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The S.S. Floridian, SACAL's Roll-on, Roll-off Service From Florida to Puerto Rico and the Virgin Islands.

85 percent of its revenues from three items. The three most important sources of revenue were: an FAK pertrailer rate 69 of $700 per 35-foot trailer (or $800 per 40-foot trailer on dry cargo); an FAK per-trailer rate of $1,000 per trailer for refrigerated cargo; and rates on passenger automobiles. In 1967, SACAL transported 94,357 tons or 3.4 percent of all weight tons moving to and from Puerto Rico by common carriers (app. C, table 1). Its traffic is expected to increase 67 percent by 1975. The principal commodities transported southbound by this carrier are listed in appendix C, table 2.

g. Gulf Puerto Rico Lines

the Maryland Shipbuilding and Drydock Co. of Baltimore, is a 2,191 d.w.t. vessel. It cruises at 16 knots and has a cargo capacity of 56 containers and 50 automobiles. SACAL first acquired this vessel by charter from Containerships Incorporated, along with the New Yorker.

The SACAL Borincano, first put into service in June, 1967, is an unusual vessel in many ways. This ship, described by its builders as the largest all-aluminum vessel ever built and the largest welded unit structure ever constructed of aluminum at a cost in excess of $1,600,000, is considerably more expensive than a steel vessel of the same capacity but is lighter by almost 500 tons, drawing 2 feet less, and is at least 1 knot faster. Fuel and maintenance costs are ultimately expected to be lower than with a steel vessel. This 226-foot-long vessel, which was leased to SACAL by Greyhound Leasing Corp., is one of the few oceangoing vessels now in service specifically designed for roll-on/roll-off trailer service. It displaces 1,570 tons at its design draft of 10 feet, cruises at 14 knots, and can carry 40 semitrailers on two decks.

(2) Voyage Patterns and Traffic.In 1967, the Floridian made 50 voyages and the Borincano 27 voyages. In 1966, SACAL earned some $3 million, or 3.6-percent of the aggregate revenues earned by common carriers in the Puerto Rican trade for that

year.
This

compares with 3.7 percent for 1963, the company's first full year of operation. Containerized traffic comprised 82 percent of SACAL's traffic (TL traffic accounted for 64 percent; LTL traffic, 18 percent). SACAL derived more than

As indicated previously, GPRL is the major carrier operating from and to U.S. Gulf ports and the second operating subsidiary of McLean Industries to be considered here. GPRL, or its predecessors, has been serving the Gulf-Puerto Rican trade since 1927 when Waterman Steamship Co. (Waterman) entered the trade.To GPRL has served Houston, New Orleans, and Mobile, and the Puerto Rican ports of San Juan, Ponce, and Mayagüez. GPRL's only potential competition in the Gulf trade consists of Lykes and, potentially, Indian ried approximately 12.5 percent of all the weight traffic moving to and from Puerto Rico by common carrier (app. C, table 1).

60 For a fuller definition of FAK rates, refer to chapter IV, section A.

70 In 1938, Waterman established a weekly service between U.S. Gulf ports and Puerto Rico. In 1940, Waterman began construction of a waterfront complex in San Juan. In that year, a subsidiary corporation called Waterman Dock Co. was formed to operate this complex. Subsequently, this corporation became known as Waterman Steamship Co. of Puerto Rico. It continued under this name after being acquired by McLean Industries in 1958 until June 1965 at which time it adopted the name Gulf Puerto Rico Lines, Inc. ** Lykes and CPRL are the only major carriers serving the Gulf region. Indian Towing Co., Inc. (Indian Towing), primarily is a barge-operating carrier operating out of the U.S. Gulf ports. It holds itself out to call at practically any port of any size from Philadelphia, Pa., to Brownsville, Tex., in the United States when sufficient cargo is offered; San Juan, Ponce, and Mayagüez in Puerto Rico; and Charlotte Amalie, St. Thomas, and Cruz Bay, St. John and Fredericksted, St. Croix, in the Virgin Islands. Although Indian Towing has been active in the trade at various times since 1962, at the present time its activities are confined to limited large volume carriage out of the Gulf ports. (This carrier is discussed more fully under unregulated water car. riers following.) In addition, Southeastern Barge Lines entered the trade in October 1968, operating a barge service between Savannah and Brunswick, Ga., on the one hand, and San Juan and Ponce. Its pattern of service calls for a sail. ing approximately once a month. This is the only carrier in the Puerto Rican trade actually calling at these two U.S. mainland ports. Since this carrier has just entered the trade, no information concerning its operations, equipment and traffic is available.

