Spirit Airlines Expands Nonstop Service to Puerto Rico
SAN JUAN — Spirit Airlines has expanded its service to Puerto Rico’s Luis Muñoz Marín International Airport (SJU) with daily nonstop flights from Boston Logan International Airport (BOS) and Newark Liberty International Airport (EWR), with a second daily flight from EWR beginning Feb. 1.
Spirit organized an event with SJU’s operator, Aerostar Airport Holdings LLC, to celebrate the first flights arriving Thursday from Newark and Boston.
“For Aerostar, it is a priority to be able to provide passengers with the greatest amount and frequency of flights. This way, we can expand the island’s possibilities while further developing visitor traffic,” Aerostar CEO Jorge Hernández said of Spirit, adding that the airline makes up 9 percent of the airport’s traffic.
“We appreciate Spirit Airlines’ commitment with the expansions of service in Puerto Rico with new daily flight routes from Newark and Boston. Each destination will have 64,970 additional seats annually, which represents an economic impact of approximately $25 million for Newark and $28 million for Boston,” said Carla Campos, the executive director of the Puerto Rico Tourism Co. (PRTC).
Camilo Martelo, regional director, Airport Services International at Spirit; and Puerto Rico Economic Development Secretary Manuel Laboy also attended the event.
Martelo assured that the carrier is committed to growing in Puerto Rico.
“In 2001, we started operations on the island and since then we have received great support from our passengers. In the last year we have maintained an average of approximately eight daily flights and, to date, we have transported approximately more than 100 million passengers to and from San Juan.”
For his part, Laboy said the additional routes are part of the bet that the government and the private sector are making in the growth of tourism in Puerto Rico and of the island as an entertainment hub. However, the official is also looking at the Newark and the Boston routes as particularly strategic for the government’s plan to attract investors to the island.
“Precisely when we came out with the study on the impact of Acts 20 and 22, what they are indicating is that the northeastern region of the United States is one of the places where we are receiving a lot of investment,” the secretary said.
Laboy also pointed out that the new flights are to areas where the Puerto Rican population has been growing and argued that part of the importance of the routes is to maintain the connection with those who have moved stateside.
“We need to continue connecting the Puerto Ricans who live here with our Puerto Rican brothers and sisters and the rest of our fellow citizens living in the United States,” Laboy concluded.
This year has been one of expansion for Sprit. For the island, in addition to the Newark and Boston routes, earlier in the year, the airline increased its service from Puerto Rico to Orlando, Florida, to Baltimore and to Washington, D.C. Internationally, the airline signed a memorandum of understanding (MOU) with Airbus for the purchase of 100 new Airbus A320neo Family aircraft, together with the option to purchase up to 50 additional aircraft. The MOU includes a mix of Airbus A319, A320, and A321 models. These aircraft are planned for delivery through 2027.
Three other cities will receive an additional daily flight to SJU in 2020 to complement existing service to the island. Tickets are on sale at Spirit.com for the following:
Orlando International Airport (MCO), effective Feb. 21
Philadelphia International Airport (PHL), effective March 1
Baltimore/Washington International Thurgood Marshall Airport (BWI), effective May 21
“We are thrilled to expand our Puerto Rico service portfolio with new destinations and more nonstops to beautiful San Juan,” John Kirby, vice president of Network Planning at Spirit Airlines, said in a release. “Our new flights from Boston and Newark give our Guests more opportunities to escape to this incredible destination of discovery and leisure.”
Spirit operates more than 600 daily flights to 75 destinations in the U.S., Latin America and the Caribbean.
Frontier Airlines Expands Service in San Juan
Announces routes from San Juan to Baltimore, Boston, Chicago and the Dominican Republic
SAN JUAN – Frontier Airlines announced Wednesday 25 nonstop routes, including its return to Central America with flights to Guatemala City and San Salvador and service to two new destinations in the Dominican Republic: Santiago and Santo Domingo. It is offering fares as low as $39, which are available at FlyFrontier.com.
Among the new routes are four from Puerto Rico’s Luis Muñoz Marin International Airport (SJU) to Baltimore, Boston, Chicago and its first service from SJU to Santo Domingo. The carrier is offering rates starting at $59.
“We are excited to expand our presence in San Juan with four new routes, highlighting our commitment to provide economic air access to Puerto Rico,” said Daniel Shurz, senior vice president of commercial for Frontier. “We are delighted with the response to our convenient service and hope to continue strengthening our relationship with the community.”
New Routes to San Juan Airport (SJU):
The service is seasonal and the frequency and times announced Wednesday are subject to change.
Carla Campos, the executive director of the Puerto Rico Tourism Co., said: “The Government of Puerto Rico appreciates Frontier’s continued commitment to our destination since it first began serving two cities to and from San Juan in June 2017. Two and a half years later, Frontier has become one of the airlines with the largest number of destinations from Puerto Rico. With the addition of Boston, Baltimore, Chicago and Santo Domingo, San Juan will receive 89,540 additional [passenger] seats during the summer of 2020, representing an economic impact resulting from visitor spending of over $28 million.”
Besides Frontier’s focus on low fares, customers can purchase options “a la carte” or in one low-priced bundle called the WORKS, which includes “refundability, a carry-on bag, a checked bag, the best available seat, waived change fees, and priority boarding.”
Nelman Nevárez, director of operations at Aerostar Airport Holdings, the Muñoz Marín Airport’s operator, added in the release that Frontier is “very pleased with the dramatic growth Frontier has experienced through a 35% increase in flights to new destinations and more frequently from San Juan. We know that this translates into better services and experience for our visitors, one of our main priorities. For this reason, we are investing substantially in the development of capital projects to improve and strengthen the facilities and infrastructure of the airport.”
Fares must be purchased by 11:59 p.m. Eastern time on Dec. 22, 2019 for nonstop travel. The following blackout dates apply: March 13-15, 20-22, 27-29, April 3-5, 10-13, May 21-26, June 25 – July 7, 2020. Fares are one-way and do not require roundtrip purchase.
Final travel date is June 10, 2020 for the following new markets: AUS, BOS, BWI, CUN, DEN, DFW, EWR, LAS, MIA, ONT, ORD, RDU, SDQ, SJU TPA and TTN.
