Mr. SCANDRIDGE. I find it most severe on the west coast. But, of course, that's where I am. They are really getting to us out there. They are charging $60 to unload palletized and they never touched the product.

Mr. LYNCH. Did you have some items you wanted to submit for the record?

Mr. SCANDRIDGE. Yes, I have copies of them.

Mr. HUNGATE. They will be admitted then. Thank you very much for some helpful information. We will have to move along. Mr. LYNCH. Mr. Hirschbach.

Mr. HUNGATE. Please raise your right hand and be sworn. Do you solemnly swear that the testimony you are about to give will be the truth, the whole truth and nothing but the truth, so help you God? Mr. HIRSCHBACH. Yes, I do.

Mr. HUNGATE. Please be seated. State your name and address for the reporter and the subcommittee.

TESTIMONY OF GEORGE HIRSCHBACH, VICE PRESIDENT,

HIRSCHBACH MOTOR LINES, INC.

Mr. HIRSCHBACH. My name is George Hirschbach, 5000 South Lewis Boulevard, Sioux City, Iowa. I am vice president of Hirschbach Motor Lines, Inc., common carrier domiciled in Sioux City, Iowa.

Mr. HUNGATE. You have a prepared statement and without objection it will be made part of the record. We welcome you. You may proceed as you see fit. We are operating under a 10-minute rule.

Mr. HIRSCHBACH. Mr. Chairman, the problem, as I see it, whether you want to blame it on the overregulation or underregulation with the independent trucker is rapidly rising costs with an inability of the truckers to recoup those costs, basically.

The independent trucker is broken down into two categories: The independent trucker who transports the exempt commodities where there are no barriers to entry, and the regulated carrier who trip leases to the independent trucker on a trip lease and a permanent lease basis.

Mr. Chairman, it is axiomatic that the independent owner-operator trucker is vital and necessary to our Nation's motor transportation system. The owner-operator strike in 1974 precipitated by a lack of diesel fuel and concomitant rising costs, absent revenues to cover those costs, brought their problems sharply into focus to millions of Americans, particularly the shipping public.

It is also true that this country has the best motor carrier transportation system in the world. Our equipment technology and reSources, our skilled drivers and operators, interstate highway system, and public demand for goods of all varieties, which must be loaded and delivered with prompt dispatch, has obtained for our people a motor carrier service system second to none. A viable "for-hire" motor carrier system, under the jurisdiction of the Interstate Commerce Commission, has emerged, which our Government officials and representatives must not allow to be torn down by deregulation.

This system must remain viable for the small less-than-truckload shipper as well as the large giant shipper to move their goods at rea

sonable prices at nondiscriminatory and nonprejudicial rates. Before addressing myself to the regulatory problems affecting the independent trucker in this business, it is necessary to bring to your attention some background facts.

Prior to 1935 all motor carriers were exempt. Our system operated much the same system as the exempt truckers today. Anyone could go in the business under a system of laissez-faire.

Highways were unsuitable for heavy duty motor vehicles and motor carriers were not a substantial factor in long haul transportation of goods at that time. But with a growth of the motor carrier industry, Federal regulations had to come and had to come for the same reason that the railroads were regulated.

That was to prevent competitive abuses, unjust discrimination, undue prejudice, and preference among the entire shipping public. Moreover, the nonregulated independent motor carriers became engaged in rate wars without quarter, for the shippers' and receivers' traffic. Their rate of attrition was extremely high.

Now, these motor carriers were forced by competition to transport goods below cost. The end results was operation of unsafe equipment on the highways because it could not be properly maintained and also rendition of an inferior service through a lack of working capital to provide a good transportation service to the public.

On August 9, 1935, the Nation's motor carriers came under the jurisdiction of Congress' agent, the Interstate Commerce Commission. It was previously testified here today and as you are well aware, all commodities are not regulated.

Many of our present grandfather common carriers can be traced back to this 1935 regulatory act. Now, these carriers provide adequate for-hire truckload and less-than-truckload service to all shippers without discrimination and prejudice. They serve the hundreds of small Iowa communities whose lifeline is totally dependent on their service. They have contracts with our Nation's teamsters whose drivers are among the best drivers in the world.

