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Poor economics, maritime logistics

Sunday, April 15, 2018

In Baracoa, on the eastern tip of Cuba, is the ‘Cruz de la Parra’—a cross made from parts of a Crucifix planted by Christopher Columbus. The relic is now swathed in silver to protect it from visitors who break off bits as souvenirs. Celebrated for having failed to discover new trade routes to China that could circumvent the treachery of the Old Silk Roads, Columbus inadvertently fashioned a new convoy system—the ‘Spanish Silver Fleet’ linking Andalucía to ‘El Dorado’. These silver galleons transported lumber, gold, gems, pearls, spices, feathers for fashion, tobacco, and other exotic commodities to and from ports in Portobello, Havana, Cartagena, Veracruz, and Seville.

Xi Jinping’s One Belt One Road will now connect the Old Silk Roads to El Callao, Manta, and Taltal. Manufactured goods from China Inc, once displaced the Atlantic as the Mare Nostrum of international trade with Pacific Coast ports in Seattle, Tacoma, Oakland, and Long Beach stifling East Coast ports like New York (NY), New Jersey (NJ), Baltimore, Savanah, and Charleston.

An expanded Panama Canal has reversed this imbalance. Ships now cross the isthmus and head for Norfolk and Miami. The Bayonne Bridge was raised to 215 feet to allow the Port of New York and New Jersey to welcome larger, more efficient vessels. By 2020, ten per cent of container traffic will shift to the East Coast Ports serving huge consumer hubs like Chicago, Detroit, Columbus, and Memphis. The Port Authority of NY & NJ makes New York blossom into one of the most opulent cities in the world. Businesses clamour to locate there, hoping to reap the windfall of profits that being close to this port can bring.

In doing so, these enterprises support 400,000 jobs amounting to nearly $25.7 billion in annual wages. Many of these jobs are apportioned to a variety of skilled trades. Meanwhile the port generates close to $8.5 billion in federal, state and local tax revenues.

San Antonio port in Chile has allocated $40M for dredging and a further $400M for storage. The Posorja Port in Ecuador invested $530M to accommodate postpanamax vessels. Buenaventura Port in Colombia is dredging its canal, improving wharves, installing postpanamax gantry cranes and RDT yard cranes, all to the tune of $80M. Cartagena invested $800M to make its port neopanamax ready.

Caucedo in the Dominican Republic is investing $30M to take advantage of the Las Américas International Airport and the Caucedo Logistics Park and to increase its share of inter-American container cargo transport, redirecting cargo from Argentina, Uruguay, and southern Brazil.

Freeport Container Port (FCP) in the Bahamas has dredged its port. Upon completion of the $250M Phase V Development, FCP will have a total quay length of 1,536 metres, a yard area of 63 hectares, a depth alongside of 15.5 metres, nine post-Panamax cranes and one super-post-Panamax quay crane. The Jamaican, Kingston Freeport Terminal can now accommodate extra-large container ships with the completion of upgrades on section one of the Kingston Container Terminal.

Stage two of the upgrade on the south terminal is to be completed by this year at a cost of $150M. These upgrades along with new gantry cranes and cargo handling equipment will position Jamaica to benefit from increased transshipment business.

The Fukushima nuclear disaster has accelerated changes in Japan’s energy matrix. Production of gas from shale formations in the Gulf of Mexico has seen growth in top-off transfers of Liquid Petroleum Gas (LPG) from larger vessels outside the Canal to those that can pass through the waterway transporting LPG to Japan.

Today, top-off operations are reduced as LPG transport ships with a capacity in excess of 6M cubic feet of gas and VLGC-type tanker vessels traverse the new ‘Green Route’ taking the least polluting fossil fuel through the Canal.

ExxonMobil, Hess, China National Offshore Oil Corporation-Nexen operating offshore Guyana at the Pacora-1 well discovered an oil-bearing sandstone reservoir. Pacora will boost Guyana’s production to more than 500,000 b/d of oil once it and Payara come online. Pacora-1, Payara and Liza will be developed using a floating, production, storage, and offloading vessel. Undoubtedly, since the Spanish West Indies, the unravelling of port economics and global supply chains remains a rich passage to competitiveness and prosperity.

Dr Fazal Ali


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