The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Family Islands are paying greater than “three times’ the cost” faced by Nassau-based businesses to ship in essential cargos and construction materials, a leading shipping executive yesterday warning this was retarding their economic development.

Michael Maura, Arawak Port Development Company’s (APD) chief executive, said Family Island economies were paying a “premium” to import goods because of inadequate port infrastructure.

He told the Bahamas Business Outlook Conference that major ports on islands such as Exuma, Eleuthera, Cat Island and San Salvador suffered from issues such as limited container storage space; shallow water depth; limited turning basins; and poor security.

This, Mr Maura explained, limited the types of vessels that shipping companies could use to serve the Family Islands, forcing them to employ smaller, less efficient ships that failed to create economies of scale.

Illustrating the cost differential, Mr Maura pointed to 190 foot long vessel, with an eight draft (depth), and a 330 foot long vessel with 13 foot draft, which were both servicing Nassau from Fort Lauderdale.

The latter’s ability to carry far more twenty-foot equivalent units (TEUs) meant that, while its $18,000 per voyage operating costs were higher than the $17,000 incurred by the smaller ship, the price per TEU was almost four times’ lower - $209 versus $817 for the 190 foot ship.

Then, comparing the cost of shipping different cargo types from Fort Lauderdale, to Nassau and Long Island respectively, Mr Maura produced data showing it was 41 per cent cheaper to send a 40-foot dry container to the capital.

The average price for Nassau was pegged at $2,300, while it would cost $3,900 to send the same container to Long Island - a $1,600 difference.

And the price differential was even more pronounced for a 40-foot refrigerated container, which cost $2,700 to ship to Nassau but $5,300 to send to Long Island - an almost-50 per cent variation.

As for aggregate,Mr Maura said the per ton cost to ship pea rock/3/4 rock from Fort Lauderdale to Freeport and Nassau was $18 and $33, respectively, yet this rose to $65 per ton for Georgetown in Exuma.

Mr Maura said the ‘pea rock’ shipping costs faced by Exuma’s contractors and developers was more than “three times’ the cost to Freeport”, and double the price paid for transportation to Nassau.

Finally, for cement, Mr Maura said the shipping costs to Georgetown were $445 per ton - a price 117 per cent greater than the $205 per ton paid to ship it from Fort Lauderdale to Nassau.

“Today, a premium is paid in transportation,” Mr Maura said. “Our Family Islands are really challenged.”

The chief executive for BISX-listed APD said that, compared to resort developers in Nassau, such costs to ship in vital construction and other raw materials created “a huge hurdle to climb over to compete” for those in the Family Islands.

“The infrastructure determines service cost and offering. The port drives shipping costs,” Mr Maura said.

“Port infrastructure in many cases drives the type of shipping making that call. Infrastructure, port infrastructure, has resulted in higher costs to operate.

“Everyone is paying for it in higher freight rates, but they’re not getting any opportunity for economic growth. The difference between what you’re paying in Nassau and the Family Islands is quite significant.”

Taking Rock Sound in Eleuthera as an example, Mr Maura said it was only served by mailboats. This, he explained, forced developers in south Eleuthera, such as Eleuthera Properties Ltd (Cotton Bay) to pay a $500 surcharge to have vital construction materials trucked from the port at Governor’s Harbour.

Mr Maura said airport and port infrastructure were key assets in attracting investment dollars to the Bahamas in a highly competitive world, and it was vital they were “up to the job”.

If not, it was highly likely that investors would take their money and place it elsewhere.