Towing, which is currently operating solely as a contract carrier.

(1) Vessels and Containers.—GPRL operates two 15-knot 10,000-d.w.t. breakbulk ships and one 16-knot combination container and car-carrier vessel of 2,189 d.w.t. in the trade. The two breakbulk vessels are the Maiden Creek, built in 1946, and the Claiborne, built in 1942. The Claiborne has some below-deck reefer space; the Maiden Creek does not. However, the Maiden Creek can carry a limited number of either dry cargo or reefer containers on deck. The M/V New Yorker, a combination roll-on/roll-off and containership, which was shifted to the Gulf trade from Sea-Land's coastwise service, has operated in a triangular run from Houston to New Orleans to San Juan and back to Houston, offering biweekly truckload-only container service. This relatively small containership has a capacity of only 66 containers and 20 vehicles. 1 GPRL leases all the containers it uses from Sea-Land, drawing them from the Sea-Land pool in Puerto Rico.

(2) Voyage Patterns and Traffic.The Claiborne serves Mobile, New Orleans, San Juan, and Mayagüez; the Maiden Creek calls at Mobile, New Orleans, San Juan, and Ponce. This provides San Juan with weekly service while service to Ponce and Mayagüez is biweekly. Besides serving Puerto Rican ports directly, GPRL has a transshipment agreement with Berwind which provides for on-carriage to the Virgin Islands under a combination-of-rates arrangement. GPRL has a joint through service arrangement with Sea-Land in the Dominican Republic Conference.2 In addition, GPRL has effected a through rate arrangement with Mexican Lines between Puerto Rico, Mexico, and Central America by transshipments at the Port of New Orleans.

In 1958, the year of GPRL's separation from Waterman, GPRL transported approximately 280,000 weight tons to and from Puerto Rico. GPRL's traffic has in. creased approximately 23 percent over the past decade, from some 280,000 tons in 1958 to 344,000 tons 1967. (Its FMC-regulated tonnage increased by almost 7 percent between 1966 and 1967, from 283,802 tons in 1966 to 302,711 tons in 1967.) In 1967, GPRL car

h. Lykes Bros. Steamship Co., Inc.

Lykes has been in the Gulf/Puerto Rican trade since 1921. Today, Lykes serves Houston and Galveston, Tex., and Lake Charles, New Orleans, La., Mobile, Ala., San Juan, Ponce, and Mayagüez, P.R. There is a scheduled sailing from these ports approximately every 2 weeks. In addition, Lykes will call, by prior arrangement if sufficient cargo is offered, at Corpus Christi, Texas City, Beaumont-Port Arthur, Port Neches, Orange, and Freeport in Texas, and Port Tampa in Florida, as well as at numerous small outports in Puerto Rico, including Aquadilla, Arecibo, Guanica, Jobos, Guayanilla, and others.74

(1) Vessels and Containers.-Lykes' operation is essentially breakbulk, but small quantities of cargo, approximately 3 percent in 1966, were classed by the carrier as moving in containers.75

In 1966 and 1967, Lykes used 13 units of its 54vessel Aleet 16 in the Puerto Rican trade on a basis of availability and scheduling obligations. Only two of these vessels were used in this trade at any one time. All of Lykes' vessels are 15-knot, 11,300-d.w.t., C-2-type vessels of World War II vintage."

