The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Arawak Cay port has suffered double the anticipated drop in container throughput volumes due to the “complete stalling” of the $3.5 billion Baha Mar project, its chief executive predicting its 2016 financial year will be “more challenging”.

Michael Maura told Tribune Business that BISX-listed Arawak Port Development Company (APD) had expected shipping container volumes to decline by 5-6 per cent as a result of Baha Mar switching from its construction to operational phase.

But the Nassau Container Port has instead seen container volumes fall by 10-12 per cent - twice the projected amount - during the first three months of its current financial year, which closes at end-June 2016.

“While 2015 was a good year, we expect the year ahead is going to be more challenging,” Mr Maura told this newspaper, explaining that APD was being impacted like the rest of the Bahamian economy by Baha Mar’s “stalling”.

“We had already anticipated a fall-off in volumes with that project given its completion and the hotel’s opening,” he added. “We anticipated seeing volumes peak in the construction phase, and after opening go away.”

Mr Maura said Baha Mar’s container imports would have switched from heavy duty construction materials and related equipment to items such as food and beverages; sheets and linens; and furniture and towels.

Yet the dispute between Baha Mar’s developer, Sarkis Izmirlian, and his Chinese partners, and the subsequent legal battles in the Bahamas and Delaware, have effectively brought the development to a halt for seven to eight months. And, as a result, all APD’s ,Baha Mar-related imports have dried up, too.

“It was expected that we would have a reduction, but we did not contemplate seeing the complete absence of volumes associated with the Baha Mar project as it came to a complete stop,” Mr Maura told Tribune Business.

“We would have expected volumes to decline by 5-6 per cent, but what we have seen is a 10-12 per cent decline over the last three months.”

Mr Maura said the decline in shipping container throughput volumes made it more challenging to “hold the line” on tariff increases, pointing to just the one solitary rise since the Nassau Container Port became operational in November 2011.

That occurred in June 2014, when the import tariff for Twenty-Foot Equivalent Units (TEUs) rose by $28, moving from $120 to $148.

“The good news is that our import tariffs did not increase,” the APD chief executive said. “From November 2011 to October 2015, we’ve only had a $28 increase in import rates.

“I think it’s a good thing that we’ve been able to hold the line, but it’s a challenge when we have this volume decrease as described.”

Dion Bethell, APD’s chief financial officer, said APD had seen “a huge impact” from its success in getting auto-carrying vessels to disgorge their cargoes at the Nassau Container Port rather than Prince George’s Wharf.

“Since December [2014], the Asian bulk car carriers have been calling her, and they have made a sizeable contribution to the landing fee increase,” he told Tribune Business.

APD had previously told this newspaper it expected a $563,000 annual top-line boost from handling 4,500 vehicles annually, with these revenues no present in the year-before comparatives.

The port’s landing fees for the year to end-June 2015 increased by 27.7 per cent year-over-year - from $9.515 million in 2014 to $12.152 million.

Mr Bethell added that there was “little cost associated” with preparing the Nassau Container Port to receive these vehicle imports, and said: “When we look at the meaningful bottom line impact, it’s had a very positive effect.”

Mr Maura, though, revealed that taking on the auto import trade had created “operational challenges” for APD and companies that use it because one-third of the port’s container terminal now had to be dedicated to vehicles.

“It has presented operational challenges,” he said. “We have given up one-third of our container terminal to vehicles. It has meant that our container operators have been challenged with their operations.”

Mr Maura explained that auto import were either ‘a feast or famine’, with the area dedicated to them either completely full or virtually empty depending on when a vessel arrived.

“We have to still keep that area dedicated to those vehicles,” he explained, “because we could very well get a call or an e-mail saying a ship is coming in with 450 cars. We can’t remove 500 containers to make way for 450 cars.”

Mr Maura pledged to Bahamian consumers and the private sector that APD would seek to rein in costs, in a bid to minimise prices and living costs as much as possible.

“Our focus needs to be, and will be, on operations and keeping this facility as efficient and productive as possible,” Mr Maura told Tribune Business, “and keeping our focus on costs.

“We do appreciate the impact this business has on the wider community, so we take that responsibility very seriously. If we can’t reduce it, we will not permit it to increase or jump.”