Virgin Islands were engaged in foreign commerce only. After the United States acquisition of the Islands foreign carriers were permitted to continue in the Virgin Islands trade until June 5, 1920 when the Merchant Marine Act, 1920 was enacted. Section 21 of the 1920 act extended the application of the coastwise laws to trades involving the Island territories and possessions after February 1, 1922. The President, however, was authorized to postpone the date of section 21 applicability when deemed necessary to ensure adequate shipping service. He did so with respect to the Virgin Islands by annual proclamation permitting foreign flag vessels to operate in the Virgin Islands trade until April 16, 1936. Because of expressed doubts concerning the merit of owning the Virgin Islands and also because it was feared that in the rush of other business the President might fail to reissue the annual proclamation, certain Virgin Islands interests pressed Congress to exempt specifically the Island trade from the restrictions against foreign vessel service. After prolonged consideration, Congress, in 1936, amended section 21 of the 1920 act to provide that the "coastwise laws" shall not apply to the Virgin Islands until the President by proclamation determines otherwise (Public Law 520, 74th Cong. 49 Stat. 1207).

In 1942, President Roosevelt, by Executive Order 9170 of May 21, 1942 (7 Fed. Reg. 382), ordered that all of the navigation and vessel inspection laws of the United States be made applicable to the Virgin Islands, except the "coastwise laws of the United States" and three other laws not pertinent to this discussion. There have been no changes in this provision since 1942. This waiver to the restriction of foreign vessels from engaging in U.S. coastwise trade has facilitated greater and more diverse services in the trade.

2. Common Carriers in the MainlandVirgin Islands Trade

Unlike the Puerto Rican trade, the Virgin Islands trade is essentially an outport type of service which imposes various limitations upon the types of services generally offered by the carriers operating in this trade. Perhaps the small volume of traffic and breakbulk character of shipments are the principal limitations to more sophisticated service. Each Virgin Islands water carrier is examined below.

a. Alcoa Steamship Co.

Alcoa, which has served the Virgin Islands since before World War II, operates as a common carrier in

conjunction with proprietary operations on behalf of its parent company, Aluminum Company of America, primarily hauling breakbulk cargo from New York to St. Thomas and St. Croix. Its U.S. mainland terminals are berth 11, Port Newark Railway Co., New Jersey, and pier 9, Port Covington in Baltimore. In the Virgin Islands, Alcoa berths at the West India Co., Ltd. dock located at Charlotte Amalie, St. Thomas; in St. Croix, it berths at the Frederiksted Pier.

Alcoa is the major carrier in this trade in terms of revenue and tonnage. In 1967, Alcoa earned a total of $1,642,715 in revenue divided as follows: $598,401 (6,997 short tons) to Charlotte Amalie, St. Thomas from North Atlantic ports; $652,025 (9,446 short tons) to Frederiksted, St. Croix, from North Atlantic ports; $179,107 to Charlotte Amalie from Gulf ports; $205,937 to Frederiksted from Gulf ports, and $7,225 to Port Harvey, St. Croix,' from Gulf ports. In 1967, Alcoa provided weekly service from New York and Baltimore to the Virgin Islands alternating between St. Thomas and St. Croix. This service was direct from New York, being the first leg of a voyage to Venezuela, Trinidad, and the Guianas, where bauxite was loaded for the return leg.2

As of April 1, 1970, Alcoa still provided regular service from New York direct to St. Thomas and St. Croix. But, sailings have been reduced. It employs two 14 knot, 6,000 dwt. vessels which now call at St. Thomas once every 3 weeks; at St. Croix, once every 6 weeks. These vessels, S.S. Monique Schroder and S.S. Jenny Marine, are chartered from the world charter market. Their sailing time from New York to the Virgin Islands is 4 days; turn-around time for the entire voyage (New York-Virgin Islands-Venezuela-Guinea) is 38 days. Alcoa's principal moving breakbulk commodities include: automobiles, trucks, iron and steel-articles, tanks, flour, boxes, and food (see table I-3). This carrier also moves some containerized cargo. In 1967, for example, its containerized cargo to the Virgin Islands comprised about 7 to 8 percent of its total traffic.3

