facilities to keep containers in excess of free time. Although water carriers have improved the collection of demurrage charges in recent years, in the past they experienced considerable problems in collecting such charges. In other words, the carriers' containers have provided shippers with the required storage space, but such use of containers in excess of free time denies the carrier the use of its containers and increases costs. Because little demurrage was collected in the past, the use of containers was provided at little or no cost to the shipper. This partially explains the lack of private warehousing in Puerto Rico. Many shippers do not pickup LTL cargo until after the last day of free time, and the carrier is forced to assess demurrage charges or to store the cargo. The resulting increase in costs may result in higher prices and cost of living for the ultimate consumer. In addition, the very low wharf demurrage charges which were formally assessed by the Commonwealth also provided shippers or consignees with inexpensive storage. Shippers were able to store their goods more cheaply at terminals by paying demurrage charges

than by the use of public or private warehouses.56 Furthermore, in the 1950's breakbulk traffic movements also reduced the need for warehousing because consignees used the piers and transit sheds at Old San Juan for warehouse purposes to a much greater extent than is now practiced. Today, a loaded trailer does not require such dock storage. These trailers move from shipside at the ocean terminal to inland points of destination making it increasingly necessary that public warehouses be expanded to receive and store this traffic.

This picture is changing with the recent enforcement of demurrage charges by some carriers and the recent increase in wharf demurrage charges. By a more vigorous collection of demurrage charges some carriers are forcing shippers to return vans sooner. The higher wharf demurrage charges in effect since January 1, 1968 have encouraged earlier pickup at the terminal. These developments may induce shippers in Puerto

56 Puerto Rico Ports Authority, Dues for the Use of Harbors of Puerto Rico and Rates, Fees, Rentals, and Other Charges Applicable to the Use of Space and the Exercise of Privileges at Marine Terminal Facilities of Puerto Rico Ports Authority (San Juan: July 1967), p. 9.

Rico to: (1) invest in private warehousing in order to remain competitive with those shippers who presently have adequate warehousing facilities; 57 and (2) use public warehousing to a greater extent thus stimulating new investment in public warehousing. Although some private warehousing may result from the shippers' desire to cut costs, it may be unsafe to rely on such competitive influence to produce the incentive for construction of warehousing facilities on the Island.

The problem of storage in San Juan has grown progressively worse over the past ten years, a condition which will continue to grow worse as the traffic flow rises unless aggressive action is taken by the Commonwealth (Fomento and Ports Authority) to encourage the development of adequate warehousing facilities and transit shed facilities at San Juan, Ponce, and Mayagüez. The lack of public and private warehousing in the port of San Juan is significant because the bulk of cargo remains in the metropolitan area. Most of the commodities imported are consumed by the population or industries centered within the metropolitan area. Therefore, the total warehousing space available in this area is important and should be augmented by new investment.

D. TERMINAL CHARGES IN PUERTO RICO The Puerto Rico Ports Authority assesses harbor dues, dockage and wharfage, at the terminals which it owns and operates in San Juan, Mayagüez, Arecibo, Fajardo, and Jobos. At other ports only harbor dues are assessed.

1. Harbor Dues

Harbor dues are assessed against any vessel entering and using a Puerto Rican port. The funds are used to maintain safe harbors and anchorages, and are not

57 Latin American Studies Center, op. cit., pp. 45-46. Pueblo Supermarket's construction of a 200,000 square foot warehouse reduced its costs

substantially.

intended to compensate for use of terminal facilities. Vessels of 1,000 GRT or over 58 are charged 1.25 cents per GRT per day. This is a unique assessment in that no Mainland ports have a charge of this nature.

Current rates, charges and practices of the Puerto Rico Ports Authority are contained in resolution No. 809, approved by Economic Development Administration on November 1, 1967, to become effective January 1, 1968.59

2. Dockage

Dockage is the charge assessed against a vessel for berthing at or making fast to a wharf, pier, or bulkhead structure, or for mooring to another vessel so berthed.

Dockage rates remained unchanged for 10 years, between July 1, 1957, and January 1, 1968. For vessels over 1,000 GRT using shedded berths, the charge was one cent per GRT per day. Rates at open berths were one-half those applicable at shedded berths. Effective January 1, 1968, the dockage rates were changed as shown in table VI-10.

The differentiation between charges assessed against long haul and short haul vessels is based on the idea that a short haul carrier has a lesser "ability to pay" than one operating in a long haul trade (i.e., between the U.S. mainland and Puerto Rico).

The practice in relation to dockage rates is not unique to Puerto Rico. California ports assess a lower dockage rate to vessels engaged in the Inland Waterway trade than to those in the coastwise and offshore trades. The practice of assessing different dockage charges to carriers in different trades may create possibilities of

58 This includes virtually all common carrier and contract vessels in the Puerto Rican/U.S. mainland trade.

59 All references in this section to terminal charges prior to Jan. 1, 1968 are from the Puerto Rico Port Authority's document, entitled Dues for the Use of the Harbors of Puerto Rico and Rates, Fees, Rentals, and Other Charges Applicable to the Use of Space and the Exercise of Privileges at Marine Terminal Facilities of the Puerto Rico Ports Authority, July 1, 1967.

discrimination. There are many factors which must be considered, however, before it can be determined whether the discrimination is unjust or unreasonable.

