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Source: FMC and Commonwealth of Puerto Rico Joint Survey of Puerto Rico Trucking Industry-1968.

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Source: FMC and Commonwealth of Puerto Rico Joint Survey of Puerto Rican Trucking Industry, 1968.

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to the question, 83 percent enjoyed the benefits of cargo insurance on their shipments. The businesses and firms represented in the shipper/consignee sample were almost entirely manufacturers which tend to patronize the large and medium-sized truckers.

(2) Insurance Practices-Liability Insurance.

Liability insurance coverage shows a definite downward trend from larger to smaller operations as shown below. The most common coverage for large, medium and small operators was $50,000, $100,000 bodily injury, and $10,000 property damage. Table VII-4 shows the insurance coverage on equipment by size firm.

Only a handful of insured one-truck operators specified their degree of coverage. Those having bodily injury coverage tended also to have property damage insurance although slightly fewer had such coverage. Accepted practice in the United States calls for liability insurance for all motor vehicles and many states have made it a legal requirement for operation.

31 For a description of large and medium-sized trucking firms, refer to paragraphs 4 and 5, respectively, of this chapter.

32 The size of vehicles utilized by these operators varied fro 34 ton pickups to tractor-trailers, hence utilization with respect to load capacity is difficult to ascertain. Moreover, differences in types of customers and nature of cargo will also influence the weight utilization of a firm's vehicles.

33 For a description of small and one-truck operators, refer to paragraphs 6 and 7, respectively, of this chapter.

34 Approximately $5,000 at best.

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c. Relative Volumes of Service by Contract

Carriers and Common Carriers Approximately 36 percent of the industries sampled reported that their business was exclusively with contract carriers while an equal number dealt exclusively with common carriers. About 16.5 percent reported a mixture of both types while about 11.5 percent operated their own trucks.

In 1967, the large truckers earned approximately $3,645,671 or about 35 percent of their total revenue from the carriage of contract cargo whereas medium truckers earned about $637,290 or about 20 percent of their total revenue from contract carriage (app. I, table 3).

Fifty-six percent of large truckers reported that they carried cargo under both common and contract carriage while only 38 percent of medium truckers carried both types. One large trucker was exclusively contract while eight were exclusively common carriers. Of the medium carriers, nine were exclusively contract while fourteen were exclusively common carriers.

Ponce metropolitan area. None were reported as being based in Mayagüez. The remainder were based in outlying areas.

Appendix I, table 3, shows that the total 1967 freight revenue earned by large firms was approximately $10,400,000 36 compared to about $5 million in 1959,37 representing an average increase of about 13.5 percent per year. About 65 percent of this revenue was earned on general cargo including consumer and intermediate goods, the remainder being earned on so-called specialized

cargo."

38 The general cargo revenues were split approximately 62 percent to 38 percent 39 between TL and LTL cargo, respectively. As nearly as can be determined, this ratio has not changed significantly since 1959. The amount of LTL cargo moving by specialized operator (i.e., trucker hauling primarily bulk traffic) was small and, thus, was not reported in the survey.

With one exception, most carriers tended to derive their revenue from either general or specialized car. riage. Six of 16 reporting firms carried predominantly specialized cargo while nine carried mostly general cargo.40 In 1959, five firms were engaged in general trucking and six emphasized specialized cargo carriage. Revenue from carriage of specialized cargo has declined relative to general cargo. Among other things, this may be traced to the trend away from dependence on sugarcane culture in the Island's agricultural sector while the industrialization of Puerto Rico resulted in the consumption of greater quantities of consumer and semimanufactured goods. Most large trucking firms now count manufacturing plants including Fomento plants, as their most important source of revenue. Manufacturing plants provided $7.3 million dollars of revenue in 1967, or approximately 70 percent of total revenue earned by large trucking firms, while specialized cargo accounted for only 15 percent of the revenue derived from these same manufacturers. b. Variety and Distribution of Business

The survey program divided shippers into five categories: sugar centrals and farmers, shipping companies (ocean carriers), retailers and wholesalers, manufacturers including Fomento plants, and all others

