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unit malfunctions and spoils the load; in the event a driver turns robber and hijacks the truck, load and all. It is my responsibility to assure the recipient of an on-time delivery with the product in good condition.
I am making payments on the $60,000 tractor-trailer unit. I am buying the license and permits to travel through the various States my equipment travels through. I am paying road use tax. I am shelling out over $5,000 a year in cargo liability and collision insurance for each truck I run. I also employ a number of workers and must pay the same expenses that every other employer pays.
These are my expenses. But you are thinking of all the things the regulated carrier does for me. The regulated carrier has employees, so therein, along with office expenses, lies his capital investments.
The regulated carrier I have to lease to pays no road use tax. He owns no transportation equipment of his own so he buys no license or permits, no equipment payments and no insurance. The regulated carrier supplies me with a lease, which I pay him for. He supplies me with placards for my doors and I pay him for these, too.
I have enclosed a breakdown of the revenue on one of my trucks earned in a 1-year period. My profits after deductible expenses show $5,000. The regulated carrier skimmed off the top of the revenue earned by my truck, a total of $15,202.08. This is for one truck. We at Freymiller's are receiving 2 percent of the revenue because of our size whereas other independents running only one or two units are receiving only 75 percent. What must that figure, which would be considerably greater than $15,000, look like to a small operator like that?
As we celebrate this 200th year as a progressive independent Nation, I want you to know that I am questioning what this word independence means. For today as I ponder this situation at hand, I have the feeling that this independence that we are so proud of is not applicable to me and others like me.
Through governmental imposition, "authority," I am not allowed the same rights as those granted to big business. I am carrying the responsibilities that normally accompany such rights but the privilege and monetary gratification are denied me. Thank you.
Mr. HUNGATE. Thank you, Mr. Freymiller. We will proceed. Ms. Fitzgerald, who will be here next?
Ms. FITZGERALD. Mr. Scandridge.
Mr. SCANDRIDGE. My statement isn't in there. I didn't have time to get it in.
Mr. HUNGATE. I apologize for the restriction of time. As you look around the room, we have got a lot of people we want to hear from. We are in the 2-minute zone, so go ahead.
Mr. SCANDRIDGE. My name is Jim Scandridge from Victor, Iowa. Born and raised as a native of the Victor community. I am 31 years of age, and I am an independent trucker operating from my hometown, a small farming community of about 1,000 population. I have been in the trucking business for approximately 71/2 years beginning January 3, 1969, owning and operating one tractor and one semitrailer.
I am a licensed exempt commodity hauler and have seen several changes in the trucking industry since I began my career, especially in the field of operating expenses. It has become extremely difficult to continue as an independent trucker due to drastically rising costs and actual decreases in revenue.
We, the independent truckers, need help from our leaders of this democracy Government which is the greatest in the world. We are privileged to be able to contact our Representatives and talk over our problems.
We need the right to compete in our business with others in the field of transportation. The Constitution of the United States guarantees that all men are created equal and guarantees us the right to make a living as long as it does not infringe upon the God given rights of another person.
In the past several years I have been approached by small businesses in my home community, and other small businesses whom I have made contacts with. They have asked me to haul products for their small factories.
One company in my home community manufactures ingredients for animal feed. The owner of this company is a longtime friend of mine and a former schoolteacher by the name of Herschel Thornton, operator of Ladora Mineral, Inc. He has contacted me on several occasions to haul products for him but I have to tell him that I cannot do it.
The law of the land says I cannot haul a regulated commodity on my equipment unless I am leased to a regulated carrier and pay him 25 percent of the total revenue for the movement. I end up with 75 percent of the revenue, yet I provide the equipment and perform the duties.
Mr. Thornton has stated to me that he has a hard time receiving this service from large carriers that he needs for his small company. He has said he would like to use local truckers from his hometown to haul his commodities to customers. He asked me what we could do to make it legal so that we might conduct business with each other. I told him that I may be able to work with a carrier who has the rights, and I could lease to that carrier and haul his commodities under lease to another carrier.