Final travel date is Aug. 9, 2020 for the following new markets: GUA, ISP, ORD (ORD-SJU), SAL and STI.
“Fare(s) shown includes all transportation fees, surcharges and taxes, and are subject to change without notice. Seats are limited at these fares and certain flights and/or days of travel may be unavailable,” according to Frontier’s release, which adds that other restrictions may apply.
“Tickets purchased at FlyFrontier.com must be paid for at the time the reservation is made, you may request a full refund up to 24 hours after the time of purchase, if the purchase is made 7 days (168 hours) or more prior to your flight’s departure. After the 24 hour period, to cancel a non-refundable ticket, a fee of up to $119 per passenger will be charged. The value of the cancelled ticket may be applied toward the purchase of a future ticket for 90 days after cancellation,” the release says.
Denver-based Frontier flies to more than 100 cities in the United States, Canada, Dominican Republic and Mexico on 400 daily flights.
HUD allocates $277.9 million for Hurricane Maria recovery in Puerto Rico
Time for U.S. gov’t to disburse ‘already approved’ recovery funds, resident commissioner says
SAN JUAN — The U.S. Department of Housing and Urban Development (HUD) allocated Tuesday more than $2.3 billion to support disaster recovery in 15 states, the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands and Puerto Rico, which was assigned $277.9 million.
According to a press release issued by the office of Puerto Rico Resident Commissioner Jenniffer González Colón, she said that after great efforts to achieve the “allocation of more resources for the reconstruction of Puerto Rico” after Hurricane Maria struck in 2017, HUD “increased the amount allocated to these purposes by $277,853,230,” which is the largest allocation among the affected jurisdictions in 2017 and the highest total, at $20.22 billion, between Hurricane Irma (DR-4336) and Maria (DR-4339).
“Today, we take another important step to ensure those hardest-hit by recent disasters can fully recover,” HUD Secretary Ben Carson is quoted as saying in both HUD and the office of González Colón’s releases announcing the allocation. “The grants awarded today will help these local communities continue the recovery process of rebuilding their homes, restoring their businesses and repairing their critical infrastructure.”
The allocation is supported through HUD’s Community Development Block Grant – Disaster Recovery (CDBG-DR) Program to address “seriously damaged housing, businesses and infrastructure from disasters that occurred since 2017.” HUD says the program requires grantees to develop “thoughtful recovery plans informed by local residents ” and spend the majority of the funds in “most impacted” areas as identified by the department, which added that it will soon issue administrative guidelines.
“Every day we continue to demand the necessary attention so that the federal government assumes its responsibility to provide its citizens with the tools needed to cope with a disaster like the one that happened in Puerto Rico,” González Colón said. “I thank Secretary Carson for increasing the CDBG-DR funds for the island. Now, let’s concentrate on that the government of Puerto Rico can expeditiously complete the documents and plans necessary for HUD to disburse the funds and in the same way that the federal government leaves the bureaucracy aside and expedites the disbursement of these and other funds already approved to move forward with the recovery of the island.”
Public Law 115-254, which was approved Oct. 5, 2018, provides $1.68 billion in CDBG-DR funding for “disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2018.”
On June 6 Public Law 116-20 was approved. It provides $2.43 billion, including $431 million to address additional unmet infrastructure needs for 2017 disasters and $2 billion “related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation in the most impacted and distressed areas resulting from a major disaster that occurred in 2018 or 2019.” HUD is announcing allocations for all but $272,072,000 of the funds appropriated under 116-20. After information on all disasters in calendar year 2019 have been taken into consideration, those remaining funds will be allocated.
Puerto Rico wall spaces reserved for muralists from around the world
Street artists urged to showcase their talent alongside island’s own
SAN JUAN – In partnership with Puerto Rico’s local art community, Discover Puerto Rico, the island’s destination marketing organization (DMO), has launched the “Blank Canvas Initiative,” a call to street artists around the world, inviting them to share their craft on the walls of Puerto Rico’s streets, and form part of the Island’s unique and booming arts scene.
“Puerto Rico boasts exceptional art museums, a flourishing art gallery scene, independent collectors, curators, quality events and highly skilled artisans, offering their work across the Island, and a thriving street art and mural experience unlike any other. For travelers who crave and seek out cultural arts and authentic experiences, Puerto Rico should top their list,” the DMO said about the inspiration for the initiative.
Internationally recognized Puerto Rican artist Alexis Bousquet, also the founder of the Santurce es Ley street art festival, is teaming up with local artists Celso González, Vero Rivera and Bob Snow. Together, they are identifying wall spaces across the island to create “Reserved for” signs, which will serve as “blank canvas invitations” for global street artists around the world, to feature their art alongside Puerto Rico’s own, the Discover Puerto Rico explained.
“As artists, we believe in expression, and I hope that my fellow artists around the world see this opportunity to express themselves while being a force for good,” Bousquet said. “We welcome them to our Island, to take part in our booming art scene and to explore a place that will surely capture their hearts.”
The new artwork from the “Blank Canvas Initiative” will be showcased in time for the holidays, which the DMO always makes sure to remind potential travelers that the island’s are “renowned as the longest in the world.”
The holidays in Puerto Rico “are like no other, and culminate” with the San Sebastián Street Festival, the largest in Puerto Rico where thousands of locals and visitors alike gather to experience parades of cabezudos (big heads), live music, dancing, libations, food, and hundreds of authentic crafts by local artisans,” the organization explained.
The new murals will also be a focal point during upcoming “Santurce es Ley” street art festivals, which celebrate the thriving mural scene and stunning works in the area, approaching its eighth anniversary, where works are being created and unveiled live.
“Some areas of Puerto Rico are a true haven for mural art, yet we’re not a destination typically visited for that,” said Brad Dean, CEO of Discover Puerto Rico. “In addition to Santurce es Ley, our Island offers many options for travelers looking for rich arts and culture to be inspired – from our artisan’s work, widely available throughout the Island, to museums and art galleries open year-round, and other art-focused events like the MECA Art Fair – our Island is a culture lovers’ delight for anyone seeking to immerse themselves in authentic experiences and everything Puerto Rico has to offer.”
Puerto Rico’s “art culture sets it apart from other Caribbean destinations,” the DMO assured in the initiative’s announcing release, adding that the island hosts the annual MECA Art Fair Nov. 21-24 – “the largest” in the Caribbean.
