250-

200

80CUBIC FOOT

CENTS PER

CONFCTIONARY PRODS NOS

ELECT. APPLIANCES, NOS

BISCUITS, ETC.
PRETZELS, ETC.

TOYS, NOS
TISSUE PAPER

CHART IV-5

OCEAN FREIGHT RATES ON PRINCIPAL MOVING COMMODITIES OF SEA-LAND SERVICE, INC.-LESS THAN TRAILERLOAD CONTAINERIZED TRAFFIC@

CENTS PER

SEPTEMBER 1, 1960; JUNE 1, 1968

FROM ELIZABETH, NEW JERSEY TO SAN JUAN, PUERTO RICO

35ARD, ETC.

OR LESS
GLASSWARE, NOS

CENTS PER

chart IV-5 and appendix E, table 1.26 This chart shows that approximately 54 percent of the items, or 38 rates, remained steady or declined during the 8-year period. Appendix E, table 1, contains the specific commodities on which rates were increased or decreased including the percentage of change occurring on each item.27

As already noted, Sea-Land's LTL rates are substantially higher than corresponding TL rates and also show greater increases during the 1960-1968 period than those applicable to TL shipments. This reflects the greater amount of handling involved in LTL shipments and the rise in labor costs. It may also reflect Sea-Land's efforts to establish a rate structure applicable on LTL and TL quantities, replacing the AQ rates that were fixed before containerization entered this trade. Roughly half of Sea-Land's containerized traffic from Elizabeth moves under TL quantity rates which show a very favorable rate situation for this period.

As previously indicated, a list of commodities which the Commonwealth deems to be most essential to Puerto Rico's economic system was obtained from the Commonwealth and rates on these commodities were analyzed. Appendix E, table 2 shows 65 TL rates applicable on consumer and intermediate goods for September 1, 1960 and June 1, 1968. Of these 65 rates, 57 either declined or remained unchanged over this period. It is significant to note that the rates on 92 percent of the consumer goods, including food items, and 86 percent of the intermediate goods experienced no increases or received reductions during this period. The majority were reduced from one to 50 percent. Consequently, Sea-Land's rates on commodities considered by the Commonwealth to be of primary importance to Puerto Rico's economic growth also have a favorable rate history.

The striking differential in foreign-domestic rates in part illustrates the effect of containerization, carrier efficiencies, and competition on rate levels in the domestic offshore trades. Sea-Land's TL rates on principal moving commodities from Elizabeth to San Juan were compared to corresponding foreign rates applicable from New York to islands nearby Puerto Rico

26 Of the 71 rates, 37 are weight rates and 33 are measurement rates, and one, barrels, is based on a charge of "cents each" (app. E, table 1). These rates which apply on containerized dry cargo only are listed in descending order of revenue importance. Appendix E, table 1, contains the actual 1960 and 1968 rates as well as their percent of change during this period. (Refrig. erated and breakbulk rates are shown in app. E, table 1.)

27 In addition, a review of principal refrigerated and breakbulk rates shows that rates on five refrigerated items and three breakbulk items remained steady or decreased during the 1960-68 period (app. B, table 1).

(Haiti, Santo Domingo, and Jamaica). Table IV–2, a comparison of specific conference commodity rates from New York to Haiti, Jamaica, and Santo Domingo shows that these rates or substantially higher than the corresponding Sea-Land commodity rates from New York to San Juan.28 From New York to Haiti, for example, 61.1 percent of the rates compared are from 100 to 300 percent higher than those from New York to San Juan; and from New York to Jamaica, 62.8 percent of the rates are from 100 to 500 percent higher than those from New York to San Juan.29

The summary of these rate comparisons revealed that only one conference rate of the 125 rates examined was lower than the New York to San Juan rates. Moreover, these conference rates have increased significantly during the past 5 to 8 years while those from U.S. mainland ports to Puerto Rico have remained, for the most part, steady or declined during the same period. For example, the foreign rates from New York to Jamaica increased approximately 20 percent between June 24, 1963 and August 14, 1968; and from New York to Haiti, rates increased approximately 10 percent between June 24, 1963 and August 14, 1968.