77

73

in

15 These containers are of three types: the LB No. 3, a plywood box of approximately 300 cubic feet; the LB No. 5 of approximately 500 cubic feet; and a crib-type container, somewhat resembling a catile pen but smaller and tailored to the commodity being carried. Approximately 10 such containers are carried each voyage. In addition, there are deck tanks used in the carriage of refrigerated cargo that are classed as containers.

78 The 13 vessels were: the SS Charles Lykes, Dick Lykes, Eugene Lykes, Elizabeth Lykes, Louise Lykes I, Mallory Lykes, Tyson Lykes, Velma Lykes, Harry Culbreath, Kendall Fish, James McKay, Kenneth McKay, Reuben Tipton.

*7 Hearings in Maritime Administration docket No. S-215, Delta Steamship Lines, application for section 805(a) permission to serve Puerto Rico revealed that Lykes has an obligation under its subsidy contract to replace the ships in the service which largely transports U.S. Gulf/Puerto Rican traffic, and that this replacement of ships has been repeatedly deferred.

71 Letter of Frank Hiljer, Jr., Sea-Land Service, Inc., July 9, 1969 to Paul Gonzalez, Chief, Branch of Trade Studies and Special Projects, FMC,

P. 5.

12 U.S. Atlantic/Gulf Santo Domingo Conference operating under rates on file in Southbound Tariff No. 18 and Northbound Tariff No. 1, respectively.

73 GPRL's manifests on file with the Puerto Rico Ports Authority (traffic includes FMC-regulated cargo and some non-FMC-regulated traffic).

a

(2) Voyage Patterns and Traffic.In 1966 and 1967, Lykes provided a total of 27 sailings each year for an average of approximately one every 2 weeks. In 1958 Lykes transported some 103,000 tons to and from Puerto Rico. By 1964 its share of the trade amounted to 176,000 tons, representing an increase of 70 percent. Since 1964, however, Lykes' traffic has not kept pace with the growth of the Puerto Rican trade. Its tonnage declined from 176,000 tons in 1964 to 118,000 tons in 1967, representing a decline of approximately 66 percent during the past 3 years. Thus, Lykes' share of the trade, in terms of weight tons, dropped to 4.3 percent of all traffic moving by common carrier to and from Puerto Rico.

As previously indicated, Lykes is essentially a breakbulk carrier. In 1966, breakbulk dry cargo freight revenues represented 96 percent of the company's total earnings ($2.58 million) in the trade. Only 3.4 percent of its earnings were on containerized traffic. Most of Lykes' traffic to Puerto Rico may be classed as foodstuffs including flour, canned milk, and Louisiana rice. The principal commodities transported southbound by this carrier are listed in appendix C, table 2.

ports of San Juan and Ponce. So Its voyage begins when the contractors have a load ready, and a typical trip from Pensacola to San Juan and return might take 25 days for a round trip hauling approximately 2,000 to 2,500 tons. In 1967, the barges carried approximately 18,000 tons from Gulf ports to Puerto Rico. There was no return traffic. The commodities transported southbound were cast iron pipe, creosoted poles, and paper products.

(2) Gulf-Atlantic Towing Corp.—The Gulf-Atlantic Towing Corp. (Gulf-Atlantic) operates between Houston, New Orleans, Mobile, Pensacola, and Tampa on the one hand and San Juan, Ponce, and Guayanilla. This company, which operates four barges and four tugs, transported at least 50,000 tons southbound in 1967. The company anticipates 1968 traffic of about 100,000 short tons southbound and 150,000 tons northbound based on approximately 10 voyages per year, each averaging some 35 days. Typical souhbound cargo was grain, fertilizer, and paper products. Only raw sugar was moved northbound. The barges Manila and Caribe 81 have been in continuous service in the Puerto Rican trade while the remainder have been employed in other operations.

