The study of the Board of Investigation and Research covered rail-carload traffic in the Mississippi Valley area in 1939. Since that time there have, of course, been very sharp increases in virtually every phase of railroad-operating costs. The extent of these increases is indicated by the fact that the carriers have already received rate increases of approximately 45 percent over the prewar rate level and are now requesting an additional 13 percent. Moreover, they have indicated their belief that the increase in rates has definitely failed to keep pace with the increase in operating costs. Accordingly, it has seemed reasonable to increase the costs developed by the Board of Investigation and Research by 50 percent. ent. When it is considered that the traffic under discussion is export and import traffic, involving in many cases special lighterage and handling services by the railroads as well as unusual car detention, the 50-percent increase over 1939 carload-traffic costs appears exceptionally conservative. This is all the more true since the area under consideration is official territory where the increase in railroad-operating costs has in general been greater than in the case of the rest of the country. The table below indicates the cost at various distances for rail-carload traffic with an assumed load of 30 tons per car. This assumed load incidentally is slightly higher than the actual average load for manufactures and miscellaneous in 1947. The table includes both the 1939 costs as developed by the Board of Investigation and Research and the estimated present costs which, as previously indicated, are 50 percent higher than the 1939 figures. Source: Board of Investigation and Research, Comparison of Rail, Motor, and Water-Carrier Costs, table 5, p. 9. The BIR figures per hundred pounds were converted to a tonnage basis and then increased by 50 percent. As previously indicated, the estimated cost figures in the preceding table are believed to be exceptionally conservative as applied to carload export and import traffic moving in boxcars. It is doubted whether the rail carriers would contend that their costs for this type of traffic are less than the figures indicated. In the case of gondola or hopper traffic in heavy ores or similar commodities where the average load is as much as 50 tons, the cost per ton would be reduced proportionately. For most commodities in the manufactures and miscellaneous classification, however, the estimates based on a 30-ton load appear reasonably satisfactory. It will be noted that in the case of traffic to and from Chicago, for example, the additional water transport cost through the seaway from Montreal, exclusive of tolls, is only slightly more than $1 per ton. In contrast the rail cost appears to range between $8 and $9 for shipments to and from the Atlantic seaboard. Since the rail rates are unlikely to be reduced below cost, the very substantial saving exclusive of tolls or even after tolls are included is certain to deflect a great volume of traffic to the seaway route. This will certainly be true in the case of traffic originating at points actually on the Lakes. In the case of traffic originating inland from the lake cities the transportation saving is somewhat less but is still significant for a substantial area surrounding the lake cities. For example, the difference in cost between a 200- and an 800-mile rail haul appears to be at least $5. Since the total additional cost of the seaway movement including tolls from Chicago was calculated to be approximately $2.30, it is clear that if rail rates are closely related to costs shipments originating within a 200-mile zone from Chicago would move to that city for transshipment over the seaway in order to obtain the net transportation savings of about $2.70 a ton. 27 In fact, the rail cost figures would seem to indicate that seaway traffic transshipped at Chicago might originate as far as 500 miles from that city. This would almost certainly be the case where the shipments originate west of Chicago and the rail costs to seaboard are accordingly greater. This discussion, it will be noted, is based not on present rail rates but on a revised rate structure closely related to costs. If rail rates from interior points to lake cities and to the seaboard were set at levels approximating the cost of performing the service the shipper would obtain transportation savings similar to those suggested above. IV. TRAFFIC CAPACITY AND TOLL REVENUE Much of the recent discussion concerning the seaway has involved the question of capacity. This problem was considered with great care in the industry report on domestic transportation entitled "An Economic Appraisal of the St. Lawrence Seaway Project" issued in 1947. The basic conclusions of the report, which still appear