b. Seatrain Ocean Rates from New York

As in the case of Sea-Land, Seatrain, the second largest carrier in the trade in terms of freight tons, offers a considerable number of TL and per container rates on commodities which move from North Atlantic ports to Puerto Rico. Appendix D, table 2 (a cumulative frequency table) contains Seatrain's overall weight and measurement rate profile applicable from New York to San Juan for June 1, 1968. This appendix revealed 1,915 weight rates and 1,039 measurement rates for 1968, 347 of which were TL weight rates and 87 TL measurement rates. Taken as a whole, Seatrain's overall rate structure is about three percent lower than those of SeaLand at any given percentile level.30 Appendix D, table 2, shows a median TL weight rate of 96.5 cents per 100

28 The commodities used in this comparison included cotton piece goods, furniture, empty bottles, toilet preparations, stationery, unmanufactured tobacco, biscuits, paper cups and tubes, shoes, lacquer and varnish, electrical machinery, electrical appliances, plumbing fixtures, refrigerators, confectionary, toys, synthetic and cotton yarn, feeds, soap, paint, lube oil and grease, beans, canned goods, packinghouse products (various meats), and iron and steel structures and pipe.

20 Although the distance from New York to islands nearby Puerto Rico is approximately equal to the distance from New York to San Juan, the volume of traffic from New York to islands nearby Puerto Rico is considerably lower than to Puerto Rico. These differences are explained in more detail in chapter VIII.

30 This differential is based on average rates rather than actual differences in specific rates.

pounds which is approximately three percent lower than the corresponding Sea-Land TL weight rate of 100 cents per 100 pounds weight (chart IV-1, p. 61).31 This is not, of course, a direct comparison of rates on specific commodities. As will be noted below, specific commodity rate studies tend to show that little if any differences exist between Seatrain's rates on principal moving commodities and those of Sea-Land. Most of Seatrain's rates on principal moving commodities remained steady or declined since it entered the trade in 1963.

Seatrain's history of rates on principal moving commodities 32 for September 1, 1963 and June 1, 1968 are contained in appendix E, table 4. This appendix shows 77 rates applicable on TL-type volume movements, almost 90 percent of which experienced no rate increases during this period.33 Of the 77 rates, more than half (40 rates) were reduced from one to 75 percent on various important foodstuffs and the intermediate goods. Only 12 percent of Seatrain's TL rates increased over the past 5-year period. Appendix E, table 4 contains the specific commodity rates and their percentage of increase or decrease between 1963 and 1968. In addition, the rate study indicated that various leading refrigerated and breakbulk cargoes also remained steady or declined.

The carrier proposes to use converted C-4 vessels capable of carrying greater containerloads and plans to initiate other projected modernizations by fiscal year 1970, which should reduce its per unit cost. Hopefully, this will be reflected in its rates. Because of the similarity between Seatrain's and Sea-Land's specific rates, findings resulting from a comparison of Sea-Land's rates to those of foreign carriers, which show that Sea-Land's rates are considerably lower than corresponding foreign rates, also apply to Seatrain.

21 Seatrain's 1968 TL weight rates at the 25 and 75 percentile points are 87 and 113 cents per 100 pounds, respectively, compared to Sea-Land's correspond. ing rates of 91 and 100 cents per 100 pounds.

32 Appendix C, table 2 contains a list of Seatrain's principal moving commodities from New York to Puerto Rico which generated approximately 50 percent of the freight revenues earned by this carrier on southbound move. ments. Seatrain's most important principal moving commodities through New York, in order of declining revenue importance, are: soap, tobacco leaf, bakery goods, powdered milk, refrigerators, plumbing goods, canned goods, paper boxes, furniture, potatoes, paper napkins, synthetic plastics, rubber tires, electrical equipment, electronic tubes, machinery, coffee, yarn, and various other foodstuffs and intermediate goods.

33 Of the 77 rates, 22 rates included a provision in which the shipper and/or the consignee is required to load and offload the trailer. These requirements would not substantially affect the comparison of rates because, as in the case of Sea-Land, TL-type shipments generally have been loaded by the shipper and unloaded by the consignee. For this reason, an adjustment of these rates for shipper load and/or offload requirements would appear to be of little importance. Rates for traffic moving in railcars were not analyzed.