1 Letter of H. Olsen, Manager Tariffs, Alcoa Steamship Co., May 31, 1968 to Paul Gonzalez, Chief, Branch of Trade Studies and Special Projects, FMC. 2 Six chartered vessels, the S.S. Ernst Schroder, S.S. Erwin Schroder, S.S. Karina, M.S. Santa Katerina, S.S. Alex, and S.S. Susaa, were used at one time or another. These vessels of medium size (about 3,000 to 8,000 dwt.) and speeds ranging from 13 to 15 knots, carried mainly breakbulk cargo. 3 In 1968, Alcoa considered establishing a full container service in this trade in order to reduce rising operating costs and to mitigate the effect of high landing charges (i.e., landing charges in 1968 were $6.50 per 40 cu. ft. at St. Thomas and St. Croix). Full container service was deferred, however, because the carrier's 1968 assessment of traffic flow to the Virgin Islands indicated that the Island's industrial base and terminal facilities were inadequate to support such an operation.

In 1967-68, Alcoa also provided service direct from gulf ports to the Virgin Islands. This service was suspended in 1968.

b. Berwind Lines, Inc.

Berwind, a subsidiary of Berwind Corp., a Pennsylvania firm having its origins in the coal-mining industry, is the principal carrier connecting Puerto Rico and the Virgin Islands. It mainly hauls traffic originating on the U.S. mainland which is transshipped at San Juan for further movement to the Virgin Islands. In 1967 (year ending September), Berwind, the second largest carrier serving the Virgin Islands, in terms of revenue tons, transported 73,061 revenue tons. Eightyeight percent of this traffic was outbound from San Juan. Berwind's total container traffic was 69,719 revenue tons or 95 percent of its total, Sixty-nine percent of the container traffic was TL traffic, producing approximately 66 percent of its revenues.

In 1967, Berwind operated a barge service between San Juan on the one hand and Charlotte Amalie, St. Thomas, and Christiansted, St. Croix, on the other, usually alternating trips to Charlotte Amalie and Christiansted. During the year, it made 324 voyages to the Virgin Islands. The ships primarily employed by Berwind in this trade were the barges Luquillo and the St. Croix. When needed, it also used the Dorado and the Condado. Its vessels and the capacity of equipment are shown in table II-2. Berwind purchased some of these barges from the Porto Rico Lighterage Co. and chartered the rest from the same source.5 Porto Rico Lighterage Co. also provided the towage for Berwind

Berwind originates relatively little traffic. It is primarily the on-carrier for the containerized cargo transported by Sea-Land, TTT, and Seatrain from North Atlantic ports.

As of mid-1968, Berwind owned ninety-nine 35 foot dry cargo containers and two 32 foot reefer vans similar to those owned by Sea-Land.

using motor vessel tugs such as the Puerto Nuevo of 191 gross tons. Porto Rico Lighterage has represented the interests of the parent Berwind Corp. in the Caribbean for over 50 years.

Berwind owns and maintains a barge ramp terminal at Isla Grande, San Juan and uses the marginal wharves provided by the Virgin Islands Government at St. Thomas and Christiansted. The latter are of concrete construction and their size is 200 feet and 100 feet in length respectively. Depth alongside is 15 feet at both berths. No special equipment other than semitractors is used for their loading and unloading operations. The San Juan berths are discussed in more detail in part I, chapter VI.

c. Atlantic Lines, Ltd.

In November 1968, Atlantic, a foreign-flag operator, inaugurated direct roll-on/roll-off service from New York and Miami to St. Thomas and St. Croix, with a sailing from New York approximately every 2 weeks; from Miami, every 10 days. This service replaced its breakbulk service which had been offered to the Virgin Islands in conjunction with South American ports of call. Its former breakbulk service operated approximately 26 voyages from New York and approximately 32 from Miami,' utilizing at various times any one of seven breakbulk ships in the trade, each of approximately 500 gross tons. In November 1968, Atlantic placed the first of three newly constructed roll-on/rolloff containerships, each of 1000 dwt., into this service. These vessels, chartered from foreign operators, are the SS Jamaica Provider, the SS Pan Atlantic, and the SS Pan America, each capable of carrying thirty to thirtyseven 40-foot trailers adapted for either dry or reefer cargo.

Chester, Blackburn, & Roder, Inc., general agents for Atlantic Lines. 7 Atlantic Lines Ltd., Schedule No. 124, Mar. 1, 1968.