valid, were to the effect that the seaway as now contemplated could handle a traffic of ore, grain, and coal ranging between 40 and 52 million tons as well as a certain amount of general cargo. The report suggested, however, that the development of any great volume of petroleum traffic in addition to the traffic in other commodities might necessitate the provision of additional locks in order to accommodate the volume of business. In the light of the developments of the last 12 months it appears much more likely that additional locks will be required to handle the volume of traffic now anticipated through the seaway. The 1947 report assumed that traffic in bulk commodities, such as ore, grain, and petroleum, would be transshipped between lake freighters and ocean carriers at Montreal or other ports on the lower St. Lawrence. This assumption was predicated on the 27-foot-channel plan for the seaway. This channel is not deep enough to handle the huge ore carriers and tankers now being constructed for ocean service. However, as indicated in the report, transshipment expenses for this type of commodity are comparatively small and the 27-foot channel is accordingly not regarded as a serious obstacle. In the case of general cargo, where handling costs are high, the 1947 report assumed that no transshipment would be made and that ocean vessels would sail directly up the seaway to the Great Lakes cities. The limitation of the 27-foot channel will reduce to a certain extent the carrying capacity of the largest general cargo vessels utilizing the waterway. A 30-foot channel through permitting the employment of larger vessels or heavier loads would result in some savings in water transport costs which might represent as much as 5 or 10 percent of the anticipated steaming costs through the seaway. In general, however, the transportation savings described in the foregoing sections of the report appear applicable whether a 27- or a 30-foot channel is constructed. It The 1947 report included a table indicating the potential traffic in certain bulk commodities on the seaway and suggesting possible toll charges. In the light of the further study which has now been made concerning these items of traffic as well as the additional commodity groups treated in the current report, it is possible to present a more elaborate table reflecting potential traffic and toll revenues. cannot be emphasized too strongly that the suggested toll charges are precisely that and do not constitute definite recommendations concerning the scale of tolls which should eventually be imposed. They represent informed judgments concerning the charges which might be levied without impeding the flow of traffic but they are not the result of the careful study, commodity by commodity, which would be necessary before a definitive set of tolls could be established. suggested toll charges are included in the current discussion solely for the purpose of indicating whether the seaway might develop enough toll revenue to be selfsustaining. The The revised estimate of traffic and toll revenue is included in table 7. This table, it should be noted, includes no estimate of any domestic Canadian traffic through the seaway or any domestic United States traffic through the seaway. It does represent with the exception of Canadian overseas general cargo traffic the foreign trade of the two countries which is likely to utilize the seaway. TABLE 7.-Possible range of toll charges and annual toll revenue on the proposed Commodity St. Lawrence seaway 30 to 371⁄2 million tons. 6 to 20 million tons... 48 thousand tons... 640 thousand tons. 25 to 35 cents. $15,000,000-$18, 750,000 1,625,000-4,025,000 60,000- 60,000 800,000- 800,000 do 1,000,000-1,400,000 25 cents. 1,500,000-5,000,000 $1.25. $1.25. 1,713, 750- 1,713, 750 7 thousand tons. 555 thousand tons. 13 thousand tons. 245 thousand tons.. 963 thousand tons... 125 thousand tons.. 6 thousand tons... 121 thousand tons. 240 thousand tons.. 34 thousand tons. 4. TABULATIONS OF THE UNITED STATES MARITIME COMMISSION BUREAU OF GOVERNMENT AIDS, RESEARCH DIVISION, VESSEL STATISTICS AND ANALYSIS BRANCH, NOVEMBER 23, 1948 (1) Number of steam and motorships in the world, 1,000 gross tons and over arranged by gross tonnage groups, for selected years between 1922 and 1947. (2) Merchant fleets of the world as of June 30, 1948. (3) United States Maritime Commission design-Summary-United States-flag merchant fleet as of June 30, 1948. (4) United States Maritime Commission design-Detail by vessel designUnited States-flag merchant fleet as of June 30, 1948. Number of steam and motorships in the world, 1,000 gross tons and over arranged by gross-tonnage groups for selected years between 1922 and 1947 1 Excludes United States-flag Great Lakes vessels. Source: Vol. II, Lloyd's Registers. |