cars hoping that they will be sold

en route.

But this goes back many years. What brought this on was the inability of the railroads to supply cars. Because we might have something in June, and we didn't think we would have any cars in July. So we would ship it in June.

Mr. YOUNGER. But that is history?

Mr. STEWART. That is history.

The CHAIRMAN. Thank you very much.

Mr. STEWART. Thank you.

The CHAIRMAN. We have, I think, three other presentations and the hour is getting late. I think under the circumstances the appropriate thing to do would be to come back tomorrow afternoon at 2 o'clock.

(Whereupon, at 4:35 p.m. the committee adjourned, to reconvene at 2 p.m. Thursday, October 7, 1965.)

NATIONAL FREIGHT CAR SHORTAGE

THURSDAY, OCTOBER 7, 1965

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C.

The committee met at 2 p.m., pursuant to recess, in room 2123, Rayburn House Office Building, Hon. Oren Harris (chairman) presiding. The CHAIRMAN. We are going to proceed.

The first witnesses-I suppose you are appearing together-Mr. Lamprecht and Mr. Waterman. I understand they are not here at the present time. Is Mr. Burks here? Mr. Burks is president of the American Short Line Railroad Association.

Glad to see you again. Welcome back to the committee.

STATEMENT OF CARROLL P. BURKS, PRESIDENT, THE AMERICAN SHORT LINE RAILROAD ASSOCIATION

Mr. BURKS. Thank you, Mr. Chairman.

Mr. Chairman and members of the committee, my name is Carroll P. Burks. I am president of the American Short Line Railroad Association and have been engaged in the railroad transportation industry for 35 years. In a majority of these years, I have been occupied in operating-supervisory positions, or in management of both class I and class II railroads.

The American Short Line Railroad is a voluntary, nonprofit organization comprised of 248 member lines located throughout the United States and consists of class I and class II railroads in both road haul and switching categories.

At our last annual meeting held in Milwaukee, Wis., the membership voted unanimously on September 29, 1965, to oppose any legis lation giving the Interstate Commerce Commission power to prescribe penalty per diem rates for use of freight cars. Today I am, therefore, representing our membership in opposition to H.R. 7165 and related bills, and to S. 1098.

Much testimony was given in hearings conducted by the Senate Commerce Committee earlier this year, and before other Congresses in previous years on this legislation. A number of western railroads, along with the grain industry and the plywood industry have supported the bill, while a number of eastern railroads and the short line railroads have opposed it. On the opposition's side, we have endeavored to prove that increased car rental rates will not serve as an incentive to build more cars; that 85 percent of our Nation's class I carriers merely exchange per diem dollars on an approximate even

basis, and that a majority of those roads benefiting by per diem rate increases would be essentially coal and ore hauling railroads. This, of course, does not enhance the boxcar supply wherein the majority of shortages exist.

While we in opposition to this legislation certainly recognize that car shortages do exist, we certainly disagree that low car rental rates are responsible. The decline in car ownership began with the end of World War II when railroad profits were reduced in proportion with the decline in intercity freight traffic transported by rail.

Fortunately, however, during the past 3 years, rail intercity freight traffic has increased and the railroads have placed orders for 60,000 to 70,000 new freight cars in each of these 3 years. These new cars are of much larger capacity, and, coupled with the railroads" "stretch-out” program of rebuilding 40-foot box, hopper, and gondola cars into 50footers, we are transporting more and more tonnage in fewer cars. Cognizant of the car shortages and resultant losses of profit, the railroads have not yet caught up with the demand, but we are making great strides in that direction.

If I may depart from my written statement for just a moment, what I am saying is that I disagree that the railroads are not doing all that they can do to alleviate the car shortage situation. We have only one thing to sell, and that is transportation service. Unfortunately we went through a period of declining profits and hardship. Along with our depletion of rolling stock we necessarily suffered by deferring maintenance of track and roadways and buildings, in an effort to keep income above expense, and thus survive. So I think that we are doing something about the car shortages.

I think the railroads are working together to alleviate the car shortage. The only disagreement we seem to have is as to whether per diem increases or car rental rates will alleviate the car shortage situation, and I for one and many like me do not believe that it will, and this is our disagreement. We are working together. We have sponsored many technological advances, and these have played a major role in returning freight traffic to the rails; other incentives of overall profit increases have contributed to our expansive car-building program. Benefits derived from the 7-percent tax credit; application of liberalized depreciation allowances; continued freight rate modification and utilization of higher capacity equipment have largely been responsible for improvement in railroad earnings and thusly have contributed to our car-building program. On the other hand, increased per diem rates established on a multilevel basis by the Association of American Railroads beginning January 1, 1965, have increased the costs to many of our short lines and have already placed the very existence of many of them in jeopardy.

Contrary to the statement of Mr. Eldon Martin yesterday wherein I understood him to say that per diem costs were frequently less under the multilevel system, it has been the experience of the short lines that our per diem costs have risen or increased from 200 to 300 percent since the introduction of the multilevel rates.

Our short line railroads quite often represent the only rail service to a town or to a community. Many of them came into existence through the purchase of branch lines about to be abandoned by the