$83m Port's fee rises 'never seen' before

By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net THE $83 MILLION Nassau Container Port's new tariff structure has made the Bahamas' capital city "one of the more expensive ports in the Caribbean", a leading shipping company yesterday telling Tribune Business it had "never seen" such fee increases coming all at once. While Crowley Caribbean Services said it was confident the tariff increases, implemented by the soon to be publicly listed Arawak Port Development Company (APD), would work themselves out in the long run, it would be implementing the second of a two-phased rate increase on its Nassau freight on April 1, 2012. Mark Miller, Crowley's director of corporate communications, told Tribune Business in relation to the new Nassau Container Port: "Ports throughout the Caribbean regularly raise their fees through the normal course of doing business, but we have never seen an increase of this size all at one time, and now Nassau is one of the more expensive ports in the Caribbean in which to operate based on its current fee structure." Yet he added: "If everyone is subject to and abides by the same fees structure, it levels the playing field for all of the carriers. "The thinking is that in the short-term we may be in the position where we lose a little bit of business if some of the other carriers don't pass on the total fee increase, but that in the long-term we should be just fine. In the long-run, Crowley being a very established, well-respected company will weather this just fine." A fax sent by Crowley to its Bahamian freight customers, which has been seen by Tribune Business, said it was implementing its second round of Nassau Port Charge increases in response to APD introducing the next phase of its port tariff rises on April 1, 2012. Crowley brought in the first phase of its Nassau Port Charge earlier this week, on March 4, 2012. "The new Arawak Port Development (APD) port tariff is being implemented by APD in two phases," Crowley said. "The second phase is scheduled to be implemented on April 1, 2012. Due to the increased operating costs associated with phase two implementation of the new tariff, Crowley Caribbean Services announces the following increases to the Nassau Port Charge, which will be effective on April 1, 2012." As a result, Crowley is further increasing the Nassau Port Charge for twenty-foot equipment units (TEUs) by a further $50 from April 1, 2012, taking the total increase across the two phases to $200. For 40-foot units, there will be a $100 increase, taking the total increase to $400, while for containers exceeding 40 feet in length, there will be another $150 increase on April 1, taking the total rise spread across the two phases to $500. Vehicles are in line for a $25 rise, taking their total increase to $175. It is unclear how much of these increases have been driven by the new Nassau Container Port and need to finance its construction, APD executives having recently suggested the shipping industry could be using it to recover losses sustained when it was squeezed by the recession and reduced cargo volumes/rates on one hand, and high fuel prices on the other. Still, the fee increases can only increase costs for both Bahamian businesses and consumers, raising the spectre of further inflation that might depress the economy just when it needs it the least. Winston Rolle, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) president, said that while the private sector organisation had received no complaints, it would canvass its members on the issue. "Any increase in costs would be a concern," Mr Rolle told Tribune Business. "Any cost increases to be businesses are going to be paid for down the road by consumers in any event. Where we are concerned, everything we consume is basically imported. If we are going up on the price of imported things, it's going to increase the price at store level." He added that a significant amount of the Bahamas' imports were acquired by companies for use in their own business, meaning that the "whole operating cost structure is going to be impacted". "It's a very bad time," Mr Rolle added of the tariff increases, "and the other thing you have to consider is that you have a large number of persons unemployed, with limited income or no income coming in. They will be on a shoestring budget, so any impact on costs is going to have an impact on families locally." Crowley, meanwhile, advised its Bahamian clients of other charges set to be incurred at Arawak Cay. The Gate/Labour Overtime fee, for instance, will be $350 per hour outside normal operating hours, and $550 per hour on Sundays and public holidays. The shipping company also announced that stripping charges for palletized TEUs containers would be $600; for 40-foot containers it would be $725; and $750 for cargo in containers larger than 40 feet. Crowley also announced that non-palletised cargo in TEUs would have a $700 stripping charge; 40-foot containers an $825 charge; and an $850 charge for non-palletised cargo in containers larger than 40 feet. And Crowley also announced that after five free days of storage at the Port, there would be a $20 per day charge for loaded dry equipment, and $50 per day for loaded refrigerated equipment. Storage after 10 days for loaded dry equipment would increase to $30 per day, and loaded refrigerated equipment would increase to $100 per day. The company noted that it would continue to monitor fuel prices and make adjustments on an as needed basis. The storage charges have not gone down well with some in the Bahamian business community, several arguing that it typically takes longer than five days to clear a container already. One leading businessman, speaking to Tribune Business on condition of anonymity, said: "I think it's absolutely ridiculous, and I believe it is five actual days, not five working days. "I'd like to know, and maybe Mike Maura [APD chief executive], can answer the public how they can expect any business owner, based on the current situation with clearing items, how they can expect anything to be cleared in under five days. "For those companies, the suppliers, retailers and wholesalers, that bring in hundreds and hundreds of containers a week, a year, this will be huge for them. It's crazy." The businessman said the current average container/import clearance time was five-eight days, due to all the paperwork and payments that Customs brokers and companies had to make. "I believe the reasoning for this charge is to expedite clearance of cargo, but they have to be reasonable and don't go from 10 days to five days without consulting the public and business community," the businessman said. Crowley's Mr Miller told Tribune Business: "We have had to increase our rates for shipping to Nassau. It's just something that we, along with others, have had to do. It doesn't make things any easier, and to the extent that the increased costs can be recovered through increased rates to our customers, it will help us offset our increased costs. "Ultimately, what will happen is the cost of goods on the island are going to increase. "If we pass increase rates on to our customers then they will pass that on to their customers, the actual consumers." Atlantic Caribbean Lines (ACL) has also announced fee increases to offset the costs associated with its move to the new Arawak Cay port. In a recent interview with Tribune Business, APD's CEO Mr Maura noted that carriers would use the port relocation as a justification to increase their rates, claiming that shipping companies have been losing a lot of money over the years. Mr Maura argued that the port fees overall will represent a small increase to the shipping companies.


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