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super-structure on commodities which are important to the low income groups of Puerto Rico.

and, eventually, (3) freight revenues of common carriers, in this trade.

Recommendation

3. Conclusion

It is recommended that the FMC common carriers and Commonwealth of Puerto Rico (Ports Authority) continue their efforts to maintain low ocean freight rates on consumer foods of paramount importance to Puerto Rico's low income groups. Appendix B (items 1 through 16) contains the list of consumer items on which the Commonwealth desires relatively low rate levels. This list reflects the Commonwealth's most recent desires with respect to commodities on which such support is desired.

2. Conclusion

The direct shipments of Mainland foods and other consumer items in trailerload quantities by the containership common carriers serving Puerto Rico have greatly assisted supermarket retailing and, consequently, price levels. These direct shipments to supermarkets have permitted by-passing local wholesalers and have thus restrained some price increases.

Although Government activity (FOMENTO's assistance programs) and the growth of supermarkets in Puerto Rico have played a vital role in improving the economic performance of the Island's marketing system, various inadequacies still exist in the wholesale and retail food distribution system which contribute to the Island's high retail price structure. Puerto Rico's wholesalers and small retailers have a very substantial impact on the Island's consumer price level. They affect the cost of living (consumer goods) at least six times as much as ocean transportation, thereby burdening the Island's low income groups who spend most of their annual income on foods and other essential consumer goods.

Ocean transportation has a substantial effect on the selling price of many southbound intermediate goods. Although these rate levels assist the carriers in maintaining lower rates on food items, certain of the intermediate goods are of extreme importance to Puerto Rico's industrialization program (ch. II) and, as in the case of the essential foods, require low transportation charges. Maintaining lower rates on these intermediate goods should result in a healthy growth in, (1) Puerto Rico's industrial output, (2) traffic flow,

CHAPTER VI

TERMINAL FACILITIES, RATES AND

CHARGES

A. GENERAL

Puerto Rico relies heavily upon containerized movements and requires an efficient gateway with modern cargo handling and storage facilities, reasonable terminal rates and charges, and progressive port development. Efficiency in cargo handling facilities is of paramount importance to the new family of large and fast containerships now entering the trade or under construction. These containerships must load and offload in 14 hours or less to maintain their scheduled service and realize the economies inherent in their large scale and rapid, low cost mode of transportation. In addition, the Island requires adequate pickup and delivery services for the efficient circulation and distribution of cargo moving between the pier and store or market place. (Trucking and pickup and delivery are discussed in the following chapter.) For these reasons, there are four dimensions of a port which should be considered in evaluating its ability to accommodate present and future containerized traffic destined for local delivery or movement overland to inland communities. These are: (1) Adequate berthing space and facilities to load, unload, and handle cargo efficiently; (2) sufficient marshalling yard space to accommodate high volume movement of containers and other cargo with ease of movement and distribution; (3) adequate warehousing facilities for transit and storage of cargo; and (4) an efficient redistribution depot (transshipment and delivery) that will preclude fragmented and costly service. Efficient performances in these areas will quite naturally help to

reduce transportation costs and will assist the development of commerce and industry. On the other hand, delays in offloading and loading of cargoes will increase a vessel's time in port and stevedoring costs per ton handled. Obstacles in the marshalling yard area will inhibit the ease with which cargo flows through the terminal, and the lack of adequate warehousing facilities may result in terminal congestion and high de. inurrage charges. These inadequacies eventually in. crease the turnaround time of containers and vessels, impede traffic movements, and result in higher transportation costs.

The primary objective of this chapter is to discuss the physical condition of terminals and warehouses in Puerto Rico and on the U.S. mainland, and the rates and charges at these facilities, as well as distribution patterns. Special attention is directed to the facilities at San Juan, Ponce, and Mayagüez. Specifically, the chapter deals with present conditions, activities, and methods of handling cargo and warehousing. In addition, the evolutionary process of containerization at San Juan, Ponce, and Mayagüez is examined with particular regard to technological trends in ocean and land transportation. A survey of physical facilities and their operations as well as harbor conditions can reveal inefficiencies or needs in port development to handle the present and future requirements of marine transportation.

