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3. Analysis of Dry Cargo Moving by
Ocean Transportation Between U.S. and Puerto Rico
traffic flow will decline from 29 percent in 1965 to 15 percent in 1975. The same will occur with respect to the apparel and textile industry, which continue to lose their relative importance in Puerto Rico's manufacturing output. It is anticipated that in 1975, these industries will produce an output of 15 percent of the total compared to some 21 percent in 1965. The production of furniture and wood products, paper, leather, cement, and other rock products will remain relatively stable to comprise some 20 percent of manufacturing in 1975, but the quantity of related traffic should increase with growth in manufacturing.
These future trends in Puerto Rico's heavy industries' petrochemical and economic development, therefore, should greatly increase the relative volume of trade in capital goods, including metal products, machinery and manufacturers, compared to semifinished fabrics, yarns, and other textiles. At these growth rates, the gross output of manufacturing can be expected to grow from $934 million in 1968 to approximately $2.35 billion in 1975. Industrial output by that year, should comprise some 32 percent or more of Puerto Rico's total Gross National Product. Thus Puerto Rico's rate of progress in manufacturing will certainly influence traffic movements and create a more favorable market for common carrier services.
In addition, new construction, which will almost double by 1975 (from $690.3 million in 1968 to $1,177 million by 1975), will also influence future traffic movements in this trade. This growth will in part be due to the construction of new hotels by U.S. mainland businesses to accommodate Puerto Rico's tourist trade. Tourist activity has had a substantial effect on the economy. The southbound foodstuffs destined for tourists staying at hotels and guest houses as well as southbound building material used in the construction of hotels will continue to increase over the next decade. Moreover, private housing construction will increase from 17,400 units in 1968 to 21,700 units in 1975.
(2) Trends in Population.—Projected growth in population and income will stimulate the flow of foodstuffs and consumer goods to complement the flow of semimanufactured and raw material goods. The population of Puerto Rico, which is expected to climb approximately 51 percent during the next two decades, from 2,739,000 in 1968 to 4,135,000 persons by 1986 (chart II-2, p. 8), together with the rise in per capita income to $1,852 by 1975, will generate an even greater flow and variety of consumer traffic between the U.S. mainland and Puerto Rico.
Chart II-4 shows that in 1966 Puerto Rico's total external dry cargo trade moving to and from the Island by all forms of ocean transportation totaled approximately 5.38 million short tons, 3.40 million of which moved between Puerto Rico and the U.S. mainland.70 In contrast, commercial air freight traffic between the U.S. mainland and Puerto Rico, totaling 48,000 tons in 1966, was relatively insignificant.
The 3.40 million tons of dry cargo moving between the Mainland and Puerto Rico represents a gain of 29 percent over the 2.64 million tons of 8 years earlier. This increase is especially significant since shipments of bulk sugar to mainland ports declined considerably over the 8-year period. For example, northbound traffic dropped by 9 percent, from 1.18 million tons in 1958 to 1.08 million tons in 1966. This decrease was linked mainly to a more than 14 percent drop in sugar exports during this period. The decline in sugar exports is attributed to several factors. From 1958 to 1966, the chronic drought in Puerto Rico, combined with decreasing activity in agriculture, led to the Island's large decline in sugar exports to the U.S. mainland. At the same time, Puerto Rico's
refineries and distillery industry began to absorb an increasing amount of the bulk sugar output."
Consequently, the 29 percent increase in traffic between the Mainland and Puerto Rico was due to a substantial rise in southbound traffic. This traffic, largely consisting of southbound semimanufactured and raw material goods for Puerto Rico's growing industries, increased slightly more than 50 percent, from 1.46 mil. lion tons in 1958 to 2.32 million tons in 1966.
b. Traffic Flow by Region
Each of the four U.S. mainland regions serving Puerto Rico is unique in terms of traffic flow. These regions are: the North Atlantic region, extending from Eastport, Maine to Cape Hatteras, N.C.; the South At
70 The specific figures are shown in app. A, table 4. The remaining 2 million tons of dry cargo consisted mainly of foreign traffic moving to and from European, Asian, and Caribbean ports. In 1967, traffic rose to 5.91 million tons.
71 Much of the sugar that previously would have been shipped in raw form is now shipped in a lighter refined state or distilled into rum. While total northbound sugar tonnage declined between 1958 and 1966, refined sugar shipments actually increased.
lantic region, extending from Cape Hatteras to the Florida Keys; the Gulf region, extending from the Florida Keys to Brownsville, Tex.; and the West Coast region, extending from San Diego, Calif. to Seattle, Wash.Table II–10 has been prepared to illustrate the movement of cargo by these four regions.
