ALASKAN AND HAWAIIAN TRANSPORTATION THURSDAY, OCTOBER 29, 1959 U.S. SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Senator BARTLETT. The meeting will be in order. This is a joint session of the Senate Committee on Interstate and Foreign Commerce and the House Committee on Interstate and Foreign Commerce. We are glad to be in Fairbanks for what may be, probably will be the final hearing within Alaska on a number of bills of importance to the State, dealing with transportation and other matters. The committee started hearings at Ketchikan and to date has been at, additionally at Juneau, Anchorage, Seward, Cordova, and Valdez. I should like at this time to introduce to the Fairbanksians who are in the hearing room those who are making this trip and since this is the place where we'll hold our final hearings in the State, I want to express at this time my personal appreciation to Congressman Moulder and every member of the staff and those from other agencies and from the industry who have accompanied me on this trip, who have been so faithful in their attendance at the hearing, and who have made such substantial contributions by way of informing the committee and helping the committee. I shall start at my immediate left, naturally, by introducing the valued Member of the U.S. House of Representatives who is in Alaska as the representative of the House Interstate and Foreign Commerce Committee, Congressman Morgan Moulder of the sovereign State of Missouri. On Congressman Moulder's left is Mr. Frank Barton, transportation counsel for the Senate committee. Over there against the blackboard is Harry Huse, who handles Fish and Wildlife legislation for the Senate committee. Next to Mr. Huse is the Alaska Supervisor for the Interstate Commerce Commission, with offices in Anchorage, Mr. William Meehan. Sitting next to Mr. Meehan is Mr. Romick, Commissioner Romick of the Alaska Department of Commerce. Mr. Commissioner, I hope that you can find room here at the head table so that you may sit with us again. Next is Mr. Henry Whitehouse, attorney for the ICC. And we have the pleasure of having with us none other than a member of the Interstate Commerce Commission, Mr. Laurence Walrath, who is on his second trip to Alaska. He liked it then, and he says he likes it even better now. The ICC is going to have to be careful, or he's going to establish his office in the State of Alaska. On my immediate right is Mr. Harold Baynton, chief counsel for the Senate committee. On Mr. Baynton's right is Mr. Allan Perley, whose official position and title is Legislative Counsel for the U.S. House of Representatives, but who is in Alaska acting as counsel for the House committee. Before we hear the first witness, I shall give a brief description of each of the bills on which the hearings are being held. There is S. 1507, to make the Interstate Commerce Act applicable to transportation by water between Alaska ports and other ports in the United States. H.R. 6244, to provide "grandfather" rights for motor carriers and freight forwarders operating within Alaska and between Alaska and other States and for water carriers operating within Alaska, to provide for Interstate Commerce Commission regulation of the Alaska Railroad, and to make the Interstate Commerce Act applicable to forhire water carriers operating between ports of Alaska and ports of other States. S. 2451, H.R. 8521, and H.R. 8564, companion bills to establish a Joint Board for through routes and joint rates and to make mandatory through routes and joint rates by carriers engaged in transportation of property between the State of Alaska or the State of Hawaii, and other States. S. 2452, H.R. 8520, and H.R. 8565, companion bills to establish a Joint Board and permit the filing of through rates-through routes and joint rates for carriers serving Alaska, Hawaii, and the other States. S. 2514, to establish the Alaska Railroad as a Government corporation. Additionally, the committee heard, while in southeastern Alaska, testimony on two bills relating to the proposed ferry service for that area. The committee heard in Valdez testimony on another bill proposing to turn over certain land to the State of Alaska located within the corporate limits of Valdez. Of course, I should state that the testimony is being recorded, and very efficiently, by William Miller, who takes a double shot at it, on the tape and on the stenotype machine, and who himself has been in Alaska on trips and to live, off and on since the time he was 4 years old. The first witness is Frank X. Chapados. Mr. Chapados, would you give your name, spelling and your mailing address for the record? STATEMENT OF FRANK X. CHAPADOS, BUSINESSMAN, FAIRBANKS, ALASKA Mr. CHAPADOS. My name is Frank X. Chapados. My mailing address is 515 Third Avenue Graehl, Fairbanks, Alaska. G-r-a-e-h-l. I am occupied as a partner in a warehouse, transfer, and transportation business here at Fairbanks, Alaska, and a member, since our firm is a member, of the Alaska Highway Carriers, I am speaking in their behalf. I am also a member of the Alaska State Legislature, and have the concern of the welfare of my district, which is District 19 of Alaska, and includes a good portion of the Alaska highway system north of the Alaska range. I would like to generalize as much as possible in my statement to the committee, to try to picture a situation that exists in the interior of Alaska, since it differs considerably from the situation that you may find in any feature along the coast. I would like to try to point out how I feel that the economic regulation by the Interstate Commerce Commission of the Alaska Railroad could help to rectify the situation that exists here in the interior of Alaska. Up until recent years a considerable amount, a large portion of the freight moving from the coast to the interior of Alaska moved through the port of Valdez. During recent years there has been a gradual and definite decline in the amount of freight moving through the port of Valdez to Fairbanks, via the highway. Of course there are other routes by which freight comes to Fairbanks. We have the route through Seward and Anchorage and by the Alaska Railroad, and also a system of transportation to Alaska via the Alaska Highway. However, most of the heavy freight that moves into the interior travels by water carrier first and then is transported by either truck or railroad to the interior. As I mentioned before, there has been a gradual decline in the amount of freight moving through the port of Valdez, and I believe there are several reasons causing this situation. The shippers or the carriers that move the freight from Seattle into Alaska, naturally must take their vessels, their carriers, and move their freight into this port to the point where the shippers desire. I mean, the shippers state that they want it shipped through Seward or through Valdez, and the freight goes to that point, that's where they must, of course, schedule their ships. And of course, due to the large volume of freight that moves to the Anchorage area, there is an increase over that which does come into the interior. I believe that the additional volume of freight that is generated through the port of Seward is due to what would appear to me