Clipper cargo horizons, Vol. 1, No. 6, June 1961

              

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A Pan Am Publication About Worldwide Air Distribution • Vol. I, No. 6 • June, 1961
At last it’s here!
The Big Atlantic Rate Breakthrough
•	Slashes of up to 63% in air cargo costs to Europe; will hike business 50%;
•	Pan Am position carries IATA, puts emphasis on weights not commodities;
•	Modern, practical volume rate structure geared to Jet Age worldwide
Shippers everywhere won a smashing victory last month.
It happened in Montreal, where a meeting of the 18 North Atlantic carriers of the International Air Transport Association slashed rates across the Atlantic by as much as 63 percent. The cuts came through the substitution of a modernized volume structure to replace virtually in toto an existing archaic commodity structure. Its basic principle was that the more you ship the lower the rate.
Present rates, due to expire on June
30,	have been extended through August
31,	to allow time for implementing the decision, which is subject to ratification by governments concerned.
The new rate structure reduces to 15 the specific commodity classifications eastbound between Europe and the U. S. and Canada, those westbound to about 23. This transfers as many as 60 commodity classifications into the more practical and simpler general rate structure. It is in this general cargo classification that new rates reflect drastic cuts for volume shipments.
Formerly most traffic across the Atlantic fell into 75 specific commodity groups, with volume rates covering a narrower cargo sector. This left little or no incentive for the volume shipper. What It Means. The comparison table on this page dramatizes what the rate cuts mean to air cargo moving transatlantic. The figures are for cargo moving between New York and London.
Rates are down a minimum of 22 percent at any general commodity weight level. By whittling specific commodities to a narrower segment of the cargo spectrum, the way has been cleared for about 75 percent of all transatlantic traffic to move under the lowered general commodity rates.
Big savings are reflected for shippers sending anywhere from 100 to 1000 kilos in either direction across the Atlantic. Slashes range from 48 to 56 percent in those weight ranges. Eastbound, shipments of 7500 kilos and over reflect the greatest savings—63 percent.
Still covered by specific commodity rates are such items as automobiles
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and agricultural machinery; radios, TV, phonographs, and some household appliances; adding and computing machines and typewriters; personal effects; weekly magazines and certain printed matter; and floral and nursery stocks. Seesaw Battle. The battle for lower transatlantic air cargo rates has stretched over more than a decade. During the past year the specific commodity rate structure transatlantic was under fresh and vigorous assault and finally succumbed to change.
At the last annual IATA conference in Cannes, France in November, 1960, a breakthrough seemed imminent. Pan Am had long advanced a “weight break” concept, but only last year at Cannes did it finally draw support from the other two American transatlantic carriers.
The Pan Am view stressed that rate differentiation by product category was basically unsound; that it resulted in uneconomic protection for specialty products exclusive to a given country; and that the restrictive character of specific commodity rates hampered the unfettered development of cargo business across the Atlantic.
A special IATA meeting last January in Paris, called solely to resolve this issue, resulted in the same frustrating deadlock encountered in the Cannes annual meeting. By mid-February the meeting broke up and going into March the prospects of an “open rate” war loomed large.
Consistent Position. Pan Am, which had first publicly advocated lower transatlantic rates through volume weight breaks as far back as 1949, left no doubt in the public’s mind as to where it stood.
Willis G. Lipscomb, v-p, traffic and sales, proclaimed Pan Am cuts of up to 63 percent on transatlantic cargo should IATA members fail to agree on a new rate structure. Lipscomb insisted the public had to benefit; that agents, forwarders, and shippers of all kind merited the reduced costs. He pointed to the successful operation of “weight break” structures into Central and South America from Miami, and similar ones across the Pacific. Immediately after inauguration of rates based on weights for the Pacific, January 1, 1960, cargo in that area shot up by 34.7 percent the first year.
(Continued on Page 8)
New general air cargo rates, New York to London — Sept. 1, 1961
WEIGHT		NEW	RATE	OLD RATE	% SLASH
Lbs.	Kilos	Lb.	Kilo	Kilo	
Under 100	(Under 45)	$1.00	($2.20)	($2.81)	22
100- 220	(45 - 100)	.69	( 1-52)	( 2.11)	28
220 - 550	(100- 250)	.50	( 1.10)	( 2.11)	48
550- 1100	(250 - 500)	.41	( -90)	( 2.11)	58
1100- 2200	(500- 1000)	.36	( -80)	( 1.83)	56
2200- 16,500	(1000-7500)	.33	( -72)	( 1-83)	61
16,500 over	(7500 over)	.31	( -68)	( 1.83)	63 Eastbound
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