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TABLE 20.-CANAL TRAFFIC BY FLAG OF VESSEL-FISCAL YEAR 1975-Continued

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1 Includes only commercial vessels of 300 net tons and over, Panama Canal measurement, or of 500 displacement tons and over on vessels paying tolls on displacement basis (dredges, warships, etc.).

Note: In canal traffic statistics, foreign naval vessels such as transports, supply ships, tankers, etc., with a measurement of 300 net tons (Panama Canal measurement) and over, and vessles of war, dredges, etc., with a displacement of 500 tons and over, are classified as oceangoing commercial vessels. Statistics on these vessels, except as relates to displacement tonnage, have been included in the table above. As displacement tonnage cannot be combined with net tonnage, the following table shows statistics covering 44 vessels which transited the canai during fiscal year 1975 and paid tolls on displacement tonnage.

Source: Panama Canal Company Annual Report, fiscal year 1975.

B. (3) For the types of ships which transit the Canal, indicate (a) the type mix of vessels for each of those nations which are major Canal users; (b) the average toll per long ton of cargo carried by these different types of ships; (c) the average toll per $1,000 of cargo value carried by the different types (if available); and (d) the sensitivity of each type of vessel to various increases in tolls and to the measurement rules change in particular (assuming a reasonable return of profit for operation of the vessels must be made).

Data responding to parts a and b of the question is given in Table 21 and Table 22 respectively. Information relating to cargo value (part c of the question) is not available to the Panama Canal Company. Information relating tolls sensitivity to vessel type (part d of the question) is likewise not available to the Panama Canal Company except in relation to cargo carried. Calculations involving vessel return and "reasonable return" are not within the Company's capability.

B(4) For each of the major categories of commodities which transit the Canal (the categories in the 1974 IRA Study are acceptable), indicate the sensitivity of each to various increases in tolls and to the proposed measurement rules in particular. Also indicate who would pay for the increase in the cost of these commodities due to an increase in tolls and transportation costs. Apply the data obtained in previous calculations to delineate effects on commodities of the proposed measurement rules.

Indicate those commodities which the proposed rules are likely to affect by causing their transit through the Canal to greatly diminish or their interchange in international trade to cease altogether.

79-367 O-77-3

TABLE 21-TRANSITS-VESSEL TYPE BY FLAG, OCEANGOING COMMERCIAL, FISCAL YEAR 1975

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TABLE 22.-AVERAGE IMPUTED TOLL PER CARGO TON BY SELECTED VESSEL TYPE, OCEANGOING COMMERCIAL, FISCAL YEAR 1975

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1 Low and high derived from approximately 100 vessel transits selected at random from data available for the month of December 1975.

2 Total laden cargo divided into total tolls paid, fiscal year 1975. Source: Executive planning staff, Panama Canal Company., 1975.

The sensitivity of canal traffic to toll increases is detailed in the various IRA analyses cited in the bibliography. The sensitivity of individual commodities to various ranges of toll increases is spelled out in great detail in these studies and an analysis of who pays the increase in tolls is provided. The impact of toll increases varies accordingly to the commodity type. Aggregate and specific effect of the measurement rules changes (averaging 9%) is adequately covered by the analysis which shows no appreciable loss of traffic up to tolls increases of 50%. No trade is deemed to cease to move because of the measurement rules changes.

B(5) Make any appropriate statistical operations on the data obtained above in order to specify the relationship which may exist between the categories which would be impacted by the proposed measurement rules.

If the above data does not conform in format or detail to that desired, the Company will respond to the degree possible on receipt of instruction or guidance.

C. OCEAN FREIGHT RATES

(1) List those factors which the Canal organization understands to increase ocean freight rates and the rapidity and directness with which each of the factors affects rates.

Ocean freight rates are determined by supply and demand conditions which are affected by economic and political conditions and may be increased by any or all increases in costs to ship operators. Among these are: fuel costs, costs of ship construction, crew costs, insurance costs, costs at ports and harbors, costs for transit of Canals and waterways, profit, etc. Such a list could be long or short depending on the breakdown defined or fixed and variable costs.

The Panama Canal Company follows the general trend of spot and term freight rate movements but is not expert on the subject and thus cannot comment authoritatively.

C. (2) Correlate 1974-75 increases in ocean freight rates for vessels and routes which transit the Canal with the 1974 Canal tolls increase and then indicate the influence which the Canal organization believes the 1974 increase had on freight rates.

Table 23 extracted from Shipping Statistics and Economics, number 62, H. P. Drewry, December 1975, indicates the pattern of freight rates for dry cargo and tankers from 1971 through November, 1975. The Panama Canal toll increase was implemented July 8, 1974-a point at which dry cargo rates had already declined by one third and tanker rates had declined by two thirds. The decline in freight rates has been clearly due to the worldwide recession and the heavy overcapacity of the world merchant fleet and not to a $20 million toll increase spread among some 4,000 vessels that used the Panama Canal in 1974 or in 1975. These 4,000 vessels represent 15 percent of the total world merchant fleet of vessels over 1,000 gross registered tons.1

1 "Lloyd's Register of Shipping Statistical Tables 1975", Table 3, p. 28 lists 26,067 vessels of over 1,000 gross registered tons in 1974.

TABLE 23

COMPARISON OF SINGLE VOYAGE FREIGHT INDEX (BASE JANUARY 1967 100) FOR DRY CARGO
(SEE PAGE 39) AND SINGLE VOYAGE WORLDSCALE TANKER RATES (BASE PO/WEST)
FOR TANKERS BETWEEN 40,000 AND 99,999 DWCT

DECEMBER 1975

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C. (3) Did freight rate increases in 1974 and early 1975 conform to the predictions for that period? (Analyze this by trade route, commodity, nation, and ship type.)

The Panama Canal Company does not have this information available. C. (4) State the Canal organization's understanding of the relationship between freight rate increases and the profitability of a particular trade route. Does the Canal organization have an estimate of the minimum level of profit desired by vessel operators whose vessels transit the Canal?

The Panama Canal Company does not have this information available.

D. PORT ACTIVITY

(1) State the percentage of vessels in each of several selected major U.S. and foreign ports which transit the Canal. State the volume and proportion of cargo in and out of those major ports which transits the Canal.

Calculations of vessel traffic and cargo volume in major U.S. and foreign ports is not within Panama Canal capability.

D. (2) State the total number of jobs at major U.S. and foreign ports which the Canal organization believes will be significantly affected by the measurement rules change.

Panama Canal cargo volume originating in or destined for the United States constitutes only a small percentage of total U.S. seaborn trade.2 This small percentage in turn is rather widely shared among numerous ports and thus, any effects resulting from vessel or cargo decline would also be subject to this

2 Based on statistics appearing in the United Nations Statistical Yearbook, 1974, (New York: United Nations, 1975) Table 157, p. 148 and on Panama Canal cargo statistics, this figure in 1973 was 12 percent.

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