1 The Ports Authority is responsible for the development of needed terminal facilities at San Juan, Mayagüez, Arecibo, Fajardo, and Jobos to accommo. date present and future marine transportation and commerce.

B. PUERTO RICAN COMMERCE AND

TERMINAL FACILITIES, RATES, AND
CHARGES

the Island, five are owned and operated by the Commonwealth Ports Authority. These are San Juan, Mayagüez, Jobos, Arecibo, and Fajardo.* The Ports Authority maintains service by a captain of the port at the remainder, including Ponce, Arroyo, Guanica, Humacao, Aguadilla, Guayanilla, and Yabucoa. (The municipality of Ponce owns and operates the municipal Pier at Ponce.)

Chart VI-1 illustrates the relative location of Puerto Rico's 13 terminal facilities. At terminals which the authority owns and operates, it can charge for harbor dues, docking, wharfage charges, demurrage, and the ground used adjacent to the facilities. At those facilities which it does not own or operate the authority has power only to set the level of harbor dues.

1. Commerce of Puerto Rico

As previously indicated, Puerto Rico is an island roughly 100 miles long and 35 miles wide. The three major ports are San Juan, Ponce, and Mayagüez, of which the most important in terms of size and traffic is San Juan. This port is interrelated with the economic development of the Commonwealth and closely linked with sources of supply or markets on the U.S. mainland, in the Caribbean, and in foreign countries. In 1966, Puerto Rico's weight dry cargo trade amounted to some 5.4 million weight tons, 52 percent of which was channeled through San Juan. Common carriers serving the Port of San Juan from U.S.-mainland ports, as noted earlier, include: Sea-Land, TTT, Seatrain, Motorships, TMT, SACAL, GPRL, and Lykes. In 1967, these eight common carriers transported approximately 2.77 million weight tons of cargo to and from Puerto Rico, of which almost 90 percent, or 2.41 million tons moved over the docks at San Juan. The principal imported goods are foodstuffs, textiles, building materials, ma. chinery, automobiles, and other motor vehicles, fertilizers and petroleum products; exports include sugar, rum, fruits, tobaccos, coffee, and manufactured goods. The Port of San Juan not only provides a gateway for traffic movements between the U.S. mainland and Puerto Rico but also acts as a direct and transshipment depot for points in the Caribbean including the Virgin Islands, the Dominican Republic, and Haiti as well as for South American and European ports (ch. III). Puerto Rico's location within dense shipping lanes connecting Europe and South America renders it amenable to use as a transshipment center in the Caribbean.

In addition to the three major ports, Puerto Rico has eight secondary terminal facilities including Aguadilla, Guanica, Jobos, Fajardo, Yabucoa, Humacao, Arecibo, and Arroyo. Of the 12 terminal facilities on

2. The Port of San Juan a. Traffic Conditions

The Port of San Juan which lies on the north coast of Puerto Rico, approximately 30 miles from the eastern end of the Island, fringes the vast residential, in. dustrial, commercial and metropolitan area of San Juan, the capital of the Commonwealth. San Juan Bay, an almost completely land-locked bay about 3 miles long, is the only harbor on the north coast which offers protection in all weather. The Port of San Juan consists of three main geographical subdivisions (1) Puerto Nuevo, (2) Isla Grande, and (3) Old San

