Evening star., 1948-11-14
|TruCksForrn
Real Threat
|ToRailroads
High Rates, Shortage
of Cars and FOB.
Cause Losses
By Roder Winoet

BY Roder Winget
NEW YORK.-Highways are hurl-
ing a new major threat against the
railroad business.
So far it is only a threat, and so
far it has attracted principal atten-
ton in the steel industry.
Competition from truckers on
highways is based on three factors
that give them a current competi-
tive edge over their giant rivals on
rails.
They are:
/. Rail freight rate increases.
2. A sortage of freight cars to haul
record steel production.
3. A change from the basing point
method of pricing steel products to
an fob. basis
The railroads have increased their
freight rates about A per cent since
mid-1946, and they have a petition
for another 13 per cent boost to be
heard November 80 before the Inter-
state Commerce Commission. Truck
rates have gone up sectionally by
20 to so per cent since prewar.
Truck Use Increases
Each time freight rates go higher
more shippers change to trucks il
they can save money. Trucks, before
the war, did about a quarter as much
business as railroads. Now they are
doing better than IS per cent as
much.
Freight car loadings this year are
about 8 per cent under a year ago;
truckers are hauling about 20 pei
cent more than in 1947.
Steel production now is running
near an annual record high rate
But there are only 289,l07 railroad
gondola cars (as of October u in
service as against 301 ,587 year ago
The Association of American Rail-
roads said the shortage of such cars
is reported from almost all sections
including the steel areas of Pitts
burgh, youngstown and Bethlehem
Fear for Highways
If steel customers caa't load their
orders on freight cars, they turn to
trucks and to waterway transporta-
ton. Truck-trailer manufacturers
report recent large increase in Or
ders for fat-bed trailers suitable for
carrying steel.
incidentally, many have voiced
fears that the Nations highways
which faced a mammoth $1,00O,-
100000 repair bill last spring as an
accumulation of wartime neglect,
would be further pounded down by
the increased truck traffic. Truck
ers belittle these fears and point
out that the American Automobile
Manufacturers Association esti.
mated that all taxes paid by all
trucks last year amounted to 1884,.
123,0 900, which would pave a lot ot
highways.
} FOB Costs Added
The third reason for increased
truck competition-the change in
quoting steel prices to fob. mil
from the basing point method un-
der which steel mills absorbed some
Of the freight-also is linked with
higher freight charges.
Steel customers, since July must
pay the same mill price, and the
freight to their plant is added
That made them conscious OF
mounting freight costs by rail. A
number Of them changed to truck
where possible, because rates were
cheaper.
The first two factors-higher
freight rates and car shortages
were given by the head of one of
the Nations largest steel corpora
tions as the prime reasons for what
he called an inclination to change
to trucks from railroads"
Railroad authorities admit both
reasons and contend they are tenn
porary. The cost of operating rail-
roads is rising. Hence the demand
for higher freight rates. The cost
of doing business by truck also is
going up. Truckers, the railroads
say, also will find they must get
pmore revenue to stay in business
Equality of. rate increases, they say
will return transportation compe-
tition to the traditional basis.
Car Orders Grow
Railroads, as of October l, had
1885 gondolas on order as against
only 9,08S year ago. As the cars
go into service and as the unprece-
dented demand for steel eases, de-
livery by rail will be easier.
The American Trucking Associa-
ton says the loading of iron and
steel on trucks increased sharply
this year over last-38.7 per cent in
August, 40.7 in July, 30.8 in June
IA in May, 25.8 in April and 30 per
cent in March.
But lest too hasty conclusions be
drawn from these figures, the AS.
sociation also pointed out that in
August, l947, the movement of iron
and steel by truck increased 1853 per
cent over August, 1916, and in July
of last year, the increase was 485
mar nonf o,,or a mann haforo