“The unique blend of Taino Indian, African and Spanish heritages makes the art scene across the Island one-of-a-kind with a cultural DNA unlike any other. The Island has more than 70 museums and 50 art galleries that contain works ranging from ancient Indigenous and African, to Baroque and Victorian, and contemporary works of art,” Discover Puerto Rico wrote.
Resident Commissioner introduces Puerto Rico Statehood Admission Act
Legislation for yes-or-no vote on the island has 45 co-sponsors
SAN JUAN — Puerto Rico Resident Commissioner Jenniffer González announced Tuesday that she will be introducing, with 45 co-sponsors, the Puerto Rico Statehood Admission Act to address the island’s territorial status and “achieve full equality for the island.”
González made the announcement at a news conference in Washington, D.C., accompanied by members of Congress Stephanie Murphy (D-Fla), Don Young (R-Alaska), Donna Shalala (D-Fla), José Serrano (D-NY) and Rob Bishop (R-Utah), among others. Former Gov. Luis Fortuño and New Progressive Party (NPP) Rep. José Aponte also participated.
The announcement was streamed via Facebook Live. The island’s residents voted for statehood in plebiscites held in 2012 and 2017, González recalled.
The main difference is that the plebiscite to be held in November 2020 is it will have the “same questions as Alaska and Hawaii.”
“So that’s the main difference of this bill,” González said. “Allowing Puerto Rico to vote on Election Day for a simple question: Statehood Yes or No.”
“The bill delineates a process consistent with the Constitution and laws of the United States, including Public Law 113-76, which funds a nonpartisan voter education process and a plebiscite that would resolve Puerto Rico’s political status,” reads a release issued by the resident commissioner.
Murphy, meanwhile said she cares deeply about Puerto Rico because “my constituents care” about Puerto Rico.
“I believe that every member of Congress should care about Puerto Rico,” Murphy said, “because Puerto Ricans are our fellow citizens and we are part of the same American family and so we should fight for each other.”
Murphy further noted that the bill will authorize the government of Puerto Rico to hold the first federally sponsored status vote in the island’s history, using “funding Congress made available for this purpose back in 2014,” Murphy added.
“The ballot will be simple and fair, asking voters whether they want Puerto Rico to be a state, Yes or No. Those who support statehood can vote yes, and those who prefer another status can vote no. That’s what Alaska did, that’s what Hawaii did and that’s what Puerto Rico should do,” the Florida lawmaker said, adding, that Puerto Ricans should vote for statehood because it is the only way to gain full rights, full equality within “this nation.”
Serrano, meanwhile said that when he is asked if he’s a “statehooder,” he says, “Yes, I guess so, because I am for equality.”
“I want my cousins, I want my mother’s neighbors who are still in the island, to have the same rights and privileges that I had because I grew up in New York,” Serrano said.
According to the bill’s summary, under the U.S. Constitution, Congress has the power to make “all needful Rules and Regulations respecting the territory or other property belonging to the United States.”
Congress granted U.S. citizenship to Puerto Rico residents in 1917, the bill reads. “There are 5.5 million Americans from Puerto Rico living and voting in all 50 states, and 3.2 million U.S. citizens in Puerto Rico,” according to the bill. “Congress enabled Puerto Rico to establish a local constitution for a republican form of government in 1952. Puerto Rico has not attained equal rights and representation in Congress and Electoral College secured under the U.S. Constitution only by statehood.”
More than 235,000 Puerto Ricans have served in the U.S. military since 1917, the bill further notes.
“Congress has recognized Puerto Rico’s ‘right to determine its future political status’. Consistent with votes in most territories that became states, a yes-or-no vote on statehood is allowed. Congress has authorized and appropriated funding for an official plebiscite,” the bill states.
If the statehood option is selected in the 2020 plebiscite, the U.S. Constitution will apply in the incorporated territory, and primary and general elections will be held to select a Senate and House of Representatives delegation to represent Puerto Rico in Congress, and the President would be required, no later than 30 months after the vote, to issue a proclamation admitting the island as a state and beginning the transition process.
Section 5 of the bill specifies that, upon admission, the “state of Puerto Rico shall include all of the land and waters presently under its jurisdiction.”
“Puerto Rico officeholders shall remain in office. All laws of Puerto Rico and the United States consistent with the bill’s provisions as well as contractual and other obligations shall continue,” reads the bill.
Finally, Section 6 states that “in lieu of enabling a federal/state transition of law project at this time, this section provides a framework for categorical repeal of federal and state law incompatible with statehood.”
During the press conference announcing the bill’s introduction, González was also joined by Mayors María “Mayita” Meléndez of Ponce and Rosachely Rivera of Gurabo; state Sen. Miguel Laureano; state Reps. José Enrique “Quiquito” Meléndez, and Eddie Charbonier; as well as “Shadow Senator” and co-chair of the Puerto Rico Statehood Commission, Zoraida Fonalledas.
Oligopoly: When Maritime Shipping Options Shrink
A special investigative report on the Puerto Rico Trade
The Federal Maritime Commission (FMC) is evaluating different alternatives to obtain more information about the agreement between two of the main companies that operate at the Puerto Nuevo, San Juan, cargo pier.
However, the chairman of the federal entity, Michael A. Khouri, warned Gov. Wanda Vázquez Garced that if, as it seems, the transaction is actually a merger of companies or a purchase of assets, the FMC may not have the authority to stop the agreement between Luis Ayala Colón (LAC), the company responsible for loading and unloading international ships at the Puerto Nuevo pier, and Puerto Rico Terminals, a subsidiary of Tote Maritime, the second-largest company that operates the domestic cargo terminals in the Port of San Juan.
The FMC’s concern over service being affected and that freight costs to and from Puerto Rico would be increased was expressed by Khouri in a letter he sent to Vázquez on Oct. 1.
The “Commission will insist on enhanced monitoring with extensive disclosure of business and marketplace information. The Commission is also exploring other avenues to develop additional information about the agreement,” such as an investigation and hearing or a special report, “(known as a Section 15 Order) requiring the parties to provide information to the Commission,” Khouri said in his letter to the governor, which her office, La Fortaleza, made available to the Center for Investigative Journalism (CPI by its Spanish initials).