(3) Marine Transport Lines, Inc.-Marine Transport Lines, Inc. (Marine Transport) operates primarily between U.S. Gulf ports and San Juan and Guanica in Puerto Rico.82 This carrier operates three self-propelled vessels of 10,000 d.w.t.83 which were converted for carriage of bulk cargo. Sailings carry mostly grains and fertilizers southbound and sugar northbound. In 1967, Marine Transport carried approximately 350,000 tons, approximately 65 percent of which was southbound grains and fertilizers. This carrier makes one sailing every 2 weeks.

(4) Other Contract Carriers.-Caribbean Barge Lines, Inc., a subsidiary of the New York based Moran

6. Unregulated Water Carrier Services

The analysis of water carrier services, as described in the foregoing pages, would not be complete without some consideration of the unregulated carriers who operate in the Puerto Rican trade. These consist of vessels offered to individual shippers on a private charter or space contract basis. This service, not being offered to all persons, is not common carriage subject to the jurisdiction of the FMC, and no published tariffs or rates are available.78 There are seven contract carriers which carry most of the bulk, nongeneral cargo, tonnage moving by this specialized type of service. This section analyzes the impact of these carriers in the U.S. mainland-Puerto Rican trade.

a. Present Carriers

79

(1) Indian Towing Co.''—Indian Towing Co. is a barge and tug operator, operating primarily between Mobile, Ala. and Pensacola, Fla. and the Puerto Rican

80 The Indian Towing Co., incorporated in Louisiana in 1949, maintains a yard and office as a home base for its barges and tugs at New Orleans. Its vessels are loaded at the plant or terminal designated by shippers contracting for its service, and for this reason, it does not have its own regularly established terminal. Indian Towing has nine barges and five tugs in its fleet including the barges Gret and Chen, each 154 feet long and 40 feet wide; barges ITCO 3378 and ITCO 3380, each 220 feet long; Mohawk with eight holds, which the company plans to use in any common carriage which many develop. The five tugs, most of which weigh approximately 190 gross tons, are the MV Winnie, Delacroix, Chesapeake, Breton, and Timbaluer.

81 Gulf-Atlantic operates four barges, each of approximately 4,300 gross tons including the Manila, Caribe, Gatco 3001, and Gaico 383. Its tugs, most of which weigh less than 200 gross tons, are the H. Williams, Gatco Alabama, Margaret C, and Sharon Lee.

82 In addition to their own operations, Marine Transport also has sub. sidiaries engaged in the carriage of bulk chemicals and acts as agent for Marine Navigation Lines whose vessels call at Puerto Rico.

83 The company's vessels, each of 10,700 d.w.t. and 15.knot speed, are the SS Denison Victory, Elko Victory, and Harvard Victory.

78 Private vessels carrying the goods of the owner, or proprietary carriers, are relatively unimportant and not regulated. These carriers, therefore, are not discussed in this study.

79 The analysis of so-called contract carriers including Indian Towing Co. did not investigate the possibility that some of these carriers may be operating as common carriers. The examination focuses on the general structure and competitive effect of contract carriers in this trade.

Towing Corp., owns a 17,779 d.w.t. barge named the Caribbean. This barge, which carries bulk cargo only, operates between the U.S. Atlantic Coast and Puerto Rico. The Caribbean carries some 150,000 long tons of grain and related products annually from Baltimore to San Juan, and some 90,000 long tons of raw sugar northbound from Guanica to North Atlantic ports. S. C. Loveland Co., Inc. operates three oceangoing barges, two of 1,100 and one of 2,200 tons. This carrier has served Puerto Rico infrequently. The company has its offices in Philadelphia and has carried creosoted piling and heavy machinery from U.S. Atlantic ports to Puerto Rico. In late 1968, John Luengo Co. began operations between Savannah, Ga., and Puerto Rico on a once-a-month basis. The carrier operates a covered hopper-type barge, S & E No. 88, with eight hatches and four holds. This barge of 3,100 d.w.t. is 260 feet long with a draft of 19 feet.

