TELL TALE EXTRA: A LITTLE NOTE ON PER DIEM
_Railway Age_, June 10, 1963, p. 40
Favorable View on Variable Per Diem
A letter published in your May 20 issue (p. 54) refers to your April Traffic
Poll which favored variable per diem and incentive per diem legislation. The
author suggests, in effect, that shippers favoring these measures do not know
what they are talking about because they are not acquainted with the facts.
This comment is not justified by the well-reasoned responses to your poll, nor
is it justified by the facts, which are:
That fewer freight cars -- and fewer box cars -- are now available for service
that at any time in this century;
That recent box car shortages have been the worst yet, and are still severe in
parts of the grain belt -- as the harvest approaches;
That low rentals _discourage_ ownership -- and rentals _encourage_ ownership --
of any article in general true, including freight cars;
That low rentals tend to prolong use, by non-owners, of any rented article,
including freight cars; and that high rentals tend to hasten movement and
return of such equipment to its owners;
That an investment of $12,000 to $20,000 for a new modern freight car is
_obviously unattractive_ when the owner cannot control it, and _must_ permit
its use by others at a rental of $2.88 per day; and that, under such
conditions, it _is_ cheaper to rent than to own;
That variable per diem -- with higher rentals for expensive new cars, and lower
rentals for old cars -- _will_ improve the quality and quantity of the car
supply;
That incentive per diem legislation (S. 1063) is desirable because it would
give recognition to the foregoing economic facts, and tell the Interstate
Commerce Commission to prescribe per diem charges (if its _existing_ authority
is invoked, as it has been) upon a basis which will encourage the acquisition
and maintenance of a car supply adequate to meet the needs of commerce and the
national defense.
The shippers polled were obviously acquainted with the foregoing facts, as
indicated by their responses. It is unlikely that they will be impressed by red
herrings which seek to divert attention from the fundamental issues.
-Eldon Martin, Vice-President and General Counsel, Burlington
(Emphasis per original)
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