I went around to different companies and tried to work out an agreement with them but with no results. So I had to go back to Ladora Mineral, Inc., and tell them that I could not give them the service they wanted. I told Mr. Thornton at Ladora Mineral, Inc., the only thing he could do was support our efforts to gain freedom for independents through legislation.
I have also run into the same situation with a company in Gering, Nebr., which manufactures steel buildings. They have contacted me to haul steel into their manufacturing plant in Gering, Nebr., but again I ran into the same situation and had to tell them I could not perform this service they desired me to do.
I own and operate two truck tractors and three semitrailers. Yet, we have to lease out to large carriers for about 80 percent of our loads in order to keep my equipment busy.
I operate one refrigerated trailer hauling exempt commodity products on it for a turkey processing company from West Liberty, Iowa. We haul interplant shipments for this company from Iowa to South Carolina and return and then to Modesto, Calif., and return.
It is a nice operation. We don't have to lease to another company to haul these commodities so we save 20 percent to 25 percent of the revenue. And I am able to keep it for myself.
At times we have to go to California to bring a load of meat back to Iowa but they do not have the load to ship out so we have to triplease a load of meat for a regulated carrier. I would like to explain how this procedure works and how the large carrier rips off the independent trucker.
Bear in mind that I own all equipment and am properly licensed within the States I operate in. I carry my own insurance and am liable for the proper care of the cargo. My insurance premium for the year 1975-76 is $8,300 for 12 months. Yet I want to explain how these carriers use the independent trucker and force us to pay for insurance and fuel taxes twice over while leasing to them.
On February 27, 1976, we trip-leased a load of meat from Vinton, Iowa, to Richmond, Calif. We contacted a company, a regulated carrier, in Denver, Colo. We asked about a load to California, and they said they would be glad to hire us for a trip.
They told me over the phone that they paid 80 percent of the revenue. I agreed to make the movement because I needed the load to get to California to pick up the load of turkey meat, which is exempt. So on March 16, 1976, we received the payment for this trip. I have a copy of the settlement with me.
Gross revenue for the trip was $1,344 less 20 percent to the truck operator. Then they deducted $21.50 for workmen's compensation insurance on my driver. I already pay over $700 a year for workmen's compensation insurance on this driver, but they said my insurance was no good while I leased to them.
Then they did not have the proper authority to pick up the load so they had to lease to another carrier to make that point to load the load. They charged me $35 for that.
Next, the guy who wrote the lease had to get something so they paid him $12.50 and charged me for that. When the total was done, they had deducted $112.01 after they had already deducted 20 percent off the top of the revenue. Gross revenue from the trip was $1,344. Net revenue to me was $963.19.
The sad thing about all this was that I am all set up with all the insurance and permits it takes to make a trip like this. Then when we have to trip lease out, we are paying for the same things over again.
The same situation happened to me on a load from Davenport, Iowa, to Oakland, Calif., for a large carrier out of California. I leased out to haul a load at Cedar Rapids, Iowa, from a local agent. I asked him what rate of pay they used and if they deducted all the different items I had experienced in the other lease. He said no, but he said they pay a lesser percent and the truck would still make more money.
I agreed to haul a load for him from Davenport, Iowa, to Oakland, Calif. The lease agreement was made on April 2, 1976. The load delivered on April 6, 1976. All papers were properly mailed in right after the trip completed. I received payment on May 14, 1976, settlement check No. 108076.
Gross revenue was $1,408. Net pay to the truck was $1,027.84. Truck received 73 percent of gross pay, and then they deducted $18.50 for permit fees which I already had all the permits I needed, $25.77 for fuel tax and I am properly licensed and responsible for all my own fuel tax, $5 for inspecting my truck to see if it was fit to haul their load, and they did not even see the truck, $8.25 for miscellaneous expenses.
I asked them what this was for. They said the miscellaneous charge was for office work and paper to make out the papers for me to haul their load. Examples like this show that these carriers are going to show a profit and the heck with the independent truckers. Yet these people complain that there is a shortage of independent truckers to haul their loads.
After pay scales like this, is it any wonder that any of us are left in business at all? Keep in mind that these are just two different cases concerning one independent trucker.