2. South Atlantic Region

Sea-Land, TMT, and SACAL are the main competitors in this area of service.34 TMT offers two sailings each week from Jacksonville,35 stopping at Miami on alternate voyages. It serves only the port of San Juan. Sea-Land, upon initiating its direct service in the Jacksonville-Puerto Rican trade in 1963, assessed its established New York to Puerto Rico rates. Subsequently, Sea-Land lowered certain rates to compete with other South Atlantic carriers (TMT and SACAL). This reduction became the subject of investigation in FMC docket No. 1182, Rates from Jacksonville, Florida to Puerto Rico 10FMC 376 (1967), in which the Commission found that:

"Sea-Land has not justified its proposed differentially lower rates between Jacksonville and Puerto Rico as compared with its rates between other Atlantic Ports and Puerto Rico by suffi cient proof of advantages in cost of operation, value of serv ice to shippers, or other transportation conditions warranting such reduction."

TMT thereupon filed reduced rates and now apparently maintains a slight rate advantage on certain commodities moving from Jacksonville to San Juan.

Sea-Land's maximum charge per container rates apply only to traffic moving through the port of New York. Jacksonville shippers of important commodities including textile products, yarn, and other items, should be given the same benefits of containerization which have been accorded those moving cargo through the port of New York. Accordingly, Sea-Land's exclusion of maximum charge per container rates from Jacksonville traffic appears to be a questionable practice.36

a. Sea-Land's Ocean Rates from Jacksonville 37

Sea-Land's North Atlantic to Puerto Rico tariff, with the exception of maximum per container rates and other exceptions noted above, is also applicable from

34 On a substantial amount of traffic moving from Jacksonville to San Juan, SACAL's overall rate level is quite similar to that of TMT which has been in this trade much longer. Thus, only TMT's rates and those of Sea-Land from Jacksonville to San Juan were selected for examination.

35 The preponderance of Sea-Land's cargo moving through Jacksonville originates in areas which have a favorable rail rate to Jacksonville. The rates of Sea-Land from Elizabeth to Puerto Rico and from Jacksonville to Puerto Rico are on parity with certain exceptions such as stoves and ranges southbound, and rum and pineapples northbound; the latter rates being lower to Jacksonville than to Elizabeth.

36 Sea-Land's rates on principal moving commodities from Jacksonville to San Juan are compared to those of TMT in more detail in section C.

37 Sea-Land's ocean rate refers to its charge for transport from ship's tackle at the Jacksonville terminal to the end of ship's tackle at the interim Puerto Rican terminal covered by its tariff FMC-F No. 3 (Pan Atlantic Corporation Series) and FMC-F No. 10 (Sea-Land collects no wharfage at Jacksonville).

South Atlantic ports, including Jacksonville and Charleston. Appendix C, table 2, contains a list of SeaLand's principal moving commodities from Jacksonville to San Juan, and appendix E, table 5 presents its TL and LTL rates on these commodities for September 1, 1960 and June 1, 1968. The latter appendix, which examined 50 rates applicable on volume movements, shows that 70 percent of these rates remained steady or were reduced during this 7-year period; 18 rates remaining steady, and 17 rates declined. Examination of 47 Sea-Land LTL rates applicable on the same principal moving commodities shows that 53 percent remained steady or declined; seven rates experienced a decline. The specific commodity TL and LTL rates and their percentage of increase or decrease are shown in appendix E, table 5.

38

39

b. TMT's Ocean Rates from Jacksonville Chart IV-6, which illustrates TMT's overall rate profile applicable on traffic moving from Jacksonville to San Juan for September 1, 1960 and June 1, 1968, shows that TMT's overall weight rate structure increased from 3 to 7 percent during the 8-year period while the overall measurement rate structure declined approximately 6 percent during the same period. And, chart IV-7, which compares TMT's overall weight and measurement rate structures from South Atlantic ports to those of Sea-Land from North Atlantic ports for June 1, 1968, indicates that TMT's overall rate structure (2,135 rates) at the median point in some 10 percent lower than that of Sea-Land (1,745 rates). TMT's LTL and AQ rate structures are about 5 to 6 percent lower respectively than those of Sea-Land.40 TMT's overall TL weight rate structure, however, exceeds that of Sea-Land by one-sixth.11

TMT's 2,135 weight and 2,097 measurement rates exceed the number of commodity rates offered by Sea-Land from Atlantic ports to Puerto Rico by about 22 percent. Its tariff includes 1,015 TL rates, 1,012

38 Ocean rate refers to TMT's charge for transport from place of rest at the Jacksonville terminal to the end of ship's tackle at San Juan. These rates are contained in TMT Trailer Ferry, Inc., Tariff FMC-F No. 3 and TMT Trailer Ferry, Inc. (C. Gordon Anderson, Trustee) FMC-F No. 5. TMT provides its own pickup and delivery services from San Juan to final destination.