Atlantic's vessels are perhaps the most modern of those serving the trade. In spite of the general consensus that small containerships can operate successfully only on short runs involving quick turn-around, Atlantic has placed these 1,000-ton vessels in a relatively long haul trade. If this operation proves successful, it may suggest an extension of the container revolution to smaller ports similar to those in the Virgin Islands. Atlantic's rates are examined in chapter III following.

d. Florida Inter-Island Lines, Inc.

8

Florida Inter-Island operates several chartered vessels between U.S. South Atlantic and Gulf ports on the one hand and the U.S. Virgin Islands on the other. Although its vessels are capable of carrying a few containers up to 20 feet in length, Florida Inter-Island is basically a breakbulk operator. In 1967, it transported 21,000 tons between Miami and St. Thomas, a gain of 24 percent over the previous year. This amounts to approximately 850 tons per voyage. During 1967, Florida Inter-Island scheduled voyages from Miami to St. Thomas and St. Croix every 10 days. Actual operations to St. Thomas produced 25 voyages. This carrier earned approximately $311,723 from its St. Thomas trade alone. This represented an increase of 16 percent from its 1966 level of $268,741. This traffic was approximately 96 percent outbound, indicating a considerable trade imbalance, even considering the possible backhaul of foreign traffic on these same voyages. In 1968, Florida Inter-Island began service between U.S. Gulf ports and the Virgin Islands following Alcoa's withdrawal from this service.

In 1968, Florida Inter-Island utilized seven chartered vessels of 930 to 1,850 tons and speeds of 9 to 11 knots in the Virgin Islands Trade.10 These vessels have a turnaround time of about 15 days and sea time of about 10 days.

e. West India Lines

West India, which has its headquarters in West Palm Beach, Fla., is an affiliate of Inagua Transports, Inc. of Liberia from which it charters its vessels. Its primary business is the transport of large heavy machinery and equipment on a contract basis throughout the world. In 1968, West India called at Christiansted and/or Char

8 Letter of F. Navia, Executive Vice-President (enclosure) Florida InterIsland Shipping Corp., Mar. 29, 1969 to Paul Gonzalez, Chief, Branch of Trade Studies and Special Projects, FMC.

9 Ibid.

10 Florida Inter-Island Lines used the following vessels: MV Terrala, 1,319 dwt., MV Charta, 940 dwt., MV Caribbean Mist, 1,850 dwt., MV Rowin, 1,170 dwt., MV Westzoan, 1,050 dwt., MV Mitropa, 1,080 dwt., and MV Joust, 930 dwt.

Netherlands Mead provides breakbulk service from Miami to St. Thomas and St. Croix as part of a service which includes calls at the Bahamas and the Netherlands Antilles." It employs one small vessel, the MV Santo Antonio, a breakbulk shelter-deck vessel built in 1958.12 The Santo Antonio sails every 3 weeks from Miami, with an average turnaround of 2 weeks per voyage. The vessel calls at the submarine base, St. Thomas and at the Island Transportation Service's facility, St. Croix. Its estimated 1967 tonnage was 5,000 tons, or approximately 300 to 350 tons per voyage. g. "K" Line

Kawasaki Kisen Kaisha of Kobe, Japan,13 which operates as “K” Line, began operations in the West CoastVirgin Islands trade in 1967 in response to a pressing need for shipping space for plywood and lumber products from the West Coast. As demand for plywood slacked off, "K" Line began to carry more general cargo. The most important commodities now carried are lumber, canned goods, household goods, and gov. ernment space cargo (GSA). No reefer cargo is ac cepted. In 1967, it carried about 3,000 tons of cargo in this trade along with cargo destined for foreign ports. This amounts to about 250 tons per voyage, mostly breakbulk cargo. "K" Line hopes to diversify its cargo

11 General agent for Netherlands Mead is Caribe Shipping Corp. of Miami Beach, Fla.

12 The vessel is 189 ft. in length, 489 gross tons, and has a cruising speed of 10 knots. It has two general cargo holds and three reefer compartments.

13 Kerr Steamship Co., 350 California Street, San Francisco, Calif., general agents for Virgin Islands service.

mix in the future and attract increasing amounts of business in general cargo.