(1) North Atlantic Region.—Table II–10 shows that the North Atlantic region is the major trade area with respect to U.S. mainland-Puerto Rico dry cargo traffic. In 1966, this traffic amounted to 1.70 million tons, or 50 percent of the total. Of this, 1.14 million tons moved southbound and 0.56 million moved in the opposite direction, representing an inbalance of some 67 percent southbound and 33 percent northbound. Virtually all of this traffic, or 1.65 million tons, moved in self-propelled vessels of more than 1,000 tons.
The 1966 North Atlantic total dry cargo represented a gain of 26 percent over the 1.35 million tons of
1958. Although the overall tonnage increased by only 26 percent over the 8-year period, southbound traffic destined for Puerto Rico's industrial plants and to feed the Island's growing population increased by approxi. mately 83 percent. The bulk of this southbound traffic consisted of food staples, appliances, fabricated textiles and plastic products, machinery, plastic materials, automobiles, trucks, and other transportation vehicles.? Return cargo was composed largely of sugar, clothing, canned tunafish, liquor, and footwear. The major common carriers linking the North Atlantic ports of Elizabeth, N.J., New York, and Baltimore, with those of Puerto Rico are Sea-Land Service, Inc., Transamerican Trailer Transport, Inc., and Seatrain Lines, Inc. The services provided by common carriers are analyzed in chapter III, and their principal southbound commodi. ties are discussed more fully in the following pages. Traffic transported by small vessels and barges 75 amounted to only 7,447 tons in 1966. Common carriage traffic totaled approximately 1.5 million weight
7These regions are defined by international usage and are used by the U.S. Navy, the U.S. Coast Guard, and the U.S. Coast and Geodetic Survey. Cargo statistics reported by the U.S. Census, Customs, the Maritime Admin. istration of the Department of Commerce, and other U.S. Department of Commerce units, are categorized according to these four regions.
13 The 1.70 million tons of North Atlantic dry cargo included 7,449 tons of Military Sea Transportation Service (MSTS) cargo.
74 In 1967, the list of principal commodities shipped from U.S. mainland ports Puerto Rico was the same as in 1966.
75 Unless otherwise noted, small vessels refers to self-propelled vessels of less than 1,000 tons; and barges to nonsell-propelled barges of all tonnage.
Northbound Trade Total:
(From Puerto Rico to Mainland)
730,137 312,144 131,259
Total dry cargo traffic carried by vessels of 1,000 gross tons and over, vessels of less than 1,000 gross tons, and Military Sea Trans. portation Service vessels.
Sources: (a) Commonwealth of Puerto Rico, Direct Exhibits of the Commonwealth of Puerto Rico, United StatesCaribbean-South American Investigation. Docket 12895, Exhibit CPR-308, January 1965, Part III, p. 8; and (b) Puerto Rico Planning Board, External Trade Statistics, various years, op. cit., pp. various pages.
tons in 1966, or 88 percent of the total to and from this region.
(2) South Atlantic Region.-In 1966, South Atlantic dry cargo traffic totaled some 409,000 tons. This traffic represented approximately 12 percent of the total U.S. mainland-Puerto Rico dry cargo trade. The bulk of this traffic, or 262,000 tons, moved southbound; 147,000 tons moved northbound, indicating that northbound traffic comprised more than one-third of the total dry cargo traffic moving from and to this region. Sixty percent of the dry cargo traffic was transported by vessels of 1,000 tons or more and 40 percent moved on small vessels and barges. As in the case of the North Atlantic region, the overall tonnage to and from the South Atlantic ports increased only 20 percent between 1958 and 1966 while southbound consumer, intermediate, and capital goods increased by almost 800 percent over the 30,000 tons of 8 years earlier. The principal southbound traffic from South Atlantic ports, including Charleston, Jacksonville, and Miami, consisted of basic foodstuffs, appliances, machinery, transportation vehicles, and electrical equipment. Northbound shipments were mainly dry goods, liquor, household effects, canned tunafish, sugar mill equipment and sugar, and shoes. The principal common carriers providing services to and from this region are South Atlantic & Caribhean Line, Inc., TMT Trailer Ferry, Inc., and Sea-Land Service Inc., which also serves the North Atlantic and West Coast regions. TMT Ferry, Inc. and South Atlantic and Caribbean Line, Inc., transported about 160,000 tons in 1966, or approximately 39 percent of the total dry cargo to and from the South Atlantic region.
As previously indicated, 40 percent, or 164,000 tons, of the dry cargo traffic to and from the South Atlantic ports is shipped on small vessels and barges. In 1966, TMT Trailer Ferry, Inc., a barge operator, accounted for a substantial part (82,000 tons) of this proportionately large amount of cargo moving by small vessels and barges.
