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C. RATE RELATIONSHIPS

In this discussion, Sea-Land's TL rates on the Commonwealth's list of essential consumer and intermediate commodities from the North Atlantic are compared to corresponding rates of TMT from the South Atlantic and of GPRL from Gulf ports to San Juan (app. E, table 10). Sea-Land and TMT rates on low-rated commodities also are considered. As previously indicated, Sea-Land, McLean's largest operating subsidiary, is the dominant carrier hauling some 60 percent of the total traffic in terms of weight moving to and from Puerto Rico by common carrier. It serves the North Atlantic, South Atlantic, and West Coast regions. GPRL, McLean Industries' other operating subsidiary, is the principal carrier in the Gulf region carrying 12.4 percent of the total Puerto Rican traffic and about 74 percent of the Gulf traffic (app. C, table 1). Consequently, about 72 percent of the total common carrier traffic in the Puerto Rican trade is carried by McLean's two operating subsidiaries, and McLean operations dominate the traffic from each U.S. area from the North Atlantic, South Atlantic, Gulf, and West Coast. Traffic moving from South Atlantic ports by TMT and SACAL amounts to barely 7 percent of the total traffic to and from Puerto Rico (app. C, table 1).

Sea-Land's overall North Atlantic weight rate structure is higher than TMT's overall South Atlantic weight rate structure but slightly lower than GPRL's overall Gulf weight rate structure (chart IV-7). Examination of rate differentials existing on volume shipments between the North Atlantic, South Atlantic, and Gulf regions to Puerto Rico, however, shows that Sea-Land's overall TL weight rate structure is relatively low compared to that of other containership operators: TMT's median TL weight rate is 19 percent higher than SeaLand's; and GPRL's median TL weight rate is 15 percent higher than Sea-Land's (chart IV-13).

wealth considers essential to the economy, are higher than TMT's corresponding rates on 28 items, or about 54 percent of the total; lower than those of TMT on 19 items, or about 37 percent of the total; and equal to those of TMT on five commodities (chart IV-14). TMT's rates on most intermediate goods including alcohol, acid, carbon black, resins, agricultural imple. ments, carbon electrodes, scrap rubber and yarn, NOS, are lower than those of Sea-Land.

It is important to mention, however, that TMT assesses higher rates than Sea-Land on many low-rated 5commodities which apparently they do not wish to carry from Jacksonville to San Juan. These rates include var. ious consumer and intermediate goods such as: onions and potatoes, laundry soap, feed and feedstuffs, and silica gel, which exceed those of Sea-Land by 46, 50, 26, and 65 percent, respectively. A separate comparison indicates that TMT's TL rates from Jacksonville generally exceed those of Sea-Land from Jacksonville by some 30 to 40 percent on certain low-rated commodities, including ferric/ferrous sulphate, fertilizer, NOS, garlic, iron and steel reinforcing bars, slacked lime, crushed limestone, glass bottles, pine lumber, paper articles, building tile, and other important commodities, while TMT publishes substantially lower rates on the highrated items. The effect of TMT's higher rates on vollume-type traffic is reflected in chart IV-14, a cumulative frequency diagram, which compares TMT's 1,015 TL rates to Sea-Land's 439 TL rates. This chart shows that TMT's overall TL rate structure is higher than that of Sea-Land. It appears, therefore, that TMT's rate structure, reflected in this statistical presentation, favors lucrative traffic and, because of higher rates, discourages the flow of the less remunerative commerce through the port of Jacksonville or Gulf ports. As a result, most low-rated traffic is hauled from Jacksonville to San Juan by Sea-Land.

GPRL's rates compared to those of TMT from Jacksonville to San Juan on the same commodities shows that GPRL's rates are higher than TMT's (app. E, table 10). Of the 52 commodities compared, GPRL's rates on 41 items, or 79 percent, are about 5 to 65 percent higher than those of TMT (app. E, table 10).

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56 Rates applicable to the Commonwealth's list of essential consumer and intermediate goods (app. B) were selected for examination. Appendix E, table 10, contains the specific rates and comparison figures.

57 “Low-rated commodities” refers to those articles having rates generally ranging from 70 to 95 cents per 100 pounds.

CHART IV-12
FREIGHT RATE STRUCTURE: DIFFERENTIALS- TOTAL RATES
SEA-LAND SERVICE, INC.
FROM NORTH ATLANTIC AND WEST COAST PORTS

SAN JUAN, PUERTO RICO - June I, 1968

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30

35

40

46

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SOURCE: APPENDIX D, TABLE 5.

50

60 65 70 75 80 & over Rates in cents per cubic foot

PUERTO RICO - VIRGIN ISLANDS TRADE STUDY
FEDERAL MARITIME COMMISSION

1969

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CHART IV-13
FREIGHT RATE STRUCTURE:DIFFERENTIALS-TL TRAFFIC
FROM NORTH ATLANTIC, SOUTH ATLANTIC, AND GULF PORTS
TO SAN JUAN, PUERTO

JUAN, PUERTO RICO- JUNE 1, 1968

90

100

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120

190

100%

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CHART IV-14

COMPARISON OF SEA-LAND SERVICE INC'S RATES ON TRAILERLOAD SHIPMENTS TO THE CORRESPONDING RATES OF TMT

, TRAILER FERRY, INC. AND GULF-PUERTO RICO LINES INC. FROM U.S. MAINLAND PORTS TO SAN JUAN, PUERTO RICO

JUNE I, 1968

INTERMEDIATE GOODS

CONSUMER GOODS

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CENTS PER 100 LBS.