Khouri was responding to the letter Vázquez Garced wrote to the FMC on Sept. 19, requesting it to intervene to ensure the transaction between Puerto Rico Terminals and LAC does not affect consumers on the island.
The governor told the commission that although former Gov. Ricardo Rosselló did not object to the transaction and refrained from submitting comments about the possible impact on the market and the island’s economy, given the concern expressed by several sectors, she must ensure “this transaction does not adversely impact the people of Puerto Rico.”
If the FMC lost jurisdiction, both the U.S. and Puerto Rico departments of Justice could intervene because the controversy would become about the possible concentration of economic power, which involves problems with the exercise of free enterprise.
“That would be the responsibility of the antitrust division of the Department of Justice of Puerto Rico and federal Justice,” explained the expert in corporate law and former director of the Ports Authority, attorney Carlos Díaz Olivo. The legal fight, the lawyer said, could be initiated by either the Government of Puerto Rico or an affected competitor.
The local Justice Department has had an investigation into the transaction underway since April.
What is the agreement about
The cooperative working agreement to create a new company, Puerto Nuevo Terminals, was presented to the FMC at the beginning of 2019. Ports Authority Director Anthony Maceira said the Puerto Rico government learned about the transaction in March, and on Rosselló González’s orders remained on the sidelines and presented no opposition. The issue was also not considered by the Ports’ board, Maceira said in his deposition to the House Committee on Federal Affairs, which is investigating the possible impacts of the agreement.
TOTE is in turn part of Saltchuk Resources, an umbrella company that includes Foss, Northern Aviation Services, Hyak Supply Chain, Tropical Shipping and NorthStar Energy.
According to OpenSecrets.org’s database of campaign contributions, between 2015 and 2019, Saltchuk donated $15,500 to Resident Commissioner Jenniffer González’s campaign. Among donations González has received through political action committees (PACs), Saltchuk is the main contributor, followed by Crowley Maritime and Seafarers International Union. González said she has no comment on the agreement because it is a matter of “pure state jurisdiction.”
LAC is in the process of negotiating a collective bargaining agreement with its employees.
When PNT starts operating, it will be responsible through its single management team and board for negotiating and entering into all terminal services agreements, crane and other yard equipment purchases or leases, coordinate labor for on-dock stevedoring and all other matters related to the operation of a marine container terminal. At that time, LAC and PRT will “withdraw from that business, leaving the PNT and Crowley…as the only two container terminal operators” in Puerto Rico, as put by the FMC.
The agreement to create PNT entered into force Aug. 29, but as of press time, the company did not yet appear as incorporated in the State Department registry, although the name does appear separately.
Despite its concerns, the FMC allowed the transaction, as its members “did not reach consensus on the threshold question of whether the agreement comes within Shipping Act jurisdiction. Next, a majority could not determine that we have enough information and evidence at this time to go to Federal Court to seek an injunction to prevent this agreement from going into effect. We understand what the parties are trying to achieve, but serious concerns remain about the implementation of the agreement,” Khouri previously explained.
The FMC is composed of four members, all appointed by the president of the United States.
Although its meetings are mostly public and can be accessed online, when passing judgment on the PNT agreement, the commission conducted its vote through an alternate procedure, according to the Federal Register.
“The PNT agreement was done as a ‘notation item,’ [with] each commissioner submitt[ing] a vote sheet with his or her vote. Considering items by notation is a common procedure at the FMC for handling agreements and is done frequently. There was no meeting where the PNT agreement was subject to a vote,” the FMC told Caribbean Business.
Freight costs triple after Hurricane Maria
Control over port activity in Puerto Rico is not only an element that defines the economic situation of the island, but is also a matter of survival.
After Hurricane Maria devastated Puerto Rico, diaspora groups organized to send supplies to the island. One of those groups was the Sunset Park Relief organization in New York. It had begun collecting supplies for those affected on the island after Hurricane Irma two weeks earlier. Two months later, sending supplies was still urgent.
The cargo was valued at more than $1 million, and they were charged $7,800 to transport it from Jacksonville, Fla., to Puerto Rico a month after Hurricane Maria. The Sunset Park Relief Coalition in New York had begun collecting supplies for those affected on the island after Hurricane Irma, and two months later, it was urgent to send these.
“In the hurricane, I paid. I did. They didn’t tell me; I paid $7,800 for a [cargo] container to Puerto Rico…. That’s a lot. That’s $7,800 for a container from Jacksonville to here,” said an indignant Germán Vázquez, president of the Transportation & Attached Branches Union (UTRA by its Spanish acronym), who in coordination with Sunset Park organized the transportation and distribution of aid to hurricane victims.
The amount paid was three and a half times more than the average estimated cost for this type of transportation using U.S.-flagged ships and 10 times more than shipping the merchandise using international vessels.
Among the stories about the aftermath of the recent hurricanes, one that is repeated frequently, is related to the problem of handling merchandise and donations at the piers. The issue has again become part of public discussion with the recent announcement of the concentration of power in the island’s ports—in the hands of practically two companies—Crowley, which operates eight vessels, and Tote Maritime, which runs two ships on a regular basis.
Maritime shipping companies are governed by the U.S. Shipping Act, which establishes the general rules under which the industry operates, and leaves the responsibility of establishing the applicable regulations to the Federal Maritime Commission (FMC).
When the Puerto Rico government sold its shipping companies in the 1990s, about 30 were operating on the island. That number has dropped to only four: Tote Maritime and Crowley, which between them serve 95 percent of the maritime cargo; as well as Trailer Bridge and National Shipping. These four companies transport merchandise, or commercial, industrial and private supplies, which arrive or leave the island on U.S.-flagged vessels and are subject to the Jones Act. While marine support services company Luis Ayala Colón (LAC) attends to cargo that arrives on international ships.
The Puerto Rico Ports Authority is the local government entity called upon to ensure the island’s air and maritime infrastructure serve the needs of the people of Puerto Rico—with the right to develop, own, upgrade, operate and manage them. However, in the case of the piers, it is Ports’ duty to ensure their operation does not hinder or threaten economic development by jeopardizing the entry or exit of commercial and industrial supplies, according to Act 125-1942, as amended.