4. Description of Large Trucking Firms

Appendix I, table 1, shows the size and geographic distribution of Puerto Rico's trucking industry (large, medium, small, and one-truck operating firms) for 1959 and 1967. This table shows that in 1967 Puerto Rico's trucking industry including large, medium, small, and one-truck operators, comprised 4,001 trucking firms operating 4,607 trucks, 1,021 tractors, and 892 trailers. The industry's power units increased about 50 percent between 1959 and 1967. It is noteworthy that tractors used to haul trailer chassis increased from 373 in 1959 to 1,021 in 1967, or by 174 percent, while large trucking firms registered the largest increases in tractor and trailer equipment. a. Size of the Group and Distribution of

Business Trucking firms are described as large for the purpose of this study when they operate 16 or more power units. Appendix I, table 1 shows that there were 20 such firms in Puerto Rico in 1967 35 and the geographical distribution of this group. Nine of these firms were in the San Juan metropolitan area and four in the

38 Based on a projection of the reported revenues of 16 firms responding to

the survey.

25 The survey of the 20 firms comprising this group resulted in 16 replies comprising an effective sample of 80 percent for the following categories : dis. tribution of business, equipment, employment, wages, unionization, and distri. bution of customers by industry. The sample returned on business volume and number of customers was 75 percent.

37 Robert R. Nathan Associates, Inc. The Puerto Rico Trucking Industry Re. port On a Survey (Washington : November 1960), p. 12.

38 For example, sugarcane, oil, etc.

39 This compares reasonably close to Sea-Land's TL, and LTL ratio of 75 to 25.

40 Estimated numbers of firms engaged in specialized and general cargo car. riage are 8 and 11, respectively, with one mixed.

including the United States and Commonwealth governments (app. I, table 4).

The number and types of customers varied according to the category surveyed. General truckers serving shipping companies predominantly reported relatively few customers while those serving retailers and wholesalers, reported more. The large trucking firms served a total of about 925 truckload (TL) customers in 1967. About 73 percent of these 925 customers are regarded by the truckers as steady customers. The largest single subcategory of truckload customers was manufacturing firms contributing about 58 percent of the total reported, some 70 percent of these being steady customers. Fifty-five customers were reported to be shipping com. panies; this small number reflects the limited number of shipping companies rather than the volume of busi. ness provided. Retailers and wholesalers on the other hand seemed to show relatively more customers (149 retailers and wholesalers) than indicated by their business volume. Only a few sugar centrals and farmers were reported as customers by large truckers.

Although LTL cargo generates about 30 percent of large truck revenue, only 17 percent of the customers were reported by large firms as LTL customers. Most of these were from the manufacturing sector; the next largest group being wholesalers and retailers. These two groups supplied 93 percent of the LTL customers reported. c. Power Equipment of Large Firms (Trucks

and Tractors) In 1967, large firms utilized 204 trucks and 514 tractors for a total of 718 power units (see app. I, table 1). In 1959, large firms controlled only 165 trucks and 254 tractors for a total of 429 power units.41 This shows a 67 percent increase in power units during this period, reflecting the large increase in traffic moving to and from Puerto Rico. Of interest is the 95 percent increase in tractors and 43 percent increase in trailers. Most of these tractors pulled 35 to 40 foot trailers. The 1967 average revenue per power unit was about $14,500 compared with $11,600 in 1959.42

The 1967 revenue per power unit, however, varies widely, ranging from about $80,000 (household goods carrier) to $2,400.43

d. Employment and Wages of Large Size Firms

In 1967, the 16 large firms responding to the survey employed 53 officers and executives. The 20 firms com. prising the entire family of large trucking firms, therefore, employed a projected 66 officers of executives. All other employees including drivers totalled 883 compared with 848 in 1959. This indicates that more equipment was apparently being operated in 1967 by approx. imately the same number of personnel as in 1959.* There are, however, only 540 drivers for 718 power units indicating a considerable underutilization of equipment. While it is known that at least some of these units were out of service at the time of the survey, it is difficult to account for the apparently large number of idle units.45

Sixty-six percent of all employees of large firms excluding executives and management were unionized in 1967. The majority of those unionized belonged to the International Brotherhood of Teamsters, but there are some who belonged to independent unions and at least one firm was organized by the International Steelworkers Union.