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pier at the Central Aguirre Sugar Co. area with pipelines for water and molasses, a conveyer belt for bulk sugar, and a gantry crane pier for handling cargo. Phillips Puerto Rico Co., Inc. (Phillips Petroleum Co.), a petroleum complex, constructed a port facility at Jobos to accommodate super-tankers. Fajardo, which lies on the east coast of Puerto Rico, has a 250-foot concrete pier. This facility is owned and operated by the Puerto Rico Ports Authority for a passenger cargo ferryboat engaged in interisland traffic to Vieques and Culebra. The Aguadilla shipping terminal at Aguadilla Bay operates a bulk sugar loading facility, however, vessels tieup at mooring buoys to load sugar. Yabucoa, on the southeast coast of the Island, has been inactive for many years. A Sun Oil complex is planned in this area for 1970. Arecibo is on the north coast of the Island, 32 miles west of San Juan. The port is used mainly as an industrial port, and its port industries are under the control of the Puerto Rico Ports Authority. Although this port has a pier approximately 500 feet long, it is not considered safe for vessel operations. The pier is used mainly for small pleasure craft as well as dock barge service. (Liquid chemicals are passed from the barge through a pipeline running inland from the pier to the Puerto Rican chemical company's storage tanks.) The ports of Humacao on the eastern side, and Arroyo, on the south coast, are small ports which are used mainly for loading bagged sugar from lighters. These ports have no adequate pier facilities. Finally, the port of Guayama is under development. (Source: Puerto Rico Ports Authority, “Ports in Puerto Rico," San Juan, 1963, pp. 3-4.)

* The terminal facilities at Vieques and Culebra also are under the administration of the Ports Authority. These are served through the Port Captain located at Fajardo. 5 Served through the captain of the Port at Mayagüez.

* Commonwealth of Puerto Rico, Puerto Rico Ports Authority, Dues for the Use of and Rates, Fees, Rentals, and Other Charges Applicable to the Use of Space and Exercise of Privileges at Marine Terminal Facilities of the Puerto Rico's Port Authority (San Juan : July 1, 1967), pp. 13–14.

2 The balance of cargo moving to and from Puerto Rico was carried by nonregulated vessels.

* The secondary ports of Puerto Rico are specialized harbors which are used predominantly for the shipment of bagged or bulk sugar, molasses, petroleum, and liquid chemicals, and, with the exception of Guanica and Jobos, for occasional imports of fertilizers. Most of these secondary ports are unable to accommodate deep-draft oceangoing common carrier vessels. Guanica, located 15 miles west of Ponce, is one of the best hurricane harbors in Puerto Rico. Its pier facilities are owned by the Guanica Central Co. and used for bulk sugar shipments and limited general cargo operations. Bulk fertilizer is handled on the east side of the harbor entrance at a 440-foot wharf. Jobos, located about 40 miles east of Ponce, has a 1,000-foot finger

Juan." The terminal facilities of Old San Juan are still essentially the same as in the 1950's. These facilities handle largely breakbulk traffic. The center of cargo handling operations is now located at the new Puerto Nuevo terminal. There are 23 piers or berths in the Port of San Juan, 17 of which are owned and operated by the Ports Authority. These piers account for approximately 52 percent of the total dry cargo traffic moving to and from Puerto Rico.

In 1968, freight tonnage handled through the termi. nal facilities at Puerto Nuevo, Isla Grande and Old San Juan totaled some 3.38 million short tons of dry cargo, an increase of about 19 percent over the 2.83 million tons of a year earlier. In addition, a total of 3,974 self-propelled oceangoing ships used San Juan port facilities, of which 3,643 were dry cargo vessels, 283 were passenger ships, and 48 were passenger cargo ships. In 1967, approximately half of the dry cargo oceangoing ships (1,533) were of American registry.10 These ocean transportation and commercial operations reflect the thriving condition of the Puerto Rican economy which is currently rising at the rate of about 10 percent annually, as was discussed in chapter II.