39 TMT's overall measurement rate structure declined 12, 8.7, and 1.8 percent at the 25, 50, and 75 percentile points, respectively.

40 TMT's 1968 median weight LTL and AQ weight rates were 128 and 143 cents per 100 pounds respectively compared to Sea-Land's corresponding rates of 134 and 151 cents per 100 pounds.

41 These rates apply from place of rest on the Mainland terminal to the end of ship's tackle at San Juan. Unlike Sea-Land, however, TMT's rate includes cargo insurance. Their rates on specific commodities are compared in chapter IV, section C.

LTL rates, and only 108 AQ rates, indicating that this carrier provides the shipping public with a great variety of TL and LTL rate levels. TMT's tariff, therefore, seems to present an overall rate structure which has twice as many TL rates as Sea-Land's. (Sea-Land's rate structure includes 948 AQ rates compared to 108 AQ rates in TMT's tariff.)

Chart IV-8 shows TMT's, TL, and LTL ocean rates on principal moving commodities transported from Jacksonville to San Juan for September 1, 1960 and June 1, 1968.42 The 37 TL rates involved in chart IV-8 revealed that two-thirds of TMT's principal moving commodities received substantial rate reductions or remained unchanged during the 8-year period. Almost 30 percent of the rates decreased. Rates remained steady on about 30 percent of these commodities. Onethird of the 37 rates increased. The specific commodity rates and their percentage of increase or decrease are shown in appendix E, table 6. Chart IV-8 also illustrates TMT's LTL rates on 27 principal moving commodities affecting 22 percent of this carrier's traffic. This chart shows that one-half (14) of these rates remained unchanged or decreased during the 1960-68 period. Almost one-half of TMT's LTL rates on major moving commodities increased, but only four of these rate increases exceeded 4 percent (app. E, table 6). TMT's rates are compared to those of Sea-Land's in chapter IV, section C which deals with rate relationships.

Examination of TMT's rates on commodities, which the Commonwealth considers most essential to Puerto Rico's economic system (consumer and intermediate goods) for September 1, 1960 and June 1, 1968, revealed that half of the 45 TL rates reflected decreases or no change during this period while the other half experienced rate increases.

3. Gulf Region

GPRL is the principal common carrier connecting the eastern section of the U.S. Gulf region and Puerto Rico.43 In 1967, GPRL carried approximately oneeighth of all the weight traffic moving to and from Puerto Rico by common carrier (chart III-2). This

42 TMT's rates applied on containerized, refrigerated, and breakbulk com. modities as indicated in chart IV-3. Total TL shipments generated about 45 percent of the revenues earned by that company in 1966; LTL shipments, 22 percent; and automobiles, 12 percent.

43 As previously indicated, carrier competition from Gulf ports is relatively limited. Lykes, which provides only breakbulk service, operates mainly from the western half of the U.S. Gulf coast and faces little competition in this area. It transported barely three percent of the total common carrier traffic in 1967. Alcoa discontinued its Gulf-Puerto Rico service in mid-1968.

section, therefore, focuses on GPRL's ocean rates from Eastern Gulf ports (New Orleans) to San Juan." Although GPRL's traffic is largely breakbulk cargo, moving predominantly under AQ rates, this carrier also provides containership service.

Chart IV-9, shows GPRL's overall rate profile applicable from Gulf ports to San Juan for February 15, 1961 and June 1, 1968. Relatively little change in rate levels occurred between these dates. GPRL's 1961 median weight rate was 145 cents per 100 lbs. Its corresponding 1968 rate also was 145 cents per 100 lbs. Moreover, GPRL's 1968 median measurement rate of 58 cents per cubic foot was only slightly below (1.5 percent) of its 1961 median rate of 59.5 cents per cubic foot (app. D, table 7). Section C of this chapter compares GPRL's specific commodity rates to those of Sea-Land and TMT.