5. Description of Medium Trucking Firms a. Size of Group and Distribution of Business

Firms of medium size in the Puerto Rican trucking industry may be defined as those firms that operated at least 6 but not more than 15 power units.46 Appendix I, table 1 shows that there were 37 medium-size truck. ing firms operating about 324 power units in 1967. Appendix I, table 1 also shows the geographical distribution of this group throughout the Island by region. Most of these firms, or 23, were located in the northern region of Puerto Rico, largely in the metropolitan area; eight in the southern region surrounding Ponce and; six in the western region surrounding Mayagüez. Total power units increased 84.7 percent during the 8year period, from 183 units in 1959 to 338 units in 1967.

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41 Robert R. Nathan Associates, Inc., op. cit., p. 1. 42 Ibid.

43 Of the three firms reporting the lowest gross revenue per power unit, two are specialized carriers; and, thus, seasonality might partially explain this low yield. The third is predominantly engaged in general trucking. This firm, which reported 18 power units and only 5 drivers, had total revenues of about $45,000 and total expenses of about $60,000 for 1967.

44 One possibility might be that some of this equipment is leased to others for personal or proprietary use and, therefore, would not have drivers employed by the trucking firm itself. Another possibility would be that some of the vehicles are operated by owners and executives but this is less likely except in the case of small truckers.

45 Appendix I, table 2 contains the range of pay for unionized and nonunionized employees.

40 The sample survey of 34 in the 37 firms resulted in 29 replies comprising an effective sample of 78 percent on distribution of business, equipment, employment, wages, unionization, and distribution of customers by industry. In the case of the number of customers, it was 59 percent.

b. Variety and Distribution of Business

Appendix I, table 3 shows that the total revenue earned by the medium-sized trucking firms in 1967. Total revenue more than doubled between 1959 and 1967, from $1,500,000 47 to $3,218,207 representing an average increase of 21.5 percent per year in Puerto Rico's traffic and a substantial rise in the number of medium-sized trucking firms during this 8-year period. The general cargo revenues were split approximately 66 to 34 percent between TL and LTL cargo, respectively. This table also shows that generalized TL trucking operations accounted for almost 50 percent of the total 1967 revenue gaining considerably over the 10 percent of the total in 1959. The rev. enues earned from specialized trucking operations, such as sugar and furniture movements, declined from 50 percent of total business in 1959 to 20 percent of business in 1967. In 1967, miscellaneous cargoes and LTL shipments represented approximately 30 percent of the revenue earned by this

group. Truckers acting as common carriers or contract carriers were predominently engaged in generalized trucking operations and had many and varied types of customers. Of the 37 medium-sized firms operating in 1967, 29 firms reported the distribution of their customers by industry categories as shown in table VII-5 below.

c. Power Equipment of Medium-Sized Firms

(Trucks and Tractors) Appendix I, table 1, show that medium-sized firms employed 168 trucks, 156 tractors (324 power units), and 107 trailers in 1967, compared to 145 trucks, 109 tractors (254 power units), and 114 trailers in 1959. The 324 power units in 1967 represented a 28 percent increase in power units during the 8-year period. The rise in generalized TL traffic is reflected in this increase in power units. Tractors increased 43 percent and trucks 60 percent. During the same period, the average revenue per power unit increased 16.1 percent from $8,200 in 1959 to $9,521 in 1967. The 1967 average revenue per power unit of $9,521 for medium firms was approximately 35 percent less than for the large-trucking firms. The majority of the medium firms reporting in 1967 indicated that their equipment was owned rather than leased.

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Sources: (a) FMC and Commonwealth of Puerto Rico Joint Survey of Puerto Rico Trucking Industry.1968; and, (b) Robert R. Nathan Associates, Inc., op. cit., pp 39-42.

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These truckers were largely involved in serving manufacturing plants, water carriers, and food stores which shipped or received primarily general cargo. Of the 29 firms reporting, only 8 were engaged in the movement of specialized cargoes (i.e., sugar and government shipments).

