I'Vater lines make contracts with shippers whereby rebates or special rates are granted if the shipper transports his en tire product by a given line. Such contracts with important shippers greatly handicap independent lines in getting suffi cient freight, especially if the contracting line spreads the report that the independent line will be allowed to remain in business only a short time. The important shippers, their business once obtained, can be held in line or disciplined.
Large established water lines bring influence to bear on marine insurance underwriters whereby the independent line can secure only a less favorable rate, having due regard for the class of vessel, than its large and well-established com petitors, thus forcing the independent carrier to equalize the extra cost of insurance in its rates to shippers.
Railroads or steamship combinations can allow compet ing lines a certain amount of freight with the implied knowl edge on the part of the competing line that the railway or steamship combination possesses the power to withdraw this alloted freight if the competing line shows aggressiveness or is unwilling to conform to the line of conduct desired. Often valuable season contracts are made with independent water lines, which these lines do not wish to lose by competing for freight.
Railroads may divert bulk traffic from watercourses by granting special commodity rates "in transit," such as "mill ing in transit" and "compressing in transit." Railroads can give access to docks to preferred water lines with which they have special arrangements, thus forc ing shippers by other water lines to pay- a series of charges for switching, docking, and unloading, and putting them to much inconvenience. In effect, it means that the ship
per who wishes the proper service must use the water line preferred by the railroad.
Railroads may- refuse to issue thru bills of lading ex cept to favored lines, thus preventing independent lines from obtaining transfer traffic. To deprive an independent line of the advantages accruing from a joint-rate arrangement with railroads, places the line in a defenseless position as compared with competing lines not thus handicapped. Without such an arrangement the independent line cannot secure interior freight and is limited largely to port-to port traffic, which is too small in volume to support the line. On the other hand, the water line having the prorating ar rangement can cut rates to an unremunerative basis on the port-to-port traffic, thereby eliminating its less fortunate competitor, and recoup its losses in large measure out of the profits secured on the thru business.
Railroads charge more for the local haul from Buffalo to seaboard points, for example, on grain that is taken to Buffalo by boat than the proportionate share of the all-rail haul from Chicago to the seaboard, thus making the thru rail-water route unprofitable as compared with the all-rail route. The local rate for the eastern rail haul is so high as to leave little to the independent water carrier for its local lake haul.
Railroads can greatly reduce rates between those points only where they are competing with an independent water carrier. Since most of the traffic of a large railroad sys tem is free from water competition, it can afrord to lower the rates on the competitive traffic to an unremunerative basis without appreciably affecting the earnings of its entire sys tem.'