World Transportation Account, 1950-1953

Abstract

A SUMMATION of the amounts on the transportation line of the balances of payments submitted to the International Monetary Fund does not give a good picture of the amounts actually paid and received by the reporting countries. The explanation is, partly, that (i) many countries report the amounts paid for freight under merchandise trade instead of under transportation; (2) earnings as well as disbursements of substantial portions of the world fleet are not reported at all; and (3) many countries do not report the receipts from bunker sales or port services. But even if allowance is made for all these deficiencies in the reporting, the receipts are still much lower than the payments: the submitted figures are either too high for payments or too low for receipts, or both. My paper deals first, with elimination of the deficiencies in the reporting, and second, with methods to correct the submitted figures. To calculate the freight paid on imports by countries which do not report it separately but include it in merchandise payments, socalled freight factors were applied. These freight factors stand for the proportion of freight in the total paid by the importing country for delivery of the merchandise to its ports (the total comprising the price received by the exporting country, the freight by the carrier, the insurance premium by the underwriter, and so forth). Freight factors differ among groups of merchandise; in general, they are high for raw materials and foodstuffs, medium for semimanufactures, and low for manufactured products. During the four years studied, they varied greatly over time for the first group because of the sharp fluctuations in tramp rates but very little for manufactured products mainly transported by liners. These freight factors were applied to the amounts paid by the importing country for each of three broad groups of commodities in each of the four years of this study. This calculation is a rather crude one, particularly so since the number of selected merchandise subgroups was rather small for each country, usually not more than twenty. A more accurate but much more time-consuming method, based on imported quantities and corresponding freight rates, will be discussed later. Neither earnings nor disbursements of tankers operated by British oil companies are reported under transportation; rather they are included with all other foreign exchange receipts and payments of these companies under miscellaneous in the United Kingdom balance of payments. To assess their earnings on account of transportation, use was made of the results of a companion study aimed at the reconciliation of payments and receipts on account of international transactions in petroleum and its derivatives. Based on quantities of petroleum products traded between countries, a world freight bill for petroleum was computed by multiplying the moved quantities by the appropriate freight rates. The calculated freight was then divided between American and British oil companies according to each group's share in petroleum exported and/or imported by each country. Charter hire payments by British oil companies for foreign tankers were calculated on the basis of tanker tonnage owned (or controlled via subsidiaries) by British and American oil companies and non-oil companies. Estimates of other disbursements in foreign exchange of tankers operated by British oil companies were based on operating costs of Norwegian tankers. Earnings and disbursements of ships flying the Panamanian, Honduran, and Liberian flags of convenience, as they are often called, are not reported at all, since the three countries do not consider these fleets as part of their economy. Such earnings and disbursements were estimated and added to transportation receipts and payments of the other reporting countries. These estimates were based on the financial accounts of Norwegian ships which have virtually the same freedom in the area of opera-