The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Nassau Container Port’s charges are “in line” with those levied by Caribbean ports of similar size, with Arawak Port Development Company’s (APD) chief executive yesterday saying its 20-foot equipment unit (TEU) landing fees were cheaper than Barbados and almost level with the Cayman Islands.

And Michael Maura also told Tribune Business that there was a “good possibility” the Nassau Container Port’s volumes this year could exceed projections, allowing it to reduce tariff rates and still maintain the guaranteed 10 per cent rate of return.

Mr Maura’s comments came in response to inquiries by Tribune Business over recent freight rate increases announced by Tropical Shipping, one of the largest containerised cargo carriers in the Caribbean region and the Bahamas.

The company blamed fees levied by the Arawak Cay Port for its decision to increase container landing charges by between 30 - 48 per cent.

Mr Maura, though, said the port’s tariffs might not be the only reason for the company’s rate hikes.

He explained: “Tropical, along with the other carriers, has been offering the market severely discounted rates for the last few years, and now needs to recover from the impact that carrying cargo at unsustainable levels has had on their company.

“While their move to Arawak Cay did represent an increase in port charges to them, I believe the amount of their published increase in freight rates also considers their decision to operate their own terminal within the Nassau Container Port.”

The APD chief told Tribune Business: “Tropical had been provided with the option of using the port’s common terminal services, but chose to self-perform their own terminal operations in an effort to offer their customers a customised service.

“One can surmise that Tropical believes their customers will receive additional value from the services provided by Tropical, and that these services are worth the increase. I do know that Tropical is experiencing greater efficiency as a result of their relocation to the Nassau Container Port.”

Regarding APD’s current tariff rates, Mr Maura said they were developed prior to the opening of the Nassau Container Port and “represent a conservative forecast of container and cargo volumes”.

“There is a good possibility that the port’s actual volumes in 2013 will exceed the volumes described in the plan, which will offer the company the ability to reduce tariff rates,” he added.

“The current port charges, however, are in-line with port charges in other ports of similar size in the Caribbean. At the time we developed the port tariff rates, we compared our rates for services provided exclusively by the Nassau Container Port with the ports of Barbados, Grand Cayman and St Marten.”

To illustrate the point, Mr Maura compared the TEU container landing charges of the Nassau Container Port and those countries. The charge for landing a TEU container at Arawak Cay is $379, compared to $294.17 in St Maarten (with no customs requirement), $377.13 in Grand Cayman and $422.40 in Barbados.

Tropical Shipping said landing charges for its TEU containers would rise 30 per cent, from $655.98 to $855.98, while charges on its 40-foot containers would rise 43 per cent from $923.23 to $1,323.23.

The company also announced that containers larger than 40 feet would see a landing charge increase of 48 per cent, from $1,109.48 to $1,640.48, while the $64.14 charge per pallet would increase to $84.14, a 31 per cent hike.

In the wake of Tropical Shipping’s planned container landing charge increases, Progressive Liberal Party (PLP) chairman, Bradley Roberts, yesterday called on the Government to intervene and to “put a stop to this madness”.

The PLP had opposed the Arawak Cay Port location and its $10 million initial public offering (IPO), and Mr Roberts said: “Given the fragility of our economic recovery, the Bahamas Government saw the wisdom in not heaping more taxes on the backs of Bahamian consumers and small businesses, and made that policy commitment to the Bahamian people.

“For their part, the shipping companies were given a sweetheart deal by Hubert Ingraham where the Bahamas Government, under the FNM, assured stakeholders of the Arawak Cay Port Development Company of at least a 10 per cent return on their investment.

“This unprecedented guarantee was in addition to $26 million in capital injections by the government into the $83 million Arawak Cay container port,” Mr Roberts added.

“These economic incentives make this tariff increase unjustified on the face of it. This is a privilege not afforded the average small business that will have to bear this initial increase in their operating costs. The Bahamian consumer is the ultimate victim in this predatory business practice.”

Mr Roberts questioned who was regulating the shipping industry and looking out for the public’s interest, suggesting that the situation was “clearly out of control”.

He added: “All who have interests in the full economic recovery of the Bahamas, and the restoration of prosperity, must look beyond their narrow self-interest as we are all in this boat together.” 

Tropical Shipping is not the only one to have increased shipping/freight rates. Atlantic Caribbean Lines (ACL), which held a 15 per cent market share, had 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 port’s tariff implementation, the company would increase its rates, a company executive telling this newspaper that the shipping firm 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”.

Phil Lightbourne, head of the Gladstone Road-based wholesale/retail operation, Phil’s Food Services, said Tropical Shipping’s rate increases was ultimately bad news for consumers.

“It affects the consumer. Whatever it costs us to get the product into the store, we must put our mark up on it,” he added.

“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 ACL and the G&G and those guys to rescue you, when Tropical and  MSC put these high demands on you, there is now 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.”