TMT

400

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NOTE

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ACIOS NOS. HAZE ACIDS NOS, NON-HAZ.

OATMEAL OLEO & BUTTER,REF?

MILK, POWDERED AS

OTHER THAN THE

ACID, PICRIC B

ACID.MURIATIC B ACID ACETIC SUL FAMICS AGAL IMPLEMENTS, HAND

8CX/ PAPER BOARDS

SILICA GELS YAFN , NOS

CARBON ELECTRODES

CURED HIDES RUBBER SCRAPS

YARN, SYNTHETIC WEAR

*IN CUBIC FEET

YARN.COTTON ,JUTE

NOTE 1: FOR FULL DESCRIPTIONS, SEE APPENDIX E, TABLE 10.

SOURCE: APPENDIX E, TABLE 10.

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As previously indicated, Sea-Land and GPRL are operating subsidiaries of McLean Industries and dominate traffic from regions served by these carriers. These carriers are largely administered through Sea-Land's Elizabeth headquarters where, for the most part, SeaLand's and GPRL's operating statistics and other records are processed and maintained. Chart IV-14 shows that many

GPRL rates on commodities which the Commonwealth considers important to the economy from Gulf ports to Puerto Rico are remarkably identical to those of Sea-Land from the North Atlantic to Puerto Rico. Of 52 rates compared, 28 or 54 percent of GPRL's rates are the same as Sea-Land's corresponding rates despite their striking differences in modes of service. 59 GPRL's service is mainly breakbulk whereas SeaLand's is fully containerized; and the size and type vessel employed by the two companies varies considerably. This similarity in rates may be due to the fact that the New Orleans-San Juan and the New YorkSan Juan distances are virtually the same.

container, and Alat dollar charge per container rates without regard to the weight, the volume, or the commodity loaded into the container. The first two types of per container rates now exist in some of the tariffs, 60 and there is a trend toward more and more of these specialized rates which are designed to meet the con. tainer movement of cargo. The trend toward the in. creased use of per container rates in the Puerto Rican trade is, therefore, discussed below and some of the advantages and difficulties inherent in this new type of rate structure are analyzed.

Examination of rates from Atlantic Coast ports shows that TTT, Sea-Land, Seatrain, SACAL, and TMT have greatly increased the use of maximum charge per container rates in this trade. Maximum dollar charge per container rates, as previously explained in the beginning of this chapter, means that when the unit charge for the commodity in cents per 100 pounds or cents per cubic foot reaches a stated maximum dollar charge, no additional unit charge will be made for additional weight or volume of the commodity shipped in that container.

Certain of these carriers have modified their tariffs to include a number of fat dollar charge per container rates with charges varying by commodity. Under this type of rate a per container charge, such as $600, is assessed for the carriage of a particular commodity in the container without regard to the weight or volume of the commodity in the container. For example, TTT's tariff covering carriage of cargo on the SS Ponce De Leon contains more than 100 commodity rates stated as a flat dollar charge per container, and other carriers in the trade similarly have added rates of this type.

D. CONTAINERIZATION AND NEW

RATE STRUCTURES

1. General

2. Flat Container Rates

As discussed earlier in this chapter, the present containerized carriers in the Puerto Rican trade not only publish a large number of AQ-type rates, which were inherited from the tariffs of the old breakbulk carriers serving the Puerto Rican trade prior to 1960, but also now include TL and LTL rates. In addition, the carriers have begun to modify their tariffs to include various per container rates to accommodate the movement of cargo in containers or trailers. These new per container rates include maximum charge per container rates by commodity; flat dollar charge per container rates by commodity but without regard to the actual weight or measurement of the cargo loaded into the

The concept of flat dollar charge per container rates is an attempt to translate the technological efficiencies inherent in containerization into new rate structures which in many ways appear to offer considerable benefits to shippers, carriers, and consumers alike. However, these rates also create severe practical and competitive problems for the carriers.

There are a number of obvious advantages which will accrue to the carriers and shippers under the new

58 Rates applicable to the Commonwealth's list of essential consumer and intermediate goods (app. B) were selected for examination. Appendix E, table 10, contains the specific rates and comparison figures.

59 Except for the rate on feed and feedstuffs, which was 24 percent lower than Sen-Land's, GPRL's rates on the remaining 23 articles examined were 3 to 113 percent higher than those of Sea-Land (app. E, table 10).

60 In addition, FAK rates which are basically flat dollar charge per container rates exist in various tariffs in this trade. These rates apply on trailerloads without regard to the weight or measurement of the cargo loaded into the container and are limited to only a few commodities.

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