The history of GPRL's rate changes on 56 45 principal moving commodities is shown in chart IV-10 for February 15, 1961 and June 1, 1968. Of the 56 items, 48 are "containerizable” and eight are generally breakbulk-only-type commodities.46 This chart shows that 26, or 54 percent, of the containerizable commodities moving in TL volumes experienced no rate increases or were reduced during the 7-year period. Of the 26 rates,1 17 remained steady and nine decreased. Rate increases were instituted for one-half of GPRL's containerizable commodities. The specific commodity rates and their percentage of increase or decrease are shown in appendix E, table 7.

It is important to note that these rates are applicable on GPRL's container service as well as breakbulk service which means that the advantages of containerizable rates and service have not yet been fully realized in the Gulf-Puerto Rican trade (section C of this chapter). The majority of the cargo transported in this service is handled in this carrier's two breakbulk vessels, the SS Maiden Creek and Claiborne and the only trailership in this trade, the SS New Yorker, has only a limited

44 These ocean rates involve a charge for transport from ship's tackle at the New Orleans terminal to the end of ship's tackle at the interim Puerto Rican terminal covered by its tariff (i.e., San Juan, Ponce, and Mayagüez). GPRL's ocean rates are contained in U.S. Atlantic and Gulf-Puerto Rico Tariff FMC-F No. 1 and U.S. Atlantic and Gulf-Puerto Rico Conference Series Tariff, FMC-F No. 13.

45 Seventy-three percent of these, or 41 rates, are AQ rates. Thus, approximately 70 percent of the rates listed in chart IV-10 as rates affecting TL volumes actually are AQ rates (app. E, table 7).

46 The eight breakbulk commodities are: structural iron and steel, vehicles, tractors, iron and steel pipe (under 8 inches I.D.), iron and steel pipe (8 to 20 inches I.D.), rough lumber (bundled), rough lumber (unbundled). The rate on canned milk applies for shipments moving on pallets.

47 The rates on the bulk of these 48 containerizable articles or 35 rates are AQ rates while only 13 are TL rates.

capacity (66 containers). But as indicated previously, as of June 1, 1968, approximately 90 percent of GPRL's total weight rates affecting TL volumes were AQ rates (chart IV-10). Of 1,327 weight rates shown in GPRL's tariff, only 43, or 3 percent, were TL and 56 or 4 percent were LTL. Most of the commodities moving by GPRL's container service (SS New Yorker) were assessed the same AQ rates which were charged for breakbulk service (SS Maiden Creek and Claiborne). Analysis of 55 LTL-type shipments for February 15, 1961 and June 1, 1968 revealed approximately the same rate situation described on the TL-type movements (chart IV-10).

GPRL's rates on the Commonwealth's list of commodities (app. B), including many articles of importance to EDA-sponsored factories, experienced a favorable rate history between 1961 and 1968. Appendix E, table 8 shows 63 commodities and applicable rates on TL quantities for February 15, 1961 and June 1, 1968. Of these 63 items, the rates on 75 percent either declined or remained steady during this 7-year period while 25 percent increased. It is important to mention, however, that some of these commodities move in very small quantities, or not at all, from Gulf ports.

48

4. West Coast Region (Intercoastal)

Sea-Land is the only common carrier currently operating between the United States West Coast and Puerto Rico.49 Its 1968 West Coast-Puerto Rican eastbound tariff 50 contains a relatively limited number of commodity rates which are not as diverse as those in its North Atlantic rate structure. The West Coast tariff contains only 194 weight rates and 123 measurement rates. This tariff offers only 29 TL weight rates (chart IV-11). In contrast, Sea-Land's Atlantic-Puerto Rican tariff contains 439 TL weight rates (TMT's tariff contains 1,015 TL weight rates from the South Atlantic).

Appendix D, table 1 shows Sea-Land's West Coast overall rate structure for April 20, 1964 and June 1, 1968. This appendix shows that Sea-Land's overall measurement rate structure decreased while its overall weight rate structure increased during this period. Sea

48 Examination of GPRL's LTL rates on the same list of commodities indicates the same favorable rate trend on these items (app. E, table 7).

49 As previously indicated, Seatrain expects to enter this trade following its conversion of C4-type vessels in fiscal year 1970.

50 Sea-Land Service, Inc., FMC-F No. 10 and FMC-F No. 13. The rates contained in the tariff (e.g., Oakland to San Juan) generally involve a charge for transport from ship's tackle at the Oakland terminal to the end of ship's

tackle at the interim Puerto Rican terminal.