I am not going into the problems that deregulation would cause the irregular route commodity carrier because I am sure in proper time they will speak for themselves. I am convinced, however, that if you deregulate the trucking industry and allow free entry for all truckers to compete for the nonexempt goods moving in interstate commerce, absent a showing to the ICC, that the present or future public convenience and necessity or the national transportation policy, require the service, would push us backwards in the pre-1935 days where truckers were forced to haul goods at ridiculously low rates.

The single or small operator with substantial payments on expensive tractor-trailer equipment would be priced out of business. After they were broken, the rates would eventually go back up again and only the giants would survive.

In order to compete with the large carrier, the single or small truck operator would be forced to forego equipment maintenance, upkeep and compliance of safety and hours of service regulation of the Department of Transportation. Independent owner-operators are an important part of the transportation picture.

Problems must be addressed and rectified if at all possible. Deregulation will not solve their problems. However, it would cause farreaching disastrous consequences not only for the operator, truck driver, and common carrier but also the shipping public.

On the other hand, our present regulatory system is far from perfect and of course, needs improvement. Accordingly, I am for regulatory reform rather than deregulation.

This subcommittee has invited me to express my views on the regulatory problems which affect independent owner-operators especially. I am not certain that the regulatory problems affect solely the independent owner-operator in the trucking business.

All of us in this industry are affected by regulation. But in any event, an unhealthy and dissatisfied owner-operator is of no benefit to the common carrier.

Accordingly, I will convey to this Commission what I think a number of the problems are, what is or is not being done, and what I think should be done to help the independent owner-operator.

I will cover only two administrative agencies; the Interstate Commerce Commission and the Department of Transportation and also common carrier management.

The first problem that I would like to address myself to is the fuel problem. Our operators must have an adequate supply of diesel fuel and increased costs thereof must be recouped by these operators. Motor carriers, especially carriers of perishable commodities, foodstuffs, and other top priority items, must have all the fuel that they need.

Management. Common carrier management must not and should not be allowed to profit from increased fuel prices borne by the independent operator. The Interstate Commerce Commission has presently in effect a simple rule of procedure which allows the carrier to raise his rates to defray increased fuel costs.

But the problem is the motor carriers are not utilizing this procedure. It should be required to do so under Interstate Commerce Commission's scrutiny. Revenue obtained under the fuel recoupment procedure should be passed on in its entirety to the operator, and Congress should give the Interstate Commerce Commission the power to implement this rule properly.

Presently, average fuel costs should be ascertained, fixed, and any increase in the average fuel price indicator should be brought to the carrier's attention by the Interstate Commerce Commission. That increase should be passed on by the carrier directly to the operator without taking anything away from the independent contractor.

The next problem, as I see it, is equipment costs. Costs of equipment as well as all the other attendant items, which are grease, oil, tubes, insurance, so on and so forth, has risen drastically. Motor carriers utilizing owner-operators do not bear these costs.

Over the past 10 years I have seen tractors rise from a price of $18,000 to $40,000. The rates have not risen proportionately. Management as well as our independent contractor organization should keep and maintain records of these increases. The Interstate Commerce Commission should require all carriers and its leasing affiliates to provide this financial data with the view toward determining whether or not the rate structure is adequate to cover these increased costs.

Our very competent independent truck organizations should furnish the Interstate Commerce Commission on a voluntary basis on a form prescribed by them this cost information so the independent contractor's equipment and operating costs can be reflected in the

rates.

The next area that I'd like to cover is the assurances that the independent operator receives his proportionate share of the revenue. The common carrier's right to contract with its operator should not be interfered with by the Government. And indeed, our courts will not allow this to happen.

However, there is a point at which an owner-operator lease should not be written. In many instances the owner-operator and the carrier do not know what the operator's costs are.

And since most leases and I am talking here about permanent leases, not trip leases-are written on a percentage of revenue or a mileage basis. So the independent contractor's portion of the revenue must cover his costs plus a reasonable profit. This compensation, of course, comes from the rates that we charge.