3. Wharfage

Wharfage is the charge assessed against the cargo for the passage of that cargo on, over, under or through any wharf, wharf premise, pier or bulkhead structure, inward or outward. It also includes the charge assessed against cargo passing or conveyed between vessels (to or from barge, lighter or water) or by pipeline when berthed at wharf or when moored in a slip adjacent to the wharf.

As in the case of dockage, wharfage rates remained unchanged from July 1, 1957, to January 1, 1968. During that period, the basic wharfage charge was 2 cents

TABLE VI-11

per 100 pounds or 1 cent per cubic foot, depending upon which would produce greater revenue to the Port Authority. This method was eliminated with the January 1, 1968 changes, and wharfage is now applied to the weight or cubic measurement as manifested by the ocean carrier.

Table VI-11 shows current wharfage charges at Puerto Rico Ports Authority terminals.

Again, in the assessment of wharfage, the "ability to pay" idea is applied, and the short haul cargo in the Puerto Rico/Virgin Islands trade pays at a lower rate than the long haul cargoes.

California ports have a differential in wharfage charges also, with three rate categories-Inland Waterway, Coastwise, and all other cargo.

The practice of assessing different wharfage charges, depending on the trade, may create problems regard

ing discrimination. As in the case of dockage, however, there are several factors which must be considered before it can be determined if this practice is unjust or unreasonable.

4. Carrier Wharfage

Although wharfage charges are assessed against the cargo, the carrier collects the charges and transmits them to the Ports Authority. Historically, however, the carriers in the U.S. mainland/Puerto Rican trade have published "wharfage" charges in their tariffs which are higher than those paid to the Ports Authority. The wharfage charges assessed by the carriers (except SACAL) on cargo moving to Puerto Rico from Atlantic and Gulf ports are higher than the wharfage on cargo moving from Puerto Rico to those ports. As of January 1, 1969, the carriers published wharfage charges were as shown in table VI−12.

$0.0170 .0225

$0.00850 .01125

$2.50 each.

$2.50 minimum.

50 percent of above.

The disparity in rates between those published by the Ports Authority and the carriers is considerable. For example on southbound traffic, New York to San Juan, the carrier assesses 6 cents or 5 cents per 100 pounds, and remits to the Ports Authority their charge of 24 cents per 100 pounds. On northbound traffic, even though the carriers' rates are lower than southbound in most cases, the charges are still higher than those of the Ports Authority i.e., 112 cents or 2 cents per cubic foot as opposed to 14 cents per cubic foot.

The practice developed when breakbulk cargo was dominant and freight rates were quoted to end of ship's tackle. It was intended that the extra charge bridge the gap between the end of ship's tackle at the Puerto Rican port and a place of rest on the terminal facility where the cargo was available for pickup. With the advent of containerization, many of the cargo handling processes were eliminated. The old rate structure remained, however, and shippers are still being assessed more for

Under the provisions of resolution No. 809 inbound and outbound cargoes are granted a free time period of five working days. At the expiration of free time, cargo may, at the option of the Ports Authority, be placed in public storage at the expense of the goods, or be assessed demurrage at the following rates: $0.03 per 100 pounds, or $0.015 per cubic foot per day for the first 5 days, and $0.045 per 100 pounds or $0.0225 per cubic foot for each succeeding day. Empty containers are assessed $5 per day.

These charges are intended to discourage shippers and consignees from keeping cargo on the terminal facility beyond the free time. Prior to January 1, 1968, when lower demurrage rates were in effect, there was no incentive for the development of adequate public warehousing. At San Juan, in particular, the lack of public warehousing is critical. It was more economical to leave the cargo in the transit shed than to pay for warehousing. This practice is undesirable because it congests the transit area, and hinders cargo handling efficiencies and economies.

It is hoped that the new rate structure will discourage holding cargo and containers in the transit area beyond

free time. With the increased traffic between the U.S. mainland and Puerto Rico, it is vital that cargo handling efficiencies be implemented and more public warehousing space be provided in Puerto Rico.

E. U.S. MAINLAND TERMINALS

The following discussion is focused on the selected U.S. North Atlantic, South Atlantic, Gulf, and West Coast terminals which are leased and operated by common carriers in the Puerto Rican trade. These terminals handle virtually all cargo moving between the U.S. mainland and Puerto Rico.