Before considering the facilities at each of the four main port areas, a brief look at the cargo handling methods existing during the 1950's will highlight the importance of the changes which have taken place over the last decade. During the 1950's, Bull Lines, Waterman, Lykes, and Pope and Talbot, all breakbulk operators, were the principal common carriers operating between the U.S. mainland and Puerto Rico. Bull Lines operated at Old San Juan piers 1, 2, 3, 7, 8, 9, and 14 where it handled general traffic and sugar.11 Bull owned these piers, Waterman owned and used pier 11, Pope and Talbot used pier 5, and Lykes used piers 12 and 13. Breakbulk traffic often kept the ship alongside the San Juan piers up to 13 days to handle loads of less

than 3,000 tons of cargo. For example, in 1950, Bull Lines moved 771,000 tons on 300 calls,12 an average of 2,570 tons per call, and spent approximately 13 days at a berth per visit.13 Waterman, the second largest carrier in terms of traffic, handled 266,000 tons on 90 calls, an average of 2,955 tons per call, spending 4 days per visit at pier 11 in 1950. (In contrast, in 1967, 82 Sea-Land voyages handled about 6,000 tons per visit at pier F Puerto Nuevo with an average of 0.84 days per call.) Moreover, in the 1950's traffic circulation on the piers was very poor and adjacent streets were badly congested. In order to reach pier 1, trucks from any area other than Old San Juan had to pass all other piers in the harbor, and, thus, cargo movements were seriously impeded. Piers 1 and 2 had little or no working aprons, and pier 7 had a very narrow transit shed and inadequate working space. As a result, these breakbulk carriers were spending more and more time in port; and stevedoring productivity was declining with a resulting increase in the cost of transportation. There is an indication that these cargo handling conditions, by increasing the cost of transportation contributed to higher rates and costs of imported goods as well as to a higher cost of living. (chs. III and IV).

During the latter part of the 1950's, soaring stevedoring and operating costs and declining traffic in this trade emphasized the need for more efficient methods of handling cargo. In the spring of 1958, Sea-Land Service (Pan-Atlantic) began service.14 Since Sea-Land's early sailings, the Puerto Rican trade has become heavily containerized (chart VI-2) and stevedoring productivity has greatly improved. As a result, vessel time in port and the problem of congestion have decreased signifi. cantly. In addition, the burden of ocean transportation on price levels (of imported articles) in Puerto Rico has also declined, as was discussed in chapter V. By 1964, the center of cargo handling operations shifted from the Old San Juan piers to the new and large container terminal located at Puerto Nuevo.

Containerization has greatly increased at San Juan (mainly Puerto Nuevo) since 1958. Chart VI-2 shows that containerized dry cargo at San Juan 15 increased

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i Catano is the location where the handling of grain, sugar, beans, and oils is centered. The Antilles Shipping Corp., which operates a monthly barge service of bulk grain shipments between Baltimore and San Juan calls at Molinos de Puerto Rico mill at Cataño. In addition, the Trans Oceanic Naviga. tion Co., which operates a barge service to carry refined sugar from San Juan to the port of Norfolk on a monthly basis visits Cataño with bulk cargo on the return leg. Common carriers do not call at Cataño. For this reason, berthing space and utilization factors in this area are not analyzed.

$ This increase is especially significant since shipments of bulk sugar through San Juan were discontinued in the middle of 1966. The large increase in general cargo more than offset this decline in sugar. General cargo in. creased by 134,681 tons.

• Puerto Rico Ports Authority, Commonwealth of Puerto Rico Ports Authority Annual Report-Fiscal year 1968 (San Juan : Ports Authority, October 10, 1968),

12 This included ships returning to San Juan after making calls at other ports around the Island.

13 S. E. Eastman and D. Marx, Jr., Ships and Sugar: An Evaluation of Puerto Rican Offshore Shipping (San Juan: University of Puerto Rico Press, 1953), pp. 85-87.

14 In 1958, Sea Land began operations between Houston, Tex. and New York. These operations were expanded to include the Puerto Rican trade later that same year, the intercoastal trade in 1962, Alaska in 1964, and, recently, the international trade.

15 Puerto Rico Ports Authority piers at Puerto Nuevo, Isla Grande, and Old San Juan were considered.

P. 12.

10 Ports Authority, Number and Tonnage of Vessels Arriving in the Several Ports of Puerto Rico--Fiscal Year 1966-67 (San Juan: Ports Authority, 1966-67), table 1.

11 Bull used piers 1, 2, and 7 for sugar.

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