Under Ports’ purview, there are 37 piers around the island. The Ponce, Mayagüez and Ceiba piers are under the jurisdiction of the Municipality of Ponce, Mayagüez Port Commission and Maritime Transportation Authority, respectively. Only the Puerto Nuevo and Isla Grande piers in San Juan are used for general cargo, or consumer goods and supplies for companies operating in Puerto Rico. Only light cargo comes through Mayagüez and Ponce.
TOTE (formerly Sea Star), rents the Puerto Nuevo pier, which pays the government $35 million for its lease, from December 2012 to 2032.
Through its Puerto Rico Terminals (PRT) subsidiary, TOTE provides cargo services to Trailer Bridge and National Shipping vessels. International ships are served by LAC employees.
The Isla Grande Pier, nearly 79 acres at the former naval base in San Juan, is leased to Crowley for $56 million for the period of September 2016 to September 2046. Crowley has the largest operation on the island.
Asked if both companies are up-to-date with their payments, Ports Authority spokesman José Carmona referred the question to the legal division.
In the interview for this investigation, Eduardo Pagán Reyes, TOTE vice president & general manager, Caribbean Services, Puerto Rico, and president of the Puerto Rico Shipping Association, acknowledged that the island’s maritime cargo industry operates as an oligopoly, or a system in which the number of sellers is very small and, thus, control and corner sales of certain products as if they were monopolies.
“Many people make the comment that this is a monopoly. No, this is not a monopoly; it is an oligopoly. A monopoly would be a single company, when you have two, three, four, maybe you can call it an oligopoly. What people don’t know is that here there are more than 20 [U.S.] American companies that could come to Puerto Rico and establish operations, but the investment they would have to make is in the $1.5 billion range. This is not selling cellphones in a corner. These are not just ships—we are talking about ships, equipment, containers, cranes—the array of expenses is significant,” he added.
Eighty percent of the merchandise that leaves or arrives in Puerto Rico comes from the Port of Jacksonville. The other ports with service to the island, although on a smaller scale, are Pennsauken, N.J.; Houston and Philadelphia.
In 1996, however, Puerto Rico also received merchandise from the ports of Elizabeth, N.J.; New Orleans, Miami, South Carolina, New York and Baltimore.
The laws of Puerto Rico establish that the island’s ports and piers are in the public domain and cannot be sold to private entities. Until 1994, the ports were operated by the Puerto Rico Maritime Cargo Transportation Authority. That year, the government created a public corporation, Navieras de Puerto Rico, which assumed that responsibility until 2001, when it filed for bankruptcy, after which, Sea Star Line Agency (SSA) acquired the contract Navieras had with the Ports Authority in December 2012.
The contract was signed by the vice president & general manager of Sea Star, Eduardo Pagán Reyes. The agreement granted that company the use of about 59 acres in the Puerto Nuevo area of the San Juan Port, for a $35.4 million, 10-year lease with the option to extend it twice for an additional five years, or a total of 20 years.
In 2006, Sea Star established a joint agreement with the other shipping companies that use the Puerto Nuevo pier so LAC, National Shipping, Island Stevedoring, Horizon Lines and Trailer Bridge could dock and use SSA’s facilities and cranes.
The agreement with SSA was amended in 2016 to stipulate the company had become TOTE Shipholdings, which thereafter assumed the contract to operate the Puerto Nuevo pier.
For its Puerto Rico business, TOTE has two ships and six cranes for loading and unloading cargo from its ships and Trailer Bridge and National Shipping’s barges. Port operations for TOTE, Trailer Bridge and National vessels are offered through the PRT, which is also run by Pagán Reyes.
For its local operations, Crowley has four ships and four barges, cargo containers, three cranes, and trucks for land transport through its subsidiary Crowley Logistics.
In 2013, federal Judge Daniel R. Domínguez sentenced the former president of Sea Star, Frank Peake, and five other people to serve prison sentences, ranging from seven months to five years, for their participation in a conspiracy to fix rates and surcharges for freight shipped from the Jacksonville Port to Puerto Rico between mid-2005 and April 2008.
Thomas Farmer, the former vice president of price & yield management of Crowley, was indicted in March 2013 for his role in the conspiracy but a jury acquitted him in May 2015.
The executives and three companies (Sea Star, Crowley and Horizon Lines) involved in the price-fixing scheme have paid more than $46 million in fines for their participation in that conspiracy, which included setting freight service rates, rigging bids submitted to Puerto Rico freight services customers and other practices in violation of the antitrust laws of the maritime shipping industry.
Finding information about these companies’ operations is an ordeal because they are mainly governed by the Shipping Act, which was amended in 1984 to deregulate the industry.
As recently as Oct. 1, a Surface Transportation Board (STB) order entered into force that requires shipping companies to make their rates accessible to the public. The website to see TOTE’s rates is www.totemaritime.com/tariffs/. There, visitors can see the rates for several customers after signing in with a provided username and password. Finding out the rate for a specific shipment is very complicated.
“The numbers [rates] we have are from a survey [of importers and exporters]. The official data are not public,” said Manuel Reyes, vice president of MIDA.
Through its spokesperson in Puerto Rico, Nelly Cruz, TOTE told Caribbean Business and CPI that its cargo rates “vary depending on several factors, including volume and the type of product shipped, the season, equipment required and many other specifications. Almost all freight shipped by TOTE between Jacksonville and San Juan is defined within confidential shipping agreements, or contractual rates.”
In Crowley’s case, the company provides basic rates on its website, but reaches private agreements with most of its regular clients, an STB spokesperson confirmed.
“There should at least be statistics but, unfortunately, there are none. Puerto Rico lives with its back to the island’s reality. The Department of Economic Development cannot go to an investor and tell them how much the freight costs are to and from Puerto Rico,” Reyes said.
When asked about the rates that inform potential investors, who want to come to the island and establish a manufacturing plant, for example, Economic Development Secretary Manuel Laboy indicated he understood the rates were published on the respective shipping companies’ websites.
“For [Hurricane Maria], in theory, the importers had a contract with their transportation company, with a price that was already established, but what would happen is they would be told: ‘I have no capacity, so I cannot bring it to you,’” Reyes explained about businesses which, despite having contracts with a shipper, were told after the hurricanes that there was no room in their vessels, but the merchandise could be brought in rented ships, which raised the previously agreed pricing.