1. North Atlantic Ports

a. New York Area

(1) General.-In 1969, the principal common carrier ports in the U.S. North Atlantic-Puerto Rican trade were New York and Baltimore. The trend toward con

00 According to Seatrain, the Ports Authority's wharfage charge is a "user charge" which does not provide for the actual movement of freight from ship's tackle to a place of rest or point of delivery in the terminal whereas the carriers' charge is for services provided from the end-of-ships tackle to place of rest or point of delivery in the terminal. Further, Seatrain believes that the carriers' cost of providing terminal service differs widely and is greater than the wharfage differential at issue.

tainerization, however, has prompted other ports to modernize their terminals. The Elizabeth Port Authority Marine Terminal is the world's largest container facility. When this facility is completed by the Authority in 1975, it will cover 919 acres and have 25 ship berths capable of accommodating the new large containerships moving cargoes to and from Puerto Rico and other overseas areas. The Authority has invested $72 million on this facility and plans to spend another $103 million.61 The terminal's 10 gantry cranes of 55,000 pound lifting capacity, valued at $700,000 each, can load and offload a container in approximately 2 minutes.2 This new facility will accommodate a fully efficient container system with trucks and railroads funneling traffic from points along the U.S. North Atlantic coast, through New York (and a few other major ports) for transport to Puerto Rico and other overseas points.

64

(2) Sea-Land Terminal.-Sea-Land's marine and trucking terminal at Elizabeth Port Authority Terminal is a highly efficient container terminal. This facility, which in 1967 handled about 1.5 million short tons of traffic moving between the U.S. mainland and Puerto Rico, is leased from the Port of New York Authority (until 1984) for an annual rental fee of about $2.4 million. The 100 acres of land area include six large containership berths, numbers 50, 52, 54, 56, 58, and 60 (each of about 600 feet in length with 32 draft feet alongside at MLW 63) located on the southside of the head of Elizabeth Channel. The facility also has a freight terminal over 1,000 feet long with an indoor railroad siding so that freight is handled under cover, and a marshalling yard area capable of accommodating about 2,500 transit trailers. The efficiency of this terminal is increased by four track-mounted dock-side cranes and additional ship-based gantry cranes. These cranes provide the connecting link in Sea-Land's "roadmarine highway" transportation concept and its movements from the U.S. mainland source of supply to plants in San Juan with a minimum of handling. These cranes are located at berths numbers 54, 56, 58, and 60. When a C4J lift-on/lift-off containership capable of transporting 609 containers docks at this terminal, it pro

63

61 Most of the cargo shipping companies are investing in new container facilities. In 1969, 36 container berths were in use on U.S. Atlantic and Gulf coasts. In addition, forty more are under construction or planned.

82 Only four of these gantry cranes are located on Sea-Land's facilities and are available for use in the Puerto Rican service. The remaining cranes are used by carriers serving trades other than Puerto Rico.

MLW refers to mean low water in port produced by tide conditions. Port of New York and New Jersey, Port Series No. 5, vol. II, part 2-1965 by the Corps of Engineers, U.S. Army (Washington: GPO 1966), p. 358.

65 Sea-Land Service, Inc.

ceeds through a lift-on/lift-off cycle in which 35 tons of containerized cargo are handled in 4 minutes, or better than 25,000 tons while in port (48 hours). Numerous tractor trailers are used to move containers between the wharf apron and open storage area. The truck, container, and vessel operations are computerized and continuously controlled. Four surface tracks connect berths 50 and 60 with the Central Railroad Co. of New Jersey, the Penn-Central Railroad, and the Lehigh Valley Railroad.

67

66

(3) Seatrain Terminal.-Seatrain's New York terminal is located at Dock No. 599, River Road, Edgewater, N.J. The terminal, constructed of concrete deck and steel pile, is a 600 feet long and 90 feet wide feedertype pier which juts into the Hudson River. There are no transit sheds on the pier, but the highway connections via River Road provide access to the trailer storage yard at the ADM pier. The pier is served by two 125-ton traveling bridge cranes for loading and unloading railcars, trailers and containers. Another bridge crane handles trailers and containers between roadways, platform, and rail cars. The pier itself has four railway tracks running the length of the pier with connection to the New York, Susquehanna, and Western Railroad. This terminal is used exclusively by Seatrain vessels in lift-on/lift-off operations to and from Puerto Rico. The pier provides one vessel berth under the overhanging trainway on each side of the pier. Each of the two bridge cranes operates independently, and the cargo of two vessels can be handled simultaneously.

(4) Transamerican Trailer Transport Terminal.68—— TTT's roll-on/roll-off trailership, the Ponce de Leon, presently uses the south side of pier 13, Staten Island. The entire terminal area from pier 8 to pier 14 is operated by Transocean Gateway Corp. The terminal facilities are also shared by American Export and Isbrandtsen Lines. Currently under way is the land fill operation which will redevelop and greatly expand the area between pier 8 and pier 14. When complete, the permanent terminal will contain four marginal berths and one conventional berth at the south end of the facility. The berths will be 750' long with a depth of 32' at mean low water. Total marshalling area will comprise 75 acres. A 100,000 square foot LTL shed is presently serving the existing terminal.

60 The berth depth at MLW is 27 feet.

The Port of New York and New Jersey, Port Series, op. cit., pp. 41-42. 68 New York Journal of Commerce (and its Commercial Supplement A), Apr. 11, 1968; and, Letter of W. R. Crowell, Trans-American Trailer Transport, Inc., Nov. 22, 1968 to Paul Gonzalez, Chief, Branch of Trade Studies and Special Projects, FMC.