The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Calls have been made for the Freeport Container Port to “fill the void” and enable The Bahamas and wider Caribbean to escape the US threat to levy up to $1m per port call by Chinese-made ships.

Myles Culmer, managing director of advisory services for BDO Bahamas, told Tribune Business via a brief e-mail that the container port’s strategic location allows it receive cargo from global suppliers that could then be shipped on to other Bahamian islands and the wider region. And this, in turn, would enable freight carriers with Chinese-made vessel fleets to avoid the proposed port fee by keeping them out of the US.

Speaking after it emerged that the US Trade Representative’s Office is proposing fees that would massively increase shipping costs from US ports by “thousands of dollars” per container, given that most of the carriers serving The Bahamas and Caribbean have fleets dominated by Chinese-made vessels, he added that if implemented this could help Freeport finally fulfill its potential as the “gateway to the Americas’.

Mr Culmer, who once served as a receiver for the Grand Bahama Port Authority (GBPA), told this newspaper: “Freeport should step up and fill the void with the Container Port and really become the gateway to the Americas. All ships can call on Freeport from Europe etc and escape the tariffs on US-bound cargo... This can be an opportunity for the resurgence of Freeport.”

His comments came as Bahamian businesses and consumers braced for further supply chain disruption and inflation/cost of living pressures as a result of the US proposal, although it is encountering strong headwinds and resistance from US exporters, shipping companies and port operators due to the major financial damage it also threatens to inflict on their financial well-being.

Michael Halkitis, minister of economic affairs, noting that Tropical Shipping, one of the major carriers supplying The Bahamas’ freight needs, is among the entities that will be impacted, signalled that this nation will have to make the power brokers in the Trump administration aware of the potentially devastating consequences for their Caribbean neighbours.

“It’s very concerning to us, because Tropical is a big importer for us and most of our stuff comes in from the US,” he said. “I understand it’s not final. I understand it was a draft somewhere. And so what we have to do is just make sure that the powers that be understand what a severe impact this can have, you know, on a country like ours that imports so much.

“Now, from reading the draft and some of the commentary, it’s an effort for the US to improve their shipping and reduce some of the Chinese dominance. That’s a fight between those two giants and, in our view, we shouldn’t be collateral damage in that fight. So we’re watching it.

“We understand it has not come into effect as yet, and we will be making our voices heard through our appropriate channels with foreign affairs, etc, to let the powers that be know that this can have a tremendous impact on us here in The Bahamas and the rest of the region. And, at the same time, we have to begin to explore alternatives. If we see this thing, we have to be ready with possible alternatives should it go ahead.”

Barry Griffin, The Bahamas Trade Commission’s chairman, said the proposed Chinese-made vessel port fee further underscores both The Bahamas’ vulnerability as a small, import-dependent economy exposed to external shocks and the urgency with which this nation needs to diversify its product sources and supply chain routes.

“The proposed US port call fee on Chinese-built cargo vessels is a new and significant development that could have far-reaching consequences for global trade, especially for small island economies like The Bahamas that rely heavily on imports and have limited shipping alternatives,” he told Tribune Business.

“Given that Tropical Shipping and other key shipping lines servicing The Bahamas may utilise vessels affected by this proposed fee, we are now actively assessing both the short-term cost implications and the long-term structural effects on our trade and logistics sector.

“If implemented, this policy could lead to higher transportation costs, which shipping lines may decide to pass on to Bahamian consumers and businesses in the form of increased freight charges. This unfortunate development underscores the importance of the Government’s trade diversification strategy. Now, more than ever, we must diversify our supply chain to better protect our economy from these types of unpredictable disruptions.

Mr Griffin added: “We call on the private sector to embrace change, and to work with the Government in our push to diversify our trading relationships and our supply chain, especially businesses in critical sectors such as food and construction. We believe this strategy will not only make Bahamian businesses more competitive, and goods more affordable for consumers, but it will ultimately make our economy stronger and more resilient.

“This is a developing situation. The Trade Commission will reach out to shipping companies that will likely be affected. We also continue to engage with our other partners in government, industry stakeholders and our regional counterparts as we assess the potential implications of this new policy. Our goal is to protect the economic interests of Bahamian businesses and the Bahamian people.”

Dion Bethell, president and chief financial officer for Arawak Port Development Company (APD), Nassau’s commercial shipping port operator, told this newspaper: “At this time, we are closely monitoring the situation and assessing its potential implications. While it is clear that this proposal could have significant effects on the broader shipping industry, the specific impact on The Bahamas’ economy remains uncertain.

“We recognise that increased costs in the supply chain can influence shipping rates and, by extension, import costs. However, it is too early to determine the extent to which this proposed fee might affect local businesses and consumers. We will continue to engage with industry stakeholders to better understand the potential consequences and will provide updates as more information becomes available.”

The US National Law Review, in its analysis of the measures being suggested by the US Trade Representative, suggested that existing Chinese-made vessels already in use with US carriers such as Tropical Shipping may not attract the proposed fee. Instead, it said the proposed fee structure is a sliding scale based on how many “proposed” new-build vessels or orders a carrier has with China.

But, while existing Chinese-made vessels serving The Bahamas and wider Caribbean may not attract the US Trade Representative fee, the US National Law Review also warned that a draft ‘executive order’ - needing only Donald Trump’s signature to take effect - is separately proposing to levy tonnage-based fees on Chinese-made vessels entering US ports although no details or mechanism for how this will work are known.

The US National Law Review added the US Trade Representative’s planned Chinese-made vessel fee structure only applies to “prospective” ships that non-Chinese carriers have ordered - or planned to order - from that nation. That raises the prospect that existing Chinese-made vessels which already serve The Bahamas and Caribbean, and are owned by non-Chinese carriers, will be spared the fee hike.

The $1m per US port call fee will only be applied to carriers where 50 percent or more of their “prospective” Chinese ships will be delivered within the following 24 months. This fee drops to either $750,000 or $500,000 per call if the percentage is less. There is, though, a requirement that US-made goods be exported on US-made vessels.