Asked about businesspeople who could be interviewed and provide evidence about this practice, Reyes replied: “To the extent that none of this is regulated, and is so monopolized, those affected are afraid to speak because they depend on those companies to bring in their goods.
“An importer who has no control or bargaining power because he is fighting against an oligopoly, if he faces them, the danger of an adverse reaction is too great. They say it in private, but they won’t say it publicly,” MIDA’s Reyes added.
In an interview with Caribbean Business, TOTE’s Pagán Reyes said the rates and reports on the shipper’s operations are periodically submitted to the Ports Authority and Treasury Department.
When asking about the rates, the Ports’ spokesperson said that specific information was not held by the agency.
Ahead of a new emergency
In the state of Florida, the Puerto Rican Professional Association (Profesa) recently established an initiative—with the support of Jacksonville Port and shipping companies—to educate community groups about the procedure for sending donations to Puerto Rico in case of an emergency.
Rafael González, president of Profesa, admitted that after Hurricane Maria, many of the donations never left the port, although he could not give specific numbers. He explained that some donations had to be returned due to lack of funds to pay for shipping to the island and others because they were not documented as required by federal law.
“When Maria [hit], the diaspora here [stateside] overwhelmingly gave donations and then did not know what to do with them,” said Dr. Thomas Agrait, Profesa’s vice president of Governmental Affairs.
Agrait said that after Hurricane Maria, TOTE and Crowley would charge $5,000 to $6,000 for a shipment of unrefrigerated donations to Puerto Rico.
González said they met with the administrators of the Port of Jacksonville to define protocols to expedite these shipments in emergencies. He also said that when he met a week ago with Puerto Rico Ports Director Maceira, he said any related negotiation should be done with the companies that operate the Tote and Crowley piers.
Agrait said the issue of rates for that cargo was discussed at that first meeting. “We know the rates are a crucial issue and we prefer to leave them aside to be more effective, but it is not something we should ignore facing the future,” he said.
Puerto Rico Ports Authority Director Anthony Maceira admitted there is a need for the government to take a more active role in controlling operations, which was discussed with the private sector just after Hurricane Maria.
“But the reality for decades in Puerto Rico has been that [the ports] is operated by private entities,” he said.
Likewise, he stressed that even when wanting to change public policy so the government retakes control of operations at the piers—as it did before Navieras was sold—the island’s financial reality prevents making an efficient operation viable.
When questioned about Ports’ debt, Maceira did not want to go into detail about current figures, alleging the authority is amid negotiations with its creditors. However, in a statement, the Fiscal Agency & Financial Advisory Authority wrote that the pre-agreement with bondholders includes those issued through the Infrastructure Financing Authority (AFI by its Spanish acronym) for the benefit of the Ports Authority, and an interagency Ports loan with AFI for $190.6 million.
The Ports Authority debt, including the AFI loan, totals $455 million. The agreement for the debt has been extended several times, the agency said, as it “continues to work with internal approvals, that of the Fiscal Oversight Board and the process of gathering information necessary for closing the transaction.”
“We will always be watchful that the business that is done complies with the law and, if at any time something is detected that we understand is outside the [legal] framework, we would make the relevant referrals because we do not have jurisdiction to enforce compliance. And I have to be very careful with what I say in that regard because what I say or don’t say can have an effect on the market and I have to be responsible in that regard,” Maceira said.
Questioned about the PNT joint venture during a public hearing held by the island’s House of Representatives, Maceira admitted he did not raise concerns with the FMC about the transaction despite it threatening to increase the oligopoly in that industry, nor did he bring up the transaction with Ports’ government board for evaluation.
Part of the Ports agreement includes using the revenue generated by leasing the Puerto Nuevo area property that Puerto Rico Terminals uses for its operations as a partial source of repayment for bonds issued in the future. In return, the creditors will contribute new capital for capital improvements, in addition to using 10 percent of the annual income of said properties for capital improvements through the 25 years considered in the debt-restructuring agreement. The negotiation also requires a valuation of this income, which is still underway.
In a statement in August, one of the FMC commissioners, Daniel B. Maffei, said the PNT “agreement certainly reduces competition, so the question is whether there is a likelihood that this reduction in competition would produce either an unreasonable reduction in transportation service or an unreasonable increase in transportation cost, or substantially lessen competition in the purchase of certain services.”
Besides the FMC chairman, Maffei was the only commissioner who issued a public statement opposing the agreement.
Crowley and TOTE operations include rentals of cargo containers to transport on their vessels from Puerto Rico to the ports of Jacksonville, Houston and Philadelphia, and back; the unloading of freight and its storage, if necessary; and cargo delivery to customers.
Some of these companies, such as Trailer Bridge and Crowley, provide door-to-port or door-to-door service, which is taking merchandise from the customer’s door to the door of the recipient in Puerto Rico or from the stateside customer’s door to the pier in San Juan.
Commissioner Maffei voted against the agreement, arguing the potential effects were reason enough to intervene. He pointed to the fact that the parties in the new agreement are both carriers and pier operators, saying the “consolidation of purchasing power” in the Port of San Juan could put newcomers “at a substantial disadvantage and thus trigger a violation of the new prong of § 41307(b)(1) created by the [Frank] LoBiondo [Coast Guard Authorization] Act,” which covers antitrust restrictions on cooperation between ocean carriers and marine terminals on harbor services.
“Given that a major party to the agreement is itself a carrier, it may have incentives to keep other carriers out and would therefore not limit price increases based on this tension. Furthermore, if a carrier found the prices too high in Puerto Rico as a result of this agreement and made the business decision to stop service, it may not have a substantial negative impact on that carrier because Puerto Rico is a small portion of overall trade for any major carrier, but it could conceivably lead to an unreasonable reduction in service to the people of Puerto Rico,” he added.
The governor said in her letter to Khouri that she instructed the island’s Justice Department, “specifically the Antitrust Division, to continue its ongoing investigation” to “ascertain any violations of Puerto Rico’s antitrust statute.”
Khouri responded that the FMC was working on a statement to present to the Justice Department, but reminded her that the “Commission is prohibited from sharing some information by statute and for several other reasons I know you will understand related to the operation of a deliberative body. I assure you, however, that the Commission will be as responsive as possible to your interests and agency’s request.”
