The Tribune

By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A MAJOR shipping company yesterday blamed fees levied by the new Arawak Cay Port for its decision to increase container landing charges by between 30-48 per cent, causing one retailer to tell this newspaper: “It’s cheaper to hire a cargo plane and fly your products in.”

Tropical Shipping Company, one of the largest containerised cargo carriers in the Caribbean region and the Bahamas, said in an e-mail to clients that “due to the increase of costs assessed by the Arawak Port Development Company,” it “must implement an increase to the landing charges for shipments destined to Nassau, Bahamas, effective February 3, 2013.”

Douglas Cowper, Nassau port manager for Tropical Shipping, declined to comment on the matter yesterday. But sources close to developments told Tribune Business that the company was the last to implement the “inevitable” increases, as several other shipping firms have announced similar rises over the past several months.

Phil Lightbourne, head of the Gladstone Road-based wholesale/retail operation, Phil’s Food Services, said this was ultimately bad news for Bahamian consumers. “It affects the consumer,” he told Tribune Business.

“Whatever it costs us to get the product into the store, we must put our mark-up on it. The only person that could survive this is the person with the best buying power. It’s going to be a nightmare, and it’s going to get worse.

“When you had the Atlantic-Caribbean Lines and the G&G’s, and those guys to rescue you when Tropical and MSC put these high demands on you, now there is nobody there. You are in a position where you have no other choice.. You only could use MSC, Tropical or Crowley. They have all businesses by the balls. Whatever their fees go to, we have to deal with it,” said Mr Lightbourne.

Atlantic-Caribbean Line (ACL), which previously held a 15 per cent market share, announced fee increases prior to shutting down its US and Bahamas operations last summer. Crowley also last year announced that due to increased operating costs associated with the Arawak Cay port’s March 1 tariff schedule implementation, the company would apply a new charge to open tariff and contract shipments for both northbound and southbound cargo.

A Crowley executive told this newspaper at the time that the company had “never seen” such fee increases all at once, and that the Nassau Container Port had made the Bahamas’ capital city “one of the more expensive ports in the Caribbean”.

“There is no relief in sight. Each time a shipping company pulls out it makes it more detrimental for a businessman,” Mr Lightbourne said.

“If 10 ships come into a port, that’s 10 fees it collects. If only two or three come into that port they have to make enough from those three ships to maintain the port. Every time a shipping line pulls out it hurts me as a businessman. It could end up only being two shipping lines here in the long run because the fees are so exorbitant. The port has gotten so expensive it’s cheaper to hire a cargo plane and fly your product in, that how hard it’s gotten to import a container.”

Tropical Shipping said yesterday that landing charges for 20-foot equipment units (TEUs) or containers would rise 30 per cent, from $655.98 to $855.98 - a rise of $200.

Charges on 40-foot containers will, as of February 3, 2013, rise 43 per cent from $923.23 to $1,323.23. Tropical also announced that containers larger than 40 feet would increase by 48 per cent, from $1,109.48 to $1,640.48, while the $64.14 charge per pallet will rise to $84.14, a 31 per cent hike.

Tribune Business was unable to obtain a response from Arawak Port Development Company’s chief executive, Michael Maura, prior to press time.

However, Mr Maura had told Tribune Business previously that shipping companies would use the port relocation as a justification/excuse to increase their rates.

He pointed out that shipping companies have been losing money in recent years, due to rates dropping amid an economic recession and increased competition with more firms entering the market.

And Mr Maura argued that the Arawak Port’s fees overall will represent a small increase for the shipping companies. He added that the port’s charges were competitive against rival ports in the Caribbean.

Regardless of who is to blame, there is every likelihood that the burden of the increased shipping costs will be passed on to Bahamian consumers. That means further reduced disposable incomes, and spending power, in an economy where many are already hard-pressed to meet their obligations - the end result being that economic activity gets more depressed. The fee increases could not have come at a worse time.

Tribune Business was told by private sector sources yesterday that Tropical Shipping had held off increasing its landing charges as long as it could, with Mediterranean Shipping Company (MSC) and others having implemented theirs last year.

Sources suggested the increases enacted by MSC were in the “same sort of range” as Tropical’s, one saying: “These are serious increases for regular shippers to absorb.”