Jacksonville-to-San Juan carriers displaying billion-dollar confidence in Puerto Rico trade

By: | Issue #643 | at 10:27 AM | Channel(s): Ports & Terminals  Ports  

With investments totaling more than $1 billion, carriers engaged in commerce between Jacksonville and Puerto Rico are clearly confident that the island commonwealth will enjoy economic revival.

Crowley Maritime Corp. investments include an expanded Isla Grande terminal and pier being developed to serve LNG-powered combination container and roll-on/roll-off, or ConRo, ships.
Crowley Maritime Corp. investments include an expanded Isla Grande terminal and pier being developed to serve LNG-powered combination container and roll-on/roll-off, or ConRo, ships.

Executives of Crowley Maritime Corp., TOTE Maritime Puerto Rico and Trailer Bridge shared upbeat views on Puerto Rico in interviews with the American Journal of Transportation. Crowley officials pointed to company investments totaling more than $550 million, including in LNG-powered combination container and roll-on/roll-off, or ConRo, ships and enhanced terminal facilities. Meanwhile, the TOTE unit has introduced LNG-driven containerships and a new joint venture San Juan area terminal, and Trailer Bridge has upgraded its barge fleet.

These financial commitments come as Puerto Rico, under leadership of a newly sworn-in governor, looks to rebound from its second recession in the past decade, the latest downturn – on the heels of the 2006 to 2011 depths linked to the Great Recession – beginning in 2013 with expiration of U.S. corporate tax incentives and overwhelming fiscal imbalance.

Even in challenging times, the 3.5 million people of the island commonwealth in the northeast Caribbean Sea count upon U.S.-flag carriers, as required under the Jones Act in domestic trades, to bring them a full spectrum of consumer goods and other commodities, predominantly via Jacksonville, Puerto Rico’s longtime leading mainland maritime link.

John P. Hourihan Jr., Crowley’s Jacksonville-based senior vice president and general manager for Puerto Rico services, pointed out that Crowley and TOTE and, to a lesser extent, Trailer Bridge, are making their investments in the trade despite the fact that the overall level of commerce has been declining in single digits annually for the past 10 years.

“The island of Puerto Rico is not going away,” Hourihan said. “It will have its ups and downs. We always plan to be there.”

Jose “Paché” Ayala, Crowley’s San Juan-based vice president for Puerto Rico services, who, like Hourihan, has three decades of experience in the trade, said he sees hope in the administration of Gov. Ricardo Antonio “Ricky” Rosselló Nevares, who assumed office Jan. 2.

The 37-year-old son of Pedro Rosselló, who served as Puerto Rico’s governor from 1993 to 2001, the new governor already has taken some positive steps, including signing incentives for pharmaceutical and aerospace sectors, and has approved a June 11 nonbinding referendum in which island residents are to again vote on statehood.

Ayala said he also believes the PROMESA bill signed last June by U.S. President Obama, including the fiscal oversight board it has created, offers promise, which, not coincidentally, the bill’s name translates to from Spanish to English.

“We should see a positive benefit in both,” Ayala said, referring to the new governor and the U.S. bill. “We are seeing a very slow boost in the local economy.”

Hourihan interjected, “Everyone is hopeful and encouraged.”

Tim Nolan, president of TOTE Maritime Puerto Rico, commented, “Though the island is currently working to stabilize its economy, commerce from Florida to Puerto Rico remains sound. Puerto Rico continues to hold the No. 1 commerce partner position for the Port of Jacksonville and the surrounding logistics community.

“Tourism is a key sector for the Puerto Rican economy, and forecasts are showing Puerto Rico will benefit from a strong U.S. economy,” he added. “Market cargo volumes continue declining, but TOTE Maritime Puerto Rico is still highly committed to serve the trade.”

Trailer Bridge’s president and chief executive officer, Mitch Luciano, was even more enthusiastic, saying, “Will Puerto Rico be what it was 15 years ago? I don’t know. But they will absolutely return and return with a big bang. So I’m excited about it.

“We’re seeing positive things in Puerto Rico,” Luciano said. “When you sit down with Wal-Mart or Costco, they say sales are good.

“The economic outlook in Puerto Rico has not been great for several years,” he said. “The people are willing to do whatever it takes to get better.”

Luciano said Trailer Bridge, which last year spent $15 million to upgrade the roll-on/roll-off and lift-on/lift-off barges it operates on twice-a-week sailings to serve the lane between Jacksonville and San Juan, continues to see imbalance that has long typified the trade, with southbound commerce currently accounting for 80 cents for every 20 cents northbound.

