The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport is failing to attract “a wider range” of businesses and become a true logistics/distribution hub, despite the Container Port outstripping all Caribbean rivals with 25 per cent cargo throughput growth.

While a United Nations (UN) body ranking Freeport as the 10th busiest port in the Western Hemisphere was “great news”, leading businessmen and politicians said the Bahamas had failed to leverage its Container Port asset into developing the city as a true ‘free trade zone’.

Robert Myers, principal of Freeport-based VTrade Company, told Tribune Business that the Container Port’s focus on Full Container Load (FCL) shipping meant it - and the second city’s economy - were effectively closed to “a larger range” of small and medium-sized manufacturers and distributors.

These companies required Less Than Container Load LCL) shipping, where containers were shared with other firms, but Mr Myers said neither of the Container Port’s shareholders - Hutchison Whampoa and the Mediterranean Shipping Company (MSC) - were “committed” to this sector.

As a result, he argued that Freeport was “not being used for what it was designed for” and failing to fulfill its potential as a free trade zone.

Mr Myers was backed by East Grand Bahama MP, KP Turnquest, who told Tribune Business that the Bahamas was “missing an opportunity” to drive investors into the little-used Sea Air Business Centre via the Container Port.

The only sizeable property in that Centre is the former Associated Grocers warehouse now occupied by Mr Myers’s VTrade, and the Opposition MP said this nation needed to place “more emphasis” on attracting manufacturers to Freeport.

Mr Turnquest, a former Grand Bahama Chamber of Commerce president, said the Freeport Container Port findings supported the case for “investing time and resources” into developing the city as a complete logistics package.

And, with the Panama Canal expansion due for completion next year, Mr Turnquest urged all involved with the Freeport Container Port to capitalise on the “head start” it enjoys over rival Caribbean ports and capture the ‘next generation’ post-Panamax ships that will be unleashed.

Both he and Mr Myers were speaking after a report by the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) found that Freeport was now the 10th busiest port in the Western Hemisphere based on container throughput volumes.

The ECLAC report found that the Freeport Container Port enjoyed the fastest year-over-year growth of any Caribbean port in 2013, with 20-foot equivalent unit (TEU) volumes up 24.8 per cent at 1.5 million. This compared to the 1.2 million TEUs processed in 2012, and was 34.4 per cent up on the 1.116 million handled in 2011.

The data further backs the plans for the long-awaited $250 million Phase V expansion of the Freeport Container Port, which will create several hundred new jobs. The Government has pledged to roll back the 2013-2014 Budget’s new and increased taxes on Freeport to facilitate this.

Kingston is the only Caribbean port that still processes greater TEU volumes than Freeport, and it actually contracted by 8.2 per cent in 2013. Havana, with a much lower growth rate, was the only other Caribbean port to join Freeport in the positive column. There was no mention of Nassau or the Arawak Cay port in the ECLAC study.

Mr Myers, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said Freeport had even greater potential than that indicated in the ECLAC report.

“Freeport has proven they’re not committed to LCL logistics,” he told Tribune Business. “Freeport is committed to FCL logistics and transshipment; that’s their core business.

“Because of the Customs snafu with the Customs Management Act, which is still not repealed, and the Grand Bahama Port Authority (GBPA) and the like, they’re not committed to LCL logistics.”

This was despite “land set aside for LCL”, added Mr Myers, in a clear reference to the Sea Air Business Centre. He added that neither Hutchison Whampoa nor MSC, as the Container Port’s main shareholders, appeared to be focused on LCL either.

“My view, and we’ve expressed this to them, is that until you get LCL logistics running into Freeport, you will not get small and medium-sized manufacturers and logistics companies,” Mr Myers told Tribune Business, “as there is no effective means to get freight out of there by multiple pallets.

“The likes of Polymers and Pharmachem are LCL manufacturers. What we are missing is that for every big we can attract to come to Freeport, if we had LCL logistics, there might be another 10 that come from a tax and logistics standpoint.

“There are many more smaller companies that large ones. You could set up a larger range of businesses.”

Mr Myers said VTrade’s business model had been based on LCL logistics, but this had been decimated by the 1 per cent Customs processing fee and other new taxes introduced by the 2013-2014 Budget.

He added: “We set up on the basis we could do it, we did it, and the Government changed the Customs Management Act and policy and completely shot us, killed us.

“They need to get rid of that. Prior to that we were talking to Customs about improvements to efficiency to open up the industry more, and instead of going that way - streamlining, modernisation and IT - they went backwards.”

Mr Myers said there was “no way on God’s Green Earth” that major transhipment and distribution companies would be attracted to Freeport in the current economic environment.

“They’re not using Freeport for what it was designed for,” Mr Myers told Tribune Business. “They’ve put so many roadblocks in the way of Freeport’s growth, they’re just choking it.

“It’s a shame. What they ought to do is get out of the way and let Freeport be a proper free trade zone, because that’s exactly what Cuba and the Dominican Republic are doing.”

Mr Myers said a recent conversation with Cuba’s ambassador to the Bahamas had revealed “all kinds of incentives” that the Castro regime was providing to attract business and investments to its new port at Mariel.

“Those guys are working hard to get business, while we’re figuring out how to turn it away,” he added. “There’s loads of things they could do to stimulate growth in Freeport if they start listening to businessmen and get the technocrats out of the way. That’s what’s holding us back; the short-sightedness of central government.”

Mr Turnquest, meanwhile, backed Mr Myers’ call to use the Freeport Container Port as leverage to attract business and investment to the Sea Air Business Centre.

“I’ve always had a firm belief that we are missing an opportunity in leveraging traffic to the Container Port to create a true logistics hub,” the FNM MP told Tribune Business. “I don’t believe we have yet put enough emphasis on that, and going to manufacturers to use Grand Bahama as the outstanding hub for distribution, certainly in the Western Hemisphere.”

He then urged Freeport Container Port’s shareholders, and the Grand Bahama Port Authority and the Government, to exploit the facility’s advantages over rival Caribbean ports to attract the extra shipping traffic set to be generated by the Panama Canal’s expansion.

“We have an advantage in that we are ready to handle those Panamax and post-Panamax ships today, and the other one [Kingston] has to engage in infrastructure and dredging to do that. We have to take advantage of the head start we have, and do all we can to lure additional business to the island,” Mr Turnquest said.

He added of the ECLAC study: “This only supports the business case for investing time and resources in developing that package, and I’d like the business partners - Hutchison, and the Government and the Port Authority - to put focused attention on that, and getting that Business Park up and running.

“If there’s more of those big ships coming in, there’s an opportunity to do break bulk shipping, recontainerisation, shipping on goods from all over the world.”

Mr Myers, though, said it was unclear what impact China’s decision to block the proposed P3 shipping alliance on competition grounds would have on MSC’s business.

The proposed tie-up, involving MSC, Maersk and CMA CGM, was designed to reduce costs and remove overcapacity that had hit global shipping rates. In the immediate aftermath, MSC said it would now have to reassess its cost efficiency and service options, although there was no suggestion of any impact to the Freeport Container Port.