On March 3, 1976, I contracted a load of lumber from a town in Montana to Cedar Rapids, Iowa, through a trucking company in Montana. The gross revenue from the load was $865.22. Net pay to me was $660.17. They deducted $8.50 for permit fees and also said while I was leased to them, I was their employee and they would have to cover me with Workmen's Compensation insurance and they would deduct the premium from my final settlement.
I argued with them that I was an independent and I did not need it because I was working for myself. They told me I was leased to them and I was their hired man. But if I would not have to lease to them to haul a regulated commodity, I would not need their insurance. When they paid me, they charged 3 percent insurance on the gross revenue, not on the net revenue to the truck but on the gross. Why should I have to pay 3 percent of a total that I did not get? Because the independent trucker has no choice.
We have to hire out to these carriers to haul these commodities and then they pay us just exactly what they want to. We have no way of forcing them to pay us what is due us.
We badly need our freedom. We want to be true and free independent truckers, not people forced to work for other people. If we had the proper equipment to perform the job and the company or manufacturers want to hire us, we should have the right to compete in business just like our local hometown grocery stores.
The years 1975 and 1976 are the worst years I have seen since I began my career in the trucking business. In 1975 a severe recession crippled the economy of the Nation. We, the independent truckers, were faced with rising costs for fuel, tires, and insurance, decreased speed limits, and decreased revenues due to a decline of tonnage for shipments.
One problem of the decline of revenue was that these large carriers that we are forced to work for were having rate wars with each other, trying to get the business from each other because of the decline in tonnage of shipments. While carriers cut rates, the independent trucker who is forced to work for these carriers pays the bill with decreased revenue.
We need to get our message to our Congressmen because we desperately need some changes in our laws governing surface transportation. The small independent trucker will flourish if he has the right to compete in business. Service will be better for small shippers who complain they cannot get good service from large carriers.
My gross revenue in my small operation for the first quarter of 1976 was over $26,000. My net profit for the first quarter of 1976 was none, a loss of $777. This trend cannot continue much longer. We need your help soon. Tomorrow would not be soon enough. We want to survive and be part of a true, free American enterprise system.
Mr. HUNGATE. Thank you, sir. We will have to go to the questioning. Time is getting to us.
Mr. BEDELL. First of all, I would like to thank you folks for your testimony and your help. It is limited to 5 minutes, and in my questioning I will try to hit some of the items that I think may not come up later.
Mr. Freymiller, in your statement you indicated that you get 82 percent of the revenue and smaller truckers only get 75 percent of the revenue that you contract with carriers; is that correct?
Mr. FREYMILLER. That's correct.
Mr. BEDELL. Why is it that there is a discrepancy in how much of what percentage of revenue goes to the contract carriers ?
Mr. FREYMILLER. The only reason that I am getting 82 percent is because I have had other large regulated carriers due to the number of trucks that I own come to me and keep raising it. In other words, they will say, "I will give you 3 percent more than this carrier, this other carrier will because we'd like to have all 27 of your trucks."
Then the next carrier comes along and he says, "OK. If he will give you 3 percent, I will raise it by another 3 percent but stay with
So they are up to 82 percent now, and I am contemplating 85 percent shortly.
Mr. BEDELL. So the bigger independent operators really have a bargaining position that would not exist with the independent operator that only operates one or two rigs; is that correct?
Mr. FREYMILLER. That's correct.
Mr. BEDELL. You feel that your costs are higher because of having more rigs?
Mr. FREYMILLER. No. I feel my costs are lower than the independent with one or two trucks.
Mr. BEDELL. So this really makes it all the tougher, if I read you correctly, for the independent with one or twa—the small independents to continue to stay in business; is that correct?
Mr. FREYMILLER. That's correct. On one of my trucks I had a $5,000 net profit for a year. I am sure that that additional 7 percent that I received because of the larger fleet is the only reason that I have a profit.
If that had been an owner-operator with one or two trucks, he would have had a negative figure.
Mr. BEDELL. Some of the independents who have testified in Washington before us have indicated that in their opinion these charges