"K" Lines' service is monthly, generally between San Francisco and St. Thomas with only occasional calls at St. Croix. Vessels call at the East Asiatic Co. Terminal in St. Thomas. This service is part of a South America, Central America, and Caribbean Service which employs only one ship at any one time. In May 1969, the Chile Maru was in this service. The Chile Maru, a 8,352 gross ton (10,722 dwt.), 15 knot flushdeck ship, was built in 1957.

3. Inter-Island Water Services

A number of smaller craft are engaged in transporting commodities from the Commonwealth of Puerto Rico to the Virgin Islands. Several sloops in this trade are registered in the neighboring British islands. Approximately 20 schooners, which ply the Virgin Islands, the Dominican Republic, Haiti, and the Windward Islands trades, dock alongside the wharf space between piers 3 and 5 in Old San Juan. These schooners, each of 40 to 50 tons, transport Puerto Rican agricultural products, building materials, foodstuffs, and manufactured goods from Puerto Rico and the Virgin Islands to adjacent Caribbean islands, returning with agricultural products and cement. In addition, the St. John Corp. provides passenger and freight service between St. Thomas and St. John several times daily. Several motor launches make daily trips between the British island of Tortola and St. Thomas accepting passengers and freight. Finally, Caribe Shipping Co., Inc., offers freight service from Puerto Rico to the Virgin Islands.

4. Principal of Free Entry

Entry into the Virgin Islands trade is open to any U.S. citizen, corporate body, foreign citizen, or foreign corporate body who is willing to float a suitable vessel or barge and operate it under common or contract carriage. This principle of free entry and exit is important to the present state of the Virgin Islands economic development. The Virgin Islands' business concerns have traditionally relied heavily on the transportation serv ices which have been offered in this trade and the suitable manner in which the carriers generally have fulfilled the Islands' needs for basic foodstuffs and semimanufactured goods. This transportation principle, therefore, has been beneficial to the economic welfare of the Islands.

1. General

C. AIR CARRIERS

Air carriers provide the only alternate means of transportation between the U.S. mainland or Puerto Rico and the Virgin Islands. Air freight, however, is inherently a relatively expensive means of transport and is, thus, usually limited to a rather restricted range of commodities in most categories of trade. Due to the somewhat unique position which the Virgin Islands enjoys in its trade with the U.S. mainland and Puerto Rico, air carriers, like the water carriers, also tend to provide specialized transportation sevices to the Islands. Commodities which are not usually transported by air due to their bulk and weight are nevertheless transported in considerable quantity by air carriers along with the items of high value and perishability where the delivery time and relatively higher margin of security in delivery are the overriding considerations in their shipment. Thus, in sharp contrast with the 1.4 percent transported by air carriers in the U.S.-Puerto Rican trade in 1968, Virgin Islands' air carriers transported about 5 percent of the total U.S. mainland-Virgin Islands traffic in the same year. In recent years, air carriers have shown a significant increase in traffic relative to the amount transported by water carriers.

2. Traffic

In 1968, the volume of air cargo flown into the Virgin Islands totaled about 14,300 tons, an increase of 43.3 percent over the 10,000 tons of a year earlier.11 This cargo was processed through the Alexander Hamilton and Harry S. Truman Airports. The airlines active in this service were: Pan American World Airways (Pan American), with direct flights to St. Thomas and St. Croix, Caribbean Airlines (Caribbean), Airlift International, Inc. (Airlift), and LIAT (a subsidiary of British West Indies Airlines). Pan American hauled by far the largest percentage of the cargo on direct flights. Caribbean enjoyed the second largest share, since cargo from Eastern Airlines, Trans-Caribbean Airways, Delta, and Air France Cargo is transshipped from San Juan via Caribbean to the U.S. Virgin Islands.

When air carriers inaugurated service to the Virgin Islands, their services were primarily restricted to the transport of frozen meats, fresh fruits and vegetables,

14 This traffic includes the air taxi traffic shipped from Ponce and Mayagüez airports.

dairy products, consumer nondurables and the like. Today, however, air freight includes such durable items as cans, trucks, bulldozers, engines, heavy construction materials, and other such unlikely commodities. Air cargo from the Virgin Islands, approximately 10 percent of total imports, typically consists of manufac tured products for U.S. markets such as textiles, watch movements, pants, thermometers, resort apparel, and foreign cars.

In May 1968, the Virgin Islands government supported the petition to the Civil Aeronautics Board of Airlift, an all-cargo carrier, to engage in the transportation of property and mail on an unrestricted basis

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