The Electoral College will never make everyone happy
…each new state would be guaranteed 3 electoral votes
With the presidential election looming, worried observers of politics have already asked whether the Electoral College will again deliver a victory to the candidate with less than a majority of the popular vote.
Critics like Vox’s Ezra Klein contend that this phenomenon is not only undemocratic, but also politically biased, because Republicans were the beneficiaries of both of these Electoral College hiccups. “American politics is edging into an era of crisis,” Klein writes.
But presidential elections – and the occasional hiccups like 2000 and 2016 – represent nothing less than the smooth working of the constitutional system’s allocation of power among the states.
I’ve studied elections and governmental systems around the world. No matter how fairly one tries to allocate political power, some state or someone will have a special edge from time to time. It’s unavoidable. But it’s not undemocratic.
The Electoral College therefore rewards very small states.
That’s because all states, regardless of their populations, are guaranteed equal representation in the Senate with two seats each, as well as at least one seat in the House of Representatives.
Seats in the House are allocated through a formula called the “method of equal proportions.” (If you are a math nerd, you will love this formula.)
The formula occasionally generates some peculiar results. For example, in 2010, Rhode Island (pop. 1,055,247) received two House seats. Montana (pop. 994,416) got only one seat, even though its population was nearly double Wyoming’s (568,300) which also got one seat.
This is typical of any mathematical formula. The results are logical, but not necessarily appealing. In another year, with different populations, Montana might get that second seat and another state would cry “foul.”
The Electoral College adds the Senate’s equal, but unfair, allocation of seats to the peculiar, but logical, allocation of House seats.
The result is that voters in small blue states like Rhode Island and small red states like Wyoming have much more voting power per person in the House, Senate and Electoral College than their counterparts in, say, Texas, California or Montana.
Tweaking the formula
To remedy some of the perceived unfairness, advocates for reformhave called for a change to a national popular vote system for presidential elections or, perhaps, a proportional allocation of Electoral College votes within each state.
Such reforms might generate seemingly fairer presidential election results in the short run. But there is no simple, consistent way to allocate legislative seats among states of radically different sizes.
If the U.S. were to increase the size of the House, admit Puerto Rico or Washington, D.C. to the union as states, or perhaps split California into three states, the Electoral College debate would be rekindled, because each new state would be guaranteed three electoral votes.
Regardless of the number of states or the formula used to allocate legislative seats and Electoral College votes, some state will complain that it was shortchanged. In my view, this is the cost of operating as a nation that is composed of states, provinces or other smaller groups.
Other federal nations endure the same disparity of representation that favors smaller states.
Canada has a similar disparity of voting power between the larger provinces of Ontario and Quebec – which each has more than 100,000 people per member of Parliament – and smaller ones such as Nunavut or the Yukon, with barely 35,000 people per member of Parliament. Albertans have the least voting power per capita, with nearly 120,000 residents per member of Parliament.
In Spain, too, power is unevenly allocated. With nearly 180,000 people per representative in the Congress, people in Madridand Barcelona have much less voting power per capita than the denizens of less-populated provinces such as Soria.
This demonstrates the complexity of organizing a democracy that ensures equality of individual voting power, but also allows smaller states or provinces to have a meaningful voice in the legislative process and the election of presidents.
In my view – and as federal nations around the world demonstrate – it is impossible to achieve both with perfection.
As the U.S. heads into the 2020 elections, I’d suggest that the public be wary of critics who call for “reforms” to the American electoral process but fail to put our process in a global perspective. They are often calling for a result that they prefer – not necessarily a better process.
Upcoming FDA guidelines to control e-cigarette use
Nextgen Pharma: Our Cannabis vaping products are safe
SAN JUAN — Given the recent alerts issued by the Food and Drug Administration (FDA) and the Centers for Disease Control (CDC) on the use of e-cigarettes and their possible link to lung disease, one of the main pharmaceutical companies involved in the cultivation and manufacture of medical cannabis in Puerto Rico, Nextgen Pharma, reiterated that its products—including cannabis oil, which is inhaled via a vaporizer—are safe and free of hazardous chemicals.
In its most recent report, the CDC said that among patients that have reported a history of using e-cigarette products containing cannabinoids such as tetrahydrocannabinol (THC), the main active ingredient of cannabis, some have reported the use of e-cigarette products containing only nicotine, and others have reported using both.
“No consistent e-cigarette product, substance, or additive has been identified in all cases, nor has any one product or substance been conclusively linked to pulmonary disease in patients,” the CDC said.
“The extraction process we use is known as ‘CO2 extraction,’ through which—under a pressurized and controlled environment—positive substances are extracted from the plant. As part of this process, cannabinoids are extracted in the form of oil and their content is purified, eliminating any impurity and dangerous agent. They are also free of vitamin E acetate, a chemical used in the illegal cannabis market and that has been identified by the FDA as the potential link responsible for the lung diseases reported in other jurisdictions,” said Julián Londoño, founding partner of the local company.
Londoño also pointed out that the cartridges that are used for the packaging and use of these products are original, high-quality and free of hazardous chemicals. Also, oil extractions come from cannabis plants grown under the “best growing conditions, organically, without the use of chemicals or pesticides,” in accordance with the local regulatory framework.
“Nextgen Pharma is committed to the development of safe and quality products that promote the health and well-being of our patients. Our product development processes are guided by the highest standards of quality and reliability promoted by the pharmaceutical industry and the medical cannabis industry, and are regulated by the Puerto Rico Department of Health,” he added.
The Nextgen Pharma executive took the opportunity to urge medical cannabis patients to only consume products made legally in Puerto Rico.
On Sept. 12, 2018, the FDA published a release outlining the latest efforts to control the multibillion-dollar vaping industry’s marketing and sale of e-cigarettes to minors, adding that sanctions could include a possible ban on flavored liquids that are used in vaporizers, known as e-liquids. That ban came closer to happening Wednesday.
Health and Human Services Secretary Alex Azar announced that the FDA will request e-cigarette flavors, except tobacco, to be eliminated.