In 1967, the medium-sized operators had approximately an equal number of drivers (i.e., drivers plus assistant drivers) and power units, 322 to 324. In 1967, the number of helpers and loaders decreased from a total of 146 employed by 22 firms to 28 employed by 37 firms indicating that far fewer trucking operators are now supplying their customers with such help. Mechan. ics are employed by medium-sized trucking firms in about the same ratio to the number of power units as in large-trucking firms. But unlike the large firms which have full-time mechanics, only 50 percent of the

& Robert R. Nathan Associates, Inc. op. cit., p. 29.

medium-sized firms employed them full time. Between 1959 and 1967, the number of mechanics of mediumsized firms decreased slightly at a time when the total number of power units operated by these firms increased by 85 percent. This is probably due to the fact that many firms now have their power units serviced and maintained by regular garages.

Office employment is unevenly distributed. Nine had no office employees in 1959 and about 50 percent of the office workers reported in that year were actually employed by the firms dealing with household goods. By 1967, these firms decreased their office employee and executive staff by about 15 percent while at the same time more than doubling the number of drivers. In practice, much of the office work is performed by owners or other executives of the medium-sized truck. ing firms.

Appendix I, table 2 illustrates the wage rates for medium-size firms in 1959 and 1967. Unionization of the medium-size firms declined between 1959 and 1967. By 1967, only 21 percent of the medium-size firms were unionized. In 1959, 27 percent of the medium-size firms had been organized by the labor unions. The total union membership was only 94 (distributed in the San Juan and Ponce).

eral cargo, sugarcane transport, and building material operations. It is estimated that 148, or approximately 45 percent, of the small firms confined their business principally to carrying general cargo (app. I, table 6). In contrast, only 40 operators, or approximately 11 percent, of the total specialized in carrying general cargo in 1959.48 In addition, the survey indicated that the percentage of small truckers engaged primarily in carrying construction material dropped from 47 percent, or 170 operators, in 1959 to 30 percent, or 96 operators, in 1967; the percentage of carriers carrying sugarcane dropped from 42 percent, or 160 operators, to 25 percent, or 81 operators, during the same period. The latter changes reflect Puerto Rico's diversification of agriculture and the trend towards industrialization as well as the declining condition of the world sugar market (ch. II).

(1) General Cargo Carriers.-In 1967, approximately half of the small truckers, or 148 operators, did not specialize in any particular type of cargo handling, but instead carried various types of general cargo. The service included movements for wholesalers and manufactures as well as other mixed shipments. These operators used 438 power units in 1967 compared to 130 units in 1959. Their employment increased from 210 in 1959 to 502 in 1967.

In 1967, these truckers made use of a substantial number of platform and stake trucks to carry general cargo. Only a few small truckers had specialized equipment such as tank trucks, panel trucks, etc. Since many of the small truckers carried general cargo which was picked up at the piers for distribution inland, they had a considerable effect on the water carrier's operation.

Small truckers come into direct competition with the large and medium truckers when they haul import cargo. According to large and medium-sized truckers, the lack of effective regulation over small trucking has permitted these truckers to engage in practices which result in destructive competition.

(2) Building Material Carriers.-In 1967, an estimated 96 small trucking firms, or 30 percent of this group, confined their business principally to the support of the construction industry in Puerto Rico compared to 170 operators in 1959. In 1967, these operators used 287 power units including low beds, dump trucks,

6. Description of Small-Trucking Firms a. Sise of the Group and Power Equipment

Trucking firms are defined as small if they operate more than one truck or tractor-trailer combination but not more than five. Appendix I, table 1 shows that in 1967, there were 325 small-trucking firms operating 708 trucks, 259 tractors, and 179 trailers. Appendix I, table 1, also shows their geographic distribution throughout Puerto Rico by region. In 1967, these 325 small-trucking firms operated 967 power units. It is estimated that in 1959 there were 370 small operators of this class operating 1,000 power units including about 30 tractor-trailer combinations. Although the small firms controlled more trucks than did the large firms, their volume of business in terms of revenue earned was far less than that of the large or medium truckers. A large proportion of their trucks operated mainly during sugar harvest; an, for this reason, average truck utilization was not as high as the medium and large firms.

b. Variety and Distribution of Business

In 1967, the small truckers were engaged mainly in three categories of distribution: movement of gen.

48 Robert R. Nathan Associates, Inc., op. cit., p. 46.

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