(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 sented a gain of 26 percent over the 1.35 million tons of

73

repre

7 These 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 Administration 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.

TABLE II-10

74

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 approximately 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 commodities are discussed more fully in the following pages. Traffic transported by small vessels and barges amounted to only 7,447 tons in 1966. Common carriage traffic totaled approximately 1.5 million weight

75

74 In 1967, the list of principal commodities shipped from U.S. mainland ports to 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 nonself-propelled barges of all tonnage.

375-842 0-70-3

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 & Caribbean 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 carriers 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 Movements by Commodity

Table II-11, p. 27, lists 52 leading commodities" representing almost half of the cargo transported southbound in 1967 from U.S. Atlantic ports in terms of freight revenues." 78 Table II-11 shows that the most important single commodity moving southbound in

78 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.

78 The total 1966 revenues earned by five major carriers on traffic transported southbound amounted to $54.09 million. The list of 52 leading commodities totaled $26 million.

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 percent of the total. These commodities represented almost one-third of the freight revenues earned on the 52 commodities listed.

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

TABLE II-11

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.

5. Commodities of Importance to the Commonwealth

The overall economic wellbeing of Puerto Rico and future industrial development on the Island will depend to some extent on the availability of reasonable rate levels on certain basic cost of living foodstuffs, semimanufactured and raw materials, as well as capital goods, imported from the U.S. mainland. Although it may be that certain of the foods and manufactured goods could be locally produced in the foreseeable future, unless the Island attains a higher degree of selfsufficiency than now appears likely, many essential foodstuffs and raw materials must be imported to foster the economic development of Puerto Rico. The commodities which the Commonwealth considers most important to the economy are discussed below.

The Commonwealth imports large quantities of foodstuffs to feed the people of Puerto Rico. Appendix B lists the food items which, according to the Commonwealth, are most important to the consumer's cost of living. This list was developed jointly by the Puerto Rican Department of Labor (Cost of Living Division), and the Puerto Rico Ports Authority. In an analysis contained in chapter IV, the ocean freight rates applicable to these commodities are discussed in some detail. In addition, chapter V undertakes an examination of the effect ocean rates have on food prices as well as on cost of living in Puerto Rico. As indicated previously, the Commonwealth imports large quantities of semimanufactured goods and raw materials, or intermediate

81 FMC docket No. 1167, Supra, p. 410.

goods, which are processed into finished products and exported, largely to U.S. mainland markets. Appendix B also lists the intermediate goods which, according to the EDA and Puerto Rico Planning Board, are important to the Island's industrial development. In addition, the specific reasons why these commodities are important to the Commonwealth were filed with the FMC by the EDA. This material is included in appendix B.

The Commonwealth believes that the general development of the economy will be aided by reasonable rates not only on cost of living foodstuffs, but also on certain essential industrial products which are destined to compete with products in the U.S. mainland and in foreign countries. On some commodities, because of this importance to certain industries, even slight variation in the rate levels may have a critical effect. According to the Commonwealth, the commodities because of their nature and need in basic industry requiring reasonable rates include: acids, agricultural implements, industrial alcohol, boxboard and paperboard, carbon black, carbon electrodes, petroleum refining catalysts, synthetic resins, rubber, urea, feed and feedstuffs, hides, and yarns (app. B). Many prominent locally established industries, like those producing textiles, paper, metal, and leather, depend almost exclusively on imported raw materials for their survival and expansion. Other prospective industries must also rely on intermediate raw materials produced locally through the processing of imported basic raw materials. The success of these industries will be linked to their degree of competitive penetration into the Mainland market. As competition tightens through rising wage levels, reductions in foreign trade tariffs, and rising costs of materials, the need for reasonable rates on the foregoing commodities becomes more important. There is a general agreement that low freight rates are important to industrial development, and it follows that American shipping companies may derive substantial benefits in relation to the increased freight revenues generated by greater traffic flows.

6. Petroleum and Bulk Cargoes

Chart II-4 (p. 11), further illustrates that Puerto Rico's 1966 petroleum and bulk traffic amounted to 14.40 million tons.82 Of this 14.40 million tons, petroleum traffic moving between Puerto Rico and the

The 14.40 million tons of petroleum and bulk cargo represented an increase of 70 percent over the 8.50 million tons of 6 years earlier. Most of this increase occurred between Puerto Rico and foreign countries.

Virtually all of the petroleum and bulk traffic moving between the U.S. mainland and Puerto Rico is transported from the Island to points of destination located in the U.S. North Atlantic in vessels operated by Gulf Oil Corp., Standard Oil Co. of New Jersey, The Texaco Inc., Mobil Oil Corp., and National Bulk Carriers which is used by the Commonwealth Oil Refining Co. (CORCO), one of the leading shippers of petroleum. Other large shippers are Phillips Puerto Rico Corp. (Phillips), and Union Carbide.84 The leading shipments from Puerto Rico to North Atlantic ports are refined oil, jet fuel, petroleum products, alcohols, gasoline, and chemicals.85 Union Carbide and CORCO ship their refined oil and petrochemical products from

83 Sources: (a) Puerto Rico Ports Authority "Movimiento de Carga Seca y Total por Los Puertos de San Juan, Ponce, Mayagüez y Puerto Rico, Ano Natural 1957 AL 1966", (San Juan: Ports Authority, July 26, 1968); (b) U.S. Department of Commerce, Maritime Administration, Domestic Oceanborne and Great Lakes Commerce of the United States (Washington: Government Printing Office, 1957-67), various pages; and (c) U.S. Bureau of Census, U.S. Waterborne Foreign Trade, FT 985 (Washington: Government Printing Office, 1967), various pages.

Si Puerto Rico, EDA, Official Industrial and Trade Guide to Puerto Rico, (San Juan, P.R., 1967), pp. 415–422.

8 U.S. Department of Commerce, Bureau of Census, U.S. Trade with Puerto Rico and U.S. Possessions; FT 800 (Washington: Government Printing Office, August 1967),

p. 13.

Guayanilla, P.R., and Phillips ships gasoline and aromatics from Jobos, P.R., to the U.S. mainland.

7. Foreign Traffic

The Island's 1968 foreign purchases of $385.3 million represent a gain of almost 13 times over the foreign imports of 1950 ($26.7 million). The principal foreign sources of supply were in South America. Appendix A, table 5 contains Puerto Rico's trade distribution with Caribbean, South American, and Central American countries from 1960-67.86 Puerto Rico's principal foreign imports consisted of hardwood lumber and corn from the neighboring Dominican Republic together with some minor volumes of food items like poultry, eggs, and cheese; wines and brandies from Spain, France, and Italy; passenger cars, drugs, whiskey, tractors, spark plugs and electrical appliances from the United Kingdom; chickpeas, garlic, and beans from Mexico and Chile; anatto seed from Ecuador; olives, capers, and olive oil from Spain and Italy; fish products from Canada, Iceland, and Norway; 87 footwear, cod, pimientos, printed matter, and books from Spain.88 The Island exported small quantities of Puerto Rican products ($84 million) to foreign countries in 1968.

88 John T. Rigby, Commonwealth of Puerto Rico, Direct Exhibits of the Commonwealth of Puerto Rico, United States-Caribbean-South American Investigation Civil Aeronautics Board Docket 12895, Exhibits CPR-309, CPR310, and CPR-311 (Washington: Arnold, Fortas and Porter, January 25, 1965) and, External Trade Statistics, op. cit., various years.

87 West Indies and Caribbean Yearbook, 1966, p. 720.

88 Puerto Rico Planning Board, External Trade Statistics, 1967, op. cit., p. 275.