to be a lower rate than is possible to provide through Valdez. This just adds to that volume and creates a situation where shippers and carriers naturally funnel their business to the Anchorage and Seward area, and by so doing it reduces the volume of freight that would move into the port of Valdez, and has at the present time reduced the number of carriers into Valdez. One major carrier, I believe coastwise, has discontinued going into Valdez entirely because of the fact that there is insufficient tonnage there to warrant taking their ships into the port of Valdez. Because of the reduction of this freight, of course other carriers are facing the same problem. At the present time we are being served by only one carrier, which is the Alaska Steamship Co., and their tonnages into Valdez, although I can't be specific, I believe have been reduced by almost 50 percent during the past 4 or 5 years. I believe, as time goes on if this continues, that perhaps Valdez could be a port that will be abandoned entirely due to the fact that there isn't sufficient freight to warrant carriers making schedules into that port. Senator BARTLETT. Would you permit an interruption there, Mr. Chapados? Mr. CHAPADOS. Yes, Senator Bartlett. Senator BARTLETT. When you said their tonnages had decreased 50 percent, did you mean the overall tonnage of the Alaska Steamship or that going into Valdez? Mr. CHAPADOS. I'm sorry. I mean the tonnages going into the port of Valdez. It may be kind of putting the cart before the horse here, but as I said, I believe the rates that are provided by the Alaska Railroad have a direct bearing on the fact that the tonnage has been reduced. I believe if the committee were to inquire and make a study they would find that there are many volume commodities, that have weight, which are used in great quantity in the interior of Alaska that are presently moving, in the main, over the Alaska Railroad. This is not only through their own facilities, but by carriers that are using the piggy-back service of the Alaska Railroad. I believe that the tariffs and the rates that are quoted are not compensatory to the costs. The rates are established in such a way as to create volume and to add additional income over and above the revenue that is obtained by shipping many of the other commodities which do not move in such a great volume. For example, I point out that groceries and flour, plumbing supplies, building materials and such items are practically nonexistent in the flow of traffic through the port of Valdez. These are volume items, and certainly would interest any carrier-they would be interested in having this business in order to produce a volume that would make their operation economical. We believe that the regulation, economic regulation of the Alaska Railroad so that the rates would be compensatory with costs would create a situation whereby the trucking industry could compete for this business. We believe that a certain amount of the traffic that is presently going through the port of Seward would then return to the port of Valdez and would maintain a volume of freight that could provide the means by which the trucking industry could survive. We also feel that the establishment of joint board legislation would be beneficial, so that it would provide us with the means of holding through rate tariffs from the States into Alaska. I believe that failure to take action to remedy the situation that exists in the interior will result in a continued reduction in tonnages moving through the port of Valdez. Eventually the water carriers may become discouraged to the point that they could very easily discontinue their service into Valdez. I know that the State government is concerned, of course, with the economy and the matter of maintenance of highways and at the present time they are spending a considerable amount of money to maintain the highway between Valdez and Fairbanks—that is, to keep it open during the winter months. A decided reduction in tonnages and the use of the highway during the winter months would certainly cause them to consider the possi bility of discontinuing the maintenance during the winter. We feel that if this were to come about that during the period of time the truckers could not operate would bring about a situation whereby it would be most difficult to create a healthy economy again through the port of Valdez. It would probably be some time before the trucking industry could recover and once again maintain another route into the interior of Alaska. If this were to come to pass, it would appear to us that the interior of Alaska would then be located at the furthest north point of the Alaska Railroad and of course the highway from Anchorage. Actually it would be difficult then, I believe, to compete with an unregulated railroad, and therefore perhaps the majority, or practically all of the freight then would move into the interior over the Alaska Řailroad. I am not sure that the rates would then remain as low as they are presently, if that were the case. I believe having a single supplier out into the interior eliminates the element of competition. Another point that comes to mind is that the trucking industry does operate as a private enterprise; it has to meet all of the requirement of the State, taxes, taxwise; we have to meet the Federal taxes, we have to comply with regulations of the Interstate Commerce Commission, which increase our cost of operation; we have to pay taxes to the State for equipment as well as pay higher wages. These things, the Alaska Railroad, as I understand it, are not required to do. They pay no taxes to the State for their vehicles; they make use of our highways, and to be in direct competition with the citizens of Alaska trying to create an industry. We believe that it's not a position that a Government agency should take. We believe that Government agencies should be cooperative rather than competitive, and help all of the people to produce a better economy in the area in which they operate. Senator BARTLETT. Before asking Representative Moulder if he has any questions, I should state for the record the sincere appreciation of the committee to U.S. Judge Vernon Forbes for making the district courtroom available for this hearing, at, we understand, some little inconvenience to himself. Representative Moulder? Mr. MOULDER. Mr. Chairman, I have one or two questions. First, I want to compliment you upon your very fine, clear, informative statement. Senator Bartlett, of course, and I, as a member of the committee on which I serve on the House side, are sincerely interested in this problem, particularly since we all know that transportation is the lifeblood of all commerce. No area, State, or country can thrive without transportation because transportation is that which makes our economy possible. I've heard from all sides, while here in Alaska, of the high cost of material, of the high cost of consumer goods of all kinds. This creates a mystery for me as to why that should exist, when Alaska has available to it what appears to be the cheapest methods of transportation that exist anywhere in the world-that is, water transportation. I've been told that the reason for the high cost of consumer goods 51709-61-21 |