Finally, Port San Juan Towing Co., a subsidiary of McAllister Brothers, Inc., which has extensive towing interests in the New York area, operates as a contract carrier in the Puerto Rican trade. However, due to a recent change in ownership, little meaningful information is available on this company.

trade. The common carriers in the Puerto Rican trade themselves have had little to say regarding contract carriers. As long as the eight common carriers serving the Puerto Rican trade make available, adequate, frequent, and fast service, it is very doubtful that much common carrier-type general cargo will move to Puerto Rico from the Mainland by contract carriers. Puerto Rico's industry and retail merchants not only rely on the frequency and regularity in service now provided by Sea-Land, Seatrain, TMT, and other domestic carriers, but also seek fast containerized services to meet the intensified demands of the economy. This limits the cargo that is potentially available to contract carriers southbound and the competition that these carriers can actually offer in this trade. The potential northbound common carrier cargo is also limited but for different reasons. Assuming that some finished Puerto Rican products became suitable for contract carriage, as long as the faster vessels sail regularly and frequently from the Island to the Mainland, common carriers will probably continue to carry virtually all of Puerto Rican northbound general cargo, particularly due to the ex• cess shipping space generally available northbound by common carriers. Moreover, Puerto Rican factories must have fairly fast and frequent containerized service at any time of the year on relatively short notice to compete in U.S. mainland markets. In contrast, contract carrier operations are not only generally slower and more infrequent but also cannot meet the requirements of Puerto Rico's industry for specialized container services and capacity loads. However, the possibility always exists that some contract carrier may be operating as a common carrier and, for this reason, subject to reg. ulation on that basis. It is, therefore, necessary that the FMC maintain surveillance over so-called contract carriers in this trade.

b. The Impact of Contract Carriers

Historically, there has been little direct competition between common and contract carriers in the Puerto Rican trade. In 1966, seven small contract carriers, which are primarily barge operators, transported approximately 540,000 tons of cargo between the U.S. mainland and Puerto Rico. This cargo consisted largely of bulk fertilizer, grain, and sugar.

The use of contract carriers in this trade has been restricted in great measure by the fact that the fertilizer, grain, and construction materials trade has been essentially a one-way operation-southbound. At present, the only substantial northbound cargo carried by contract carriers is sugar; and this traffic has continually declined over the past 20 years (ch. II). The predominant cargoes carried by contract carriers is precisely that cargo which the common carriers in the trade have generally attempted to avoid in recent years (i.e., fertilizer, grain, and sugar).84

Although the possibility of competition exists between common and contract carriers, there has been no complaints regarding destructive competition in this

C. ROAD SYSTEM OF PUERTO RICO

1. General

Because Puerto Rico has virtually no railroads, all freight moves to and from the port areas in motor trucks. For this reason, the highway network of Puerto Rico and the traffic patterns are of especially critical importance to the steamship industry and to shippers and consignees in the U.S. mainland-Puerto Rican trade.

In 1966, Puerto Rico had some 5,875 miles of highways of which 3,760 miles were designated as part of

84 The only domestic offshore carrier (Matson Navigation Co.) showing any interest in the carriage of sugar in recent years operates in the Hawaiian trade.

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the Commonwealth highway system; 85 and the remainder were classed as part of the municipal system controlled and maintained by local governmental units.86

Studies undertaken on behalf of the Commonwealth government 87 show that the highway system has serious deficiencies both for movement within the metropolitan areas and for travel outside these areas as is necessary under the industrial decentralization plan promoted by the Commonwealth government. The principal defects may be summarized as follows: (1)

