CHART IV-10 OCEAN FREIGHT RATES ON PRINCIPAL MOVING COMMODITIES ON GULF-PUERTO RICO LINES, INC. FROM NEW ORLEANS, LOUISIANA TO SAN JUAN, PUERTO RICO COTTON IN BA WRAPPING PAPER 3b COTTON IN BALES SOURCE: APPENDIX E, TABLE 7. LARD, NOS DRIED BEANS ETC MALT IN BAGS HYDRAULIC OIL COTTON, PIECE GOODS 80 8b סון SON CREPE CLOTHING, NOS ONIONS, IN CRATES PLASTIC PROD'S NOS 10 STRUCTURALIS, * PAINT, NOS دیه AIR CONDITIONERS BOXES, K.D. CARTONS, FIBERBD. KO STOVES, NOT ELECT COMMERCIAL VEHICLES, NOS HARDWARE 16 PLUMBING MATERIALS, NOS 18 RUBBER GOODS, NOS INSECTICIDE DRY GOODS, NOS LEATHER GOODS, NOS VACUUM BOTTLES Of 56 items shown, 48 containerizable. On container rates 17 Rates remained steady 9 Rates decreased from 3 to 18% 22 Rates increased from 3 to 181% FEEDSTUFFS TABLET PAPER UNDER 80 FOODSTUFFS, NOS FEEDSTUFFS FLOUR 12 BACON, HAM, SAUSAGE, ETC. PIGS FEET 14 PULPBOARD, IN ROLLS CANNED MILK MILK,PALLITIZED IES SHEETS, FLAP PULPBOARD, IN BXS PAPER BAGS 18 19 20 21 VEGETABLE OIL RICE, IN CLOTH BAGS TIRE & TUBES NOTE : FOR FULL DESCRIPTIONS, SEE APPENDIX E, TABLE 7. FEDERAL MARITIME COMMISSION - 1969 BREAKBULK RATES NON-CONTAINERIZABLE CHART IV-II FREIGHT RATE STRUCTURE: DIFFERENTIALS-TL TRAFFIC FROM NORTH ATLANTIC AND WEST COAST PORTS SOURCE: APPENDIX D, TABLES I AND 5. 80 & over Rates in cents per cubic foot PUERTO RICO-VIRGIN ISLANDS TRADE STUDY FEDERAL MARITIME COMMISSION 1969 Land's 1964 median measurement rate declined by about 4 percent to 80 cents per cubic foot on June 1, 1968. On the other hand, its median weight rate increased about 5 percent from 186 cents in 1964 to 196 cents on June 1, 1968. The history of Sea-Land's TL and LTL rate changes on 28 principal moving commodities 51 from the West coast is contained in appendix E, table 9 for September 1, 1961 and June 1, 1968. This appendix shows that of these 28 rates, more than 92 percent remained steady or declined from one to 53 percent on both TL and LTL movements during the 7-year period. On LTL traffic, 73 percent of the rates remained steady and 19 percent declined. Only two LTL rates and one TL rate increased slightly (4 percent).52 Although Sea-Land's West Coast to Puerto Rico rate levels have had a favorable history since Sea-Land's entry into this trade, these rates are high compared to its North Atlantic rates. The favorable rate history, in part, was made possible by the relatively high AQ rate structure which Sea-Land inherited when Waterman, the last breakbulk conference carrier serving this trade, departed the service in 1963. All categories of West Coast rates are considerably higher than those applicable to North Atlantic-Puerto Rican traffic. Various individual shippers have indicated that rates from the West Coast are high.53 Chart 51 Appendix C, table 2 shows Sea-Land's principal eastbound moving com. modities in the West Coast-Puerto Rican trade. These commodities include the following articles: rice, beans, meats, canned goods, tomato paste, various fruits-principally apples, grapes and pears, dried fruits-soaps, paper bags, plastic materials, certain clays, cleaning compounds, and lubricating oils. These commodities comprise a substantial portion of the eastbound freight revenues earned by this carrier. 52 During the latter part of 1968, Sea-Land increased rates on approximately 20 commodities, mainly iron and steel products. During the course of the study, the FMC conducted an extensive survey of Puerto Rican industries by means of about 2,400 questionnaires to determine their transportation problems. This survey by means of questionnaires revealed various shippers complain of high rates on powered or electric scaffolds, medicines, vegetables, canned and bottled goods, paper products (e.g. wrapping paper and paper towels), dolls, and materials for the manufacture of chocolate moving from West Coast ports to Puerto Rico. TABLE IV-3 IV-12 reveals that Sea-Land's West Coast weight rate structure, on the whole, is some 40 percent higher than its North Atlantic weight rates. Chart IV-11 shows that Sea-Land's West Coast TL weight rate structure is some 70 to 80 percent higher than its corresponding North Atlantic rate structure. The comparison of SeaLand's North Atlantic and West Coast rate structures is summarized in table IV-3 below. Sea-Land's West Coast LTL and AQ rates are also considerably higher than its North Atlantic rates. Portto-port distances, of course, are much longer in the West Coast-Puerto Rican trade than in the Atlantic trade. The sailing time, is about three times as long (i.e. 13 days from West Coast ports versus 4 days from New York) which increases operating costs in the West Coast-Puerto Rican trade. Compared to the past breakbulk services of the conference system, Sea-Land's efficiencies gained through the use of containerships from the West Coast have improved operating practices and costs in this trade considerably over the past years. These savings should continue to be passed on to the shipping public in the form of reasonable rates. According to Sea-Land, its vessels in the Viet Nam service that do call at Seattle and Oakland are devoted to the military which has priority demand on the space. When space is available on these vessels on the Seattleto-Oakland leg, commercial cargo is accepted and car. ried for transshipment at Oakland to San Juan.54 Direct service from Seattle/Portland to Puerto Rico should be considered when traffic conditions warrant. If Seatrain's proposed entry into the West Coast-Puerto Rican trade in fiscal year 1970 becomes a reality, it may improve service and possibly ocean rate levels in this trade.55 54 Letter of Frank Hiljer, Jr. Sea-Land Service, Inc., July 7, 1969, to Paul Gonzalez, Chief, Branch of Trade Studies and Special Projects, FMC, p. 4. 53 Seatrain Lines, Inc. Annual Report 1968 (New York: 1968), pp. 3-6. Sea-Land's West Coast Eastbound TL Rate Levels Compared to North Atlantic Southbound 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 implements, 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 " commodities which apparently they do not wish to carry from Jacksonville to San Juan. These rates include various 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). 57 "Low-rated commodities" refers to those articles having rates generally ranging from 70 to 95 cents per 100 pounds. |