Nonetheless, he said, Trailer Bridge gleaned $130 million from the trade in 2016, up from $100 million four years earlier. He pointed to Trailer Bridge service enhancements, transcending the longtime price-focused motivation for shippers selecting barge transit, as helping his line go to more than 90 percent utilization of its barges from 75 percent just a few years ago.

While northbound pharmaceuticals volumes have sharply declined since discontinuation a dozen years ago of U.S. incentives for that business on the island, Luciano pointed out that his line has seen growth in bringing northbound Baxter International intravenous solutions and bags.

Pointing to the Crowley and TOTE investments, Luciano commented, “Obviously, they’re just as optimistic as we are about the Puerto Rico trade.”

Crowley, which has been engaged in the Puerto Rican trade for more than 60 years and continues to hold top market share, is centering its current efforts on transitioning from triple-deck roll-on/roll-off barges to the LNG-propelled ConRo vessels.

The first of two of the aptly monikered Commitment Class ConRo ships being built in Pascagoula, Mississippi, dubbed El Coquí, named for the native Puerto Rican frog, is slated for delivery in September or October. The second, Taíno, named for the indigenous Puerto Rican people, is to soon follow.

With the ConRo vessels, Crowley’s transit time for each of its two weekly sailings from Jacksonville to San Juan is to be reduced to 2 1/2 days from the present six days afforded by Crowley barges. (Weekly ro/ro barge service to San Juan from the Delaware River is to continue.)

In addition to the ConRo vessels themselves, with a combined price tag of $350 million, Crowley is investing more than $120 million in improvements to its Isla Grande terminal in San Juan, including a new 900-foot-long lo/lo pier, three new gantry cranes, and a new gate, plus a $14 million high-tech terminal operating system, combining to provide enhanced efficiency and visibility. Crowley also is shifting its Jacksonville base to the Jacksonville Port Authority’s Talleyrand Marine Terminal.

Ayala said the new equipment and facilities will bring about the speed necessary for Crowley to become more of a “one-stop-shop complete supply chain solution,” including with capability to move fresh poultry and fresh produce.

While Ayala said the ratio of southbound to northbound volumes in the trade continues at 4-to-1, he said actions of the new governor and PROMESA are being eyed to again stimulate manufacturing on the island and thus more northbound cargo.

Whereas he and Hourihan said it is too soon to tell if the Trump administration’s stated desire to reduce U.S. imports from foreign nations – keeping in mind that Puerto Rico is not a foreign country – will spur increased Puerto Rican manufacturing, Ayala said he hopes the trade may once again become what it was 20 to 25 years ago, with northbound volume reaching nearly 50 percent of that heading southbound.

Hourihan interpolated, “Balance is just such an important ingredient in driving your bottom line results. It really makes a big difference.”

TOTE’s Nolan said he still sees opportunities for northbound cargo as “limited,” adding, “Some growth is being experienced by exporting Puerto Rican brand products to cities and areas in the U.S., particularly Florida, where the Puerto Rican community is growing. There are a number of projects experiencing growth in agriculture commodities.”

Nolan pointed to TOTE’s introduction of its Marlin Class LNG-powered containerships, the first of which entered service in November 2015, recent equipment upgrades and the company’s Puerto Rico Terminals joint venture with INTERSHIP, announced in August 2016, plus new gate and terminal operating systems being advanced this year, as all constituting proof of TOTE Maritime Puerto Rico’s commitment.

“For more than 30 years, TOTE Maritime Puerto Rico has been dedicated to serving the people of Puerto Rico,” Nolan said. “That commitment always has and always will remain.”

TOTE Maritime Puerto Rico actually was rebranded from Sea Star Line LLC in September 2015, shortly before its El Faro sank Oct. 1, 2015, in a hurricane when en route from Jacksonville to San Juan, killing all 33 crew members. The line has reached settlements with crew member families, but it has continued to operate under a bit of a cloud, with U.S. Coast Guard Marine Board of Investigation hearings held this month in Jacksonville.

Crowley, TOTE and Trailer Bridge are the three carriers presently in the trade, with now-defunct Horizon Lines Inc. having bowed out of the lane in late 2014.

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For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist. A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists. Abbott honed his skills on several daily newspapers, including [em]The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.[/em] A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.