The Tribune

* Traditional 'spike' in merchant imports not seen

* Auto imports match trend through 41% decline

* BISX-listed operator sees no upturn until 2021

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau's major commercial shipping port yesterday revealed profits slumped by 34 percent during the three months to end-September as it detected further signs of a grim Christmas for retailers.

Dion Bethell, Arawak Port Development Company's (APD) president and chief financial officer, told Tribune Business that the traditional spike in retail imports that traditionally occurs during the fall as merchants stock up on festive industry has been noticeably absent to-date.

Bahamian non-food retailers typically generate 15 percent of the Arawak Cay-based port's imports, and Mr Bethell attributed the missed "peak" that normally boosts such activity to depressed consumer spending and COVID-19 restrictions that have slashed industry sales by forcing all operators to curb-side.

Suggesting that many merchants were sitting on old inventory they are unable to move, the APD chief told this newspaper: "What we usually see around now, but which has not occurred, is we'd be in the peak of the season where we see a lot of the Christmas volumes for a lot of retail stores.

"Our volumes indicate that, as a result of curb-side service and inventories that a lot of retailers are sitting on, a lot of those volumes are not coming through. If I were to take a guess, it's about 15 percent of our [container] volumes where we would see an increase over and above what they normally would be between the months of October, November and the first two weeks in December.

"That is where we see that spike in the average monthly volumes. It has not happened as yet, and we're beginning the first week of November and have not seen that occurring."

Mr Bethell's disclosures reinforce the concerns voiced last week by Tara Morley, the Bahamas Federation of Retailers' co-president, who warned the Government that most merchants are simply not generating sufficient sales and cash flow to purchase their desired Christmas inventories because they have been forced to curb-side operations by the present COVID-19 restrictions.

Revealing that curb-side generated between 1 percent to 15 percent of the normal sales volume enjoyed by the Federation's 100 members, Ms Morley blasted: "After being either shut down or only permitted to operate online/curbside for five out of the last eight months, retailers were relying on the November 1 [tourism] re-opening date to generate much needed income during the upcoming holiday season in order to avoid bankruptcy and further layoffs.

"Many retailers committed to orders based on the Prime Minister’s promise of ‘no more lockdowns’ in early September. However, in addition to the obligations faced by all businesses such as electricity bills, rent, payroll, Internet etc, they now find themselves with insufficient cash flow to clear these shipments meaning that they cannot even outfit their stores with the requisite inventory to sustain seasonal turnover."

Mr Bethell confirmed this impact was also being felt at the Nassau Container Port, which BISX-listed APD operates, adding that present restrictions were likely driving Bahamian shoppers online to the benefit of courier companies/freight forwarders rather than the port and its shareholders (Bahamian public investors collectively own a 20 percent stake).

"I don't know if it's as a result of where we're at," the APD chief said of the reduced retail volumes. "A lot more persons are focused on purchasing online, and oftentimes when they do those volumes come into the country by air freight as opposed to ocean freight.

"Those small items, gifts that people purchase for significant others, family and friends, because they cannot go into retail stores and see, touch and purchase what they want, persons are looking for that merchandise online and forwarding it via air freight as opposed to the likes of Kelly's bringing it in by ocean freight.

"I'm not suggesting the volumes are not coming in. They're not coming in by ocean freight based on the volumes we're seeing thus far." Mr Bethell suggested APD's import volumes were also reflecting that a similar situation is playing out with Bahamian new and used auto dealers, who have either halted or reduced vehicle orders because they are already sitting on significant inventories.

"On the vehicle side, our volumes are down quite a bit year-over-year by 41 percent, and even in terms of what we had budgeted they're down by 34 percent," he told Tribune Business of figures for the three months to end-September 2020.

"They're still trying to turn that existing inventory, and in this environment many of the financial institutions are not lending, especially for that type of loan, for fear they will not get repaid. The banks may be lending, but it's very limited. If I work at Atlantis and Baha Mar I would not be a candidate for a loan for a vehicle."

Mr Bethell said the absence of the traditional spike in retail-related imports, together with the fall-off in vehicles coming across APD's wharves and bulkheads, had helped to produce a continuation of the downward trend experienced since the pandemic began.

Revealing that the Nassau Container Port's performance was not expected to improve before the 2021 calendar year's first quarter, he told Tribune Business that all major indicators were down for the three months to end-September 2020, which is the first period of APD's financial year.

"Revenues were down year-over-year by about 18 percent," Mr Bethell said of the September 2020 quarter, "and ironically expenses are down year-over-year by the same amount. Overall, net earnings are down by 34 percent, and our TEU (twenty-foot equivalent unit) volumes are down by 13 percent year-over-year.

"Bulk tonnage is down by 31 percent, and vehicles are down by 41 percent year-over-year. That's in-line with what we saw from March to April. The trend continues. What we saw in the first quarter of the 2021 financial year was a repetition of that. It's principally because of the state of the economy and tourism, our number one driver.

"While the construction side made up for some of it, we're still tracking or trending down. It's not far off, though, from our projections. We had envisioned a downward trend continuing through the end of the year, and it's been validated by what our actuals are," the APD president continued.

"When we forecast, we envisioned there would be a fall-off in revenues and volumes through to December before we see any upward trend. We had envisioned that we would not see an improvement until the 2021 calendar first quarter at the earliest. I didn't envision that occurring any time before the first quarter in 2021."

Mr Bethell did not provide any dollar figures prior to APD's upcoming annual general meeting (AGM) on November 19. He spoke after APD unveiled full-year profits for the 12 months to end-June 2020 which, while 10 percent down on the prior year's $8.03m at $7.23m, came in close to the company's budgetary forecasts.