An owner-operator who leases his vehicle below the operating costs will not be able to maintain a safe vehicle and will be forced to drive while fatigued to save driver wages. Eventually, he will either wreck his vehicle or go broke and lose his truck. Of course, this is not in our national interest.

The Interstate Commerce Commission has issued an order requiring carriers to show the operator the gross revenue his runs produce to prevent any cheating. However, this does not go far enough. Under regulatory reform the operator's costs should be considered and dealt with positively.

The next area that I'd like to cover this morning with the subcommittee is the paperwork which must be accomplished by the operator. Most of the paperwork required of the operator stems from the safety and hours of service rules and regulations of the Department of Transportation. The Department of Transportation, of course, as you are familiar has a vast code of safety regulations to prevent mass slaughter on the highways.

I am not for relaxation of these rules in any way, shape, or form because our Government must maintain and insure that we have good competent rested drivers and good equipment in good working order. The recent bus accident in California I am sure brought that sharply to our attention.

However, much paperwork could be curtailed and streamlined for the benefit of the operator and carrier because you must remember that if all paperwork that the operator accomplishes, the carrier has to check it out, ascertain it, and file it.

One of the areas that I would like to cover in that regard is the driver's log. Our truckdrivers have to make a log for every day of their life whether they are on duty or off duty. That has to be submitted to the carrier and filed for a year.

The Department of Transportation currently has under consideration a 5-day log on one piece of paper. This rule should be implemented quickly so that we could avoid the avalanche of paperwork that the operator and the carrier must provide. Along those other lines, the

paperwork will be streamlined as it pertains to equipment maintenance reports and all the other items.

Another area, Mr. Chairman, that I believe this council today touched upon was the unloading of the operator's vehicles. With the exception of the regular route general commodity L.T.L. carrier and possibly the household goods carrier, an operator should not be required to load and unload his truck.

He has enough to do to drive the truck from origin to destination and getting it there safely. Another practice prevails today not only in the meat industry but transporting other types of commodities is that once the operator gets there, the receiver will not unload the vehicle. He is either required to unload it himself while he is tired or to hire some outside lugger or independent third persons to unload that at rip-off prices.

The motor carriers have implemented a rule, of which I was a part of, that requires the shipper to load, the carrier to unload. The Interstate Commerce Commission approved this rule; however, the recent court decision overturned it on the basis that loading and unloading is an historic function of the motor carrier and it should not be dispensed with without a corresponding decrease in the rates.

I urge this subcommittee to look into this matter so that we can reinstitute the shipper load-carrier unload rule. Many of my own trucks and the independent contractors that I use are forced to pay anywhere from $50 to $100 a trip to unload that vehicle. If you take that on the basis of 50 trips per year, you can easily see that it will run anywhere from $2,500 to $5,000, which is completely unnecessary and it's absurd. The size weight restrictions is the last area that I am going to touch upon. I am sure you are familiar with it. In order to conserve our Nation's precious energy fuel resources, which is brought to our attention by the Arab oil boycott, we slowed our equipment movement on the highways down to 55 miles an hour.

However, the Federal Government allowed for 80,000 pounds on the interstate highway system. I have attached in my testimony an exhibit that shows which of the States, and you will see that there are 34 of them that allow us to go 60, 65 feet, and transport 85,000 pounds of goods.

Unfortunately, one of the States that you're sitting in here today to hear this testimony, the great State of Iowa, has got extremely inclement weather for the trucker to transport on our highways. The implementation of this rule would allow us to haul another 7-to-10,000 pounds of product on our trailers, which would definitely work to the benefit not only of the common carrier but the independent contractor trucker.

Your Honor, the rest of my testimony has been reduced to writing. I ask that it be received. I see that my time is about up and I will quit. Mr. HUNGATE. Thank you, sir. Statement, Mr. Bedell?

Mr. BEDELL. Mr. Hirschbach, how does your firm operate? I take it you are a certificated common carrier?

Mr HIRSCHBACH. Yes, we are.

Mr. BEDELL. What sort of loads do you carry and how do you operate?

Mr. HIRSCHBACH. We transport primarily meat and packinghouse products from the Midwest to the South, Southeastern States, which