(3) Gulf Region.—U.S. Gulf-Puerto Rico 1966 dry cargo, which totaled 1.15 million tons, represented 34 percent of the total U.S mainland-Puerto Rico dry cargo traffic. Approximately two-thirds of this tonnage, 785,000 tons, was southbound traffic. Unlike the North and South Atlantic regions, each of which showed an increase of only about 20 percent over the past 8 years, dry cargo traffic to and from this region increased approximately 55 percent since 1958. The predominant amount of dry cargo traffic was transported by vessels
of 1,000 tons or more.76 Less than 8 percent moved in small vessels and barges. Southbound consumer and industrial goods increased by only 28 percent since 1958, while northbound goods rose 175 percent during the same period. The bulk of southbound shipments from the principal ports in this region, including New Orleans, Lake Charles, Mobile, and Houston, were fertilizers, grains, lumber, steel products, machinery, paper products, meats, poultry, lard, onions, and malt. Rum, canned tunafish, shoes, and clothing constituted a large part of the northbound dry cargo. In addition, sugar to this region was a leading commodity. Only two major common carriers, largely breakbulk operators, connect this region with Puerto Rican ports. These riers are Lykes Bros. Steamship Co., Inc. and Gulf Puerto Lines, Inc. In 1966, 404,000 tons move to and from Puerto Rico by these carriers; the remainder largely consisted of bulk fertilizers, grains, and sugar.
(4) West Coast Region.—The flow of dry cargo traffic linking West Coast markets with those of Puerto Rico totaled approximately 144,000 tons in 1966. This traffic amounted to only 5 percent of the total U.S. mainland-Puerto Rico dry cargo traffic in that year. Of
. this 144,000 tons, almost 90 percent moved eastbound through the Panama Canal to Puerto Rico. Despite this severe inbalance, traffic moving in the opposite direction has more than doubled over the past 8 years.
The bulk of southbound traffic consisted of rice, plywood, and veneer, canned goods including tomato paste and juice, and tomatoes. Return cargo consisted of rum, small finished electrical and electronic articles, and some agricultural products. The only common carrier connecting the West Coast ports of Oakland, Long Beach, and Seattle with Puerto Rico is Sea-Land Service, Inc.
4. Analysis of Common Carrier Move
ments by Commodity
Table II–11, p. 27, lists 52 leading commodities 77 representing almost half of the cargo transported southbound in 1967 from U.S. Atlantic ports in terms of freight revenues.78 Table Il-11 shows that the most important single commodity moving southbound in 1967 was automobiles, accounting for 20 percent of the total freight revenues of $26 million. Canned and bottled foodstuffs and meats each accounted for 5 per. cent of the total. These commodities represented almost one-third of the freight revenues earned on the 52 commodities listed.
76 Approximately 10.000 tons of the traffic moving in vessels of 1,000 tons or more consisted of MSTS traffic.
77 The figures include all commodity movements which totaled more than $25.000.
7! The total 1966 revenues earned by five major carriers on traffic trans. ported southbound amounted to $54.09 million. The list of 52 leading coinmodities totaled $26 million.
The table also shows the considerable number of commodities moving in substantial volume on which there is some intercarrier competition. The most competitive commodities include: automobiles, machinery, trucks, fruits and vegetables, canned foods, fresh meat and poultry, refrigerators, electrical equipment, and footwear. In 1966, the intercarrier competition on heavy machinery, including scrapers, tractors, bull
dozers, trucks, and cranes, became so intense that the FMC, in docket No. 1187, Reduced Rates on Machinery and Tractors from United States Atlantic Ports to Ports in Puerto Rico, found certain reduced machinery rates of TMT Trailer Ferry, Inc., and South Atlantic & Caribbean Line, Inc. from South Atlantic ports to be unjust and unreasonable. As a consequence of this decision, such competition was not permitted to continue.
To take another example of such competition, in FMC docket No. 1167, Reduced Rates on AutomobilesAtlantic Coast Ports to Puerto Rico,80 the FMC found the reduced rates of various North Atlantic common
80 FMC docket No. 1167, Reduced Rates on Automobiles-Atlantic Coast Ports to Puerto Rico, 8 FMC 404–432.
Principal Commodities from U.S. Atlantic Ports to Puerto Rico—1967
loads or FAK ? shipments Canned/bottled fruits, vege.
tables, beverages, and
beans, macaroni, and dry
Iron and steel
441,212 425,880 346,577 337,222 333,118
1.7 1.6 1.3
1 Commodity groups listed included the combined southbound traffic of Sea-Land, Seatrain, TMT, Motorships and SACAL. Automobiles, trucks, and unidentified refrigerated cargo figures in. cluded a small amount of unrelated cargo.
2 Freight of all kinds.