1 many roads and highways have surfaces, bases, and sub-bases which are entirely inadequate to carry the heavy loads now being hauled over them in 35-foot and 40-foot trailers and containers; (2) much of the rural highway system has lanes and bridges too narrow or of inadequate clearance, and curves of too short a radius to be adequate for semitrailer trucks and other large vehicles; (3) many of the major traffic arteries servicing metropolitan areas have a traffic volume significantly in excess of their effective capacity. Conditions are especially critical in San Juan, where it was found that the five major traffic corridors 88 identified by the study were carrying traffic averaging 150 percent of their effective capacity.89 Major bottlenecks are at the bridges into Old San Juan, where many foreign and some domestic vessels still dock, and at all the bridges across the Martin Pena channel which bisects San Juan east to

Wilbur Smith's study, entitled Ponce Metropolitan Area Transportation Study, revealed various defects in Ponce's highway and road system. This study's survey of important intersections showed that four intersections operated beyond their effective capacity during most of the day while five others operated in excess of their capacity during the rush hours.91 The port of Ponce traffic sample revealed that of 2,308 vehicle trips, 33 percent were trucks. Manufacturing plants within the port are attracted a relatively large number of automobiles; 92 and, overland trucking from San Juan accounted for a substantial amount of the trips made by trucks. The study also considered the relationship between maritime traffic and highway development, and stated:

west.

2. San Juan

Wilbur Smith's recent study, entitled San Juan Metropolitan Area Transportation Study, sampled vehicular traffic to and from the three regions comprising the San Juan Port District (Old San Juan, Isla Grande, and Puerto Nuevo). Of 9,714 vehicles over all, 58 percent were trucks. In Old San Juan the survey showed 76 percent of all trips were trucks, Isla Grande revealed

“In 1964 the port handled 715,817 short tons of cargo of 14.3 percent of total dry cargo of Puerto Rico. The expected annual tonnage in 1980 was estimated to be over 1 million tons. How. ever, there are emerging factors that tend to dampen this projection; for example, improvement of PR-1 to an expressway category will drastically reduce the time and cost of transferring water-borne cargo from the port of San Juan to Ponce; the advent of super-jumbo trailerships stopping only at San Juan in order to shorten turnaround time. It is estimated that in 1985 the port of Ponce will be handling around 850,000 tons of dry cargo annually"

4. Mayagüez

The Mayagüez port area attracted 310 vehicle trips per day, 18 percent of which were trucks.94 A

of those utilizing pickup and delivery services in Puerto Rico revealed various road defects. Specifically men

survey

$5 In 1871, there were 30 miles of highways in Puerto Rico; by 1940, the highway system had increased to 1,212 miles. During the past 20 years, almost 1,360 miles of highways have been constructed, 460 miles of which were in the primary and secondary system.

$6 Sources: (a) Wilbur Smith & Associates, Interim Report, Needs and Finances for the Commonwealth Highway System, Puerto Rico (Columbia, S.C.: June 1967), pp. various pages; and (b) Wilbur Smith & Associates, Padilla and Gracia, San Juan Metropolitan Area Transportation Study Transportation Plan (Hato Rey, Puerto Rico: June, 1967), p. 12.

57 Wilbur Smith & Associates, Padilla and Gracia, op. cit., pp. various pages.

$$ These routes were: (1) Fernandez Juncos, Munoz Rivera and Ponce de Leon Avenues; (2) Puerto Rico Route No. 1; (3) Puerto Rico Route No. 2; (4) Franklin D. Roosevelt Avenue; and (5) 65th Infantry Avenue.

** Wilbur Smith & Associates, Padilla and Gracia, San Juan Metropolitan Area Transportation Study., op. cit., p. 12.

) Wilbur Smith & Associates, Padilla and Gracia, op. cit., p. 47.
01 Wilbur Smith & Associates, Padilla and Gracia, Transportation Plan
Ponce Metropolitan Area Transportation Study (Hato Rey, Puerto Rico :
March 1968), p. 15.

92 Wilbur Smith & Associates, Padilla and Gracia, op. cit., p. 64.
93 Ibid.

04 Wilbur Smith & Associates, Padilla and Gracia, Mayagüe: Metropolitan Area Transportation Study (Hato Rey, Puerto Rico: April 1968), p. 62.

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