Business: Railroaders’ Profits, Truckers’ Problems

THE PIGGYBACK BOOM

TOP a steep, truck-clogged grade in California’s Sierra Nevada moun tains, the Southern Pacific Railroad recently erected a sign: “Take the trucks off the highway. Put the trucks on piggyback.” The railroad’s sign symbolized a growing problem for the U.S. trucking industry. Piggybacking, which was originally envisioned as a happy marriage between trucks and railroads, has zoomed 180% (to some 210,000 carloadings annually) since 1954, and the outlook is for a $1 billion business by 1965. But so far, railroads have puffed off with most of the profits. Of 39 roads offering some form of piggyback service, only seven do business with common-carrier highway truckers; all the rest have set up their own piggyback truck lines, perform every service themselves.

As a result, though few truckers are being hurt yet, the industry wonders if piggybacking might not eventually do it more harm than good. Says W. Stanhaus, president of Spector Freight System, Inc., which operates some 1,700 tractors and trailers: “Some roads have been prone to discourage cooperation, provide an exclusive service of their own, engage in public relations and power politics campaigns that would indicate that they are primarily interested in the elimination of all forms of competition.”

Many railroads are frank to admit that they are out to dominate piggybacking, argue that it is a matter of economic necessity. From 1939 to 1954, the railroads’ share of intercity freight slumped from 63% to less than 50%, while the truckers’ share jumped from 10% to 19%. Now, with the help of piggybacking, the roads hope to win back lost ground. Last year truck business slipped to 17.7%, while railroads just about held their own. Says Southern Pacific’s Assistant General Freight Agent Ray F. Robinson: “Ninetynine percent of our piggyback business is business we never had before—freight that had been moving over the highway.” The Pennsylvania Railroad alone is getting $10 million worth of new business annually by piggybacking. The Pennsy’s forecast for 1960: $100 million annually. Furthermore, profits from piggybacking are often higher than those from regular freight. The flatcars used by the Pennsy travel better than 300 miles per day and average $40,000 revenue annually, v. only 45 miles and a $5,000 annual revenue from standard freight cars.

Two of the biggest piggybackers, the Pennsy and the New York, New Haven & Hartford, have elaborate cooperative programs to handle truck-company trailers as well as their own, provide such economical service that more and more highway companies are putting . their trailers on flatcars for trips of 500 miles or more. Drivers’ wages (as high as $175 a week), highway taxes and equipment costs are so steep that some truckers are thus able to snip as much as 9¢ per mile from their 30¢-per-mile highway costs. By going piggyback, says the Rail-Trailer Co., which solicits business for the railroads, one New York-Chicago trucker was able to chop his trip costs so much that his profit margin quintupled. Eastern Motor Express, Cooper-Jarrett, Mid-States Freight Lines, Spector Freight System, and Denver Chicago Trucking Co. currently use piggyback for some 10% to 20% of all their long-haul trips. Kansas City’s Riss & Co., one of the biggest U.S. truckers, ships 600 trailers weekly by piggyback. As a result, the line has laid off some 1,000 of its original 1,350 drivers, is also planning to sell part of its 500-unit tractor fleet.

The trouble, say truckers, is that piggyback’s impressive savings may prove their undoing. They fear that while short-run profits may rise, piggybacking leaves the door open for railroads to steal away bigger and bigger chunks of the freight market with their own trailer fleets. Says the Pennsylvania Motor Truck Association, some of whose members look on piggybacking with a jaundiced eye: “Let’s say the ABC trucking company operates a fleet of 1,000 power units and 1,500 trailers from the Midwest to the Eastern seaboard. Then the company decides to use piggyback. It disposes of 700 to 800 tractors, using the remaining motor units just to pick up and deliver piggyback trailers. It cuts its over-the-road fleet to the bone and drops many of its drivers. Then the railroad starts picking up freight, using its own trucks. ABC is out of business; it doesn’t have equipment or drivers.”

In any event, piggybacking is here to stay. And for all their arguments, truckers will have a tough time selling their worries to any U.S. motorist who has crawled painfully up a long grade behind a line of exhaust-spewing tractor-trailers. Atop the same mountain grades where the Southern Pacific has its piggyback signs, another series of signs has been put up by California citizens’ committees. Their message: “Write your Congressman. Make U.S. 40 four lanes.” Either that, or, as the Southern Pacific says, put the trucks on piggyback.