The reason is that the use of e-cigarettes and the practice of vaping among minors have reached epidemic levels. However, attention has recently been focused on Juul-branded vapes, which have been on the market for less than three years and are raising concern over their safety and potential to lead minors to use regular cigarettes or other illegal drugs.
Although no single device, ingredient or additive has been identified, many cases involve marijuana vaping, according to the Associated Press, which added that the restrictions would only apply to nicotine vaping products.
Juul said it would “fully comply with the final FDA policy when effective,” the AP reports.
Legislature to investigate
Faced with the dramatic increase in the number of people diagnosed with severe respiratory diseases from using vaping devices stateside, Puerto Rico Rep. Maricarmen Mas Rodríguez introduced a resolution to investigate the use of e-cigarettes in Puerto Rico.
“In the United States, about 450 possible cases of severe respiratory diseases related to vaping have already been identified, not to mention the six deaths attributed directly to this practice. That is why it is worthwhile to investigate what is happening with this in Puerto Rico to develop an early intervention plan and to regulate this modality even more,” Mas said in a statement.
She noted that health authorities in New York are focusing on vitamin E acetate, which has been used recently as a thickener in vaping cartridges.
“We have doubts, for example, about chemical substances in vaping devices such as formaldehyde, which some studies have indicated can cause cancer. There are also other chemicals, such as propylene glycol and vegetable glycerin, which we still do not know its real long-term effect. There are many questions and that is why we want to do this investigation, the people have to know what they are exposed to with these devices,” the lawmaker said.
The CDC warns that aerosols produced by e-cigarettes “can contain harmful or potentially harmful substances, including heavy metals such as lead, volatile organic compounds, ultrafine particles, cancer-causing chemicals, or other agents such as chemicals used for cleaning the device.”
—CyberNews contributed to this report.
FCC chair proposes $950 million for broadband in Puerto Rico, USVI
Pai circulates draft order to harden networks, deploy gigabit fiber and 5G
SAN JUAN — Federal Communications Commission Chairman Ajit Pai circulated a draft order to agency commissioners that would provide approximately $950 million in funding to “storm-harden, improve, and expand broadband networks” in Puerto Rico and the U.S. Virgin Islands, which were devastated by hurricanes Irma and Maria in 2017.
This is the second round of funding under the FCC’s Uniendo a Puerto Rico Fund and Connect USVI Fund and follows $130 million in extra funding the commission provided to restore hurricane-damaged networks in Puerto Rico and the USVI since 2017.
The draft order will be considered at FCC’s monthly meeting Sept. 26, according to a release that included the following statement by Pai:
“The FCC took numerous steps to help restore communications in Puerto Rico and the U.S. Virgin Islands following the devastating one-two punches delivered by Hurricanes Irma and Maria. But even as we were responding to immediate needs, we knew that we needed to have a long-term strategy to expand broadband availability in Puerto Rico and the U.S. Virgin Islands, improve broadband networks on these islands, and help protect these networks against future storms. That’s why we created the Uniendo a Puerto Rico Fund and the Connect USVI Fund.
“This draft Order would deliver on that strategy by allocating about $950 million in federal universal service support for Stage 2 of the Funds. Significant work has been done to restore connectivity. Now, this new funding would support deployment of the networks of tomorrow, including gigabit fiber and 5G, in Puerto Rico and the U.S. Virgin Islands. It would also help ensure that Americans living there will be able to fully participate in the digital economy and remain connected when they need it most. Our goal is simple: to provide everyone in Puerto Rico and the U.S. Virgin Islands with digital opportunity.”
Puerto Rico Ports chief, shippers assure supply availability as Dorian skims Florida
Retailers insist on repeal of inventory tax amid hurricane season
SAN JUAN – The executive director of the Puerto Rico Ports Authority (APPR), Anthony Maceira, met Tuesday with the Puerto Rico Shippers Association and its president, Eduardo Pagán, and assured the availability of food and merchandise on the island during the peak of the hurricane season.
In addition, they discussed concerted actions that shipping companies have taken to ensure the arrival of supplies to the island. Gov. Wanda Vázquez welcomed the meeting, a Ports release says, “noting that her administration is fully collaborating and made itself available to help the shipping companies ensure the arrival of merchandise to Puerto Rico” during the hurricane season.
As Hurricane Dorian’s path took it up along the east coast of Florida, the U.S. Coast Guard ordered the closure Monday of the Port of Jacksonville, from where 90% of the merchandise is shipped to the island.
“Anticipating this situation the shipping companies [ordered] the departure of vessels in advance last week from Florida and New Jersey with merchandise to Puerto Rico. In the past few days, we have been receiving such vessels, and the closure of the Port of Jacksonville is estimated to last only a couple of days, which represents a minimum delay. In addition, there is merchandise on the island for between 20 to 30 days, which rules out that there will be a shortage of food and other products,” Maceira said.
This week (Aug. 31 to Sept. 6), the island will be receiving about 40 different cargo vessels, the Ports official added.
For his part, Pagán clarified that the cargo ships that left the island for Jacksonville will “only experience a minimum delay” while the stateside port is reopened, which is expected Thursday.
“It should be noted that after the experience with [Hurricane] Maria two years ago, many food distributors have increased their inventory of supplies on the island between July and November. In addition, we have agreements with other ports, both inside and outside the United States, to use them if necessary to transport merchandise to Puerto Rico,” Pagán said.
Meanwhile, the president of the Puerto Rico Retail Trade Association (ACDET by it Spanish initials), Iván Báez, again urged the government and the legislature to end the inventory tax, “because of the food safety risk it represents for Puerto Rico,” as the closure of the Port of Jacksonville was announced.
“The elimination of the inventory tax is urgent. The crisis we suffered after the scourge of Hurricane Maria exposed the precariousness of our supplies and our vulnerability. We reiterate that the current tax prevents having the necessary inventories maintained to meet the needs of our people,” Báez said in a statement.
He stressed that a large part of the food, basic necessities and supplies consumed on the island are shipped from the Jacksonville port and the island’s stores are on high alert.
“Although the Puerto Rico Ports Authority assures that supplies would [only] be delayed 48 hours to reach our shores, the truth is that in an emergency, there are no guarantees and we have been lucky that the recent threats have not become complex emergencies. We depend on products from other latitudes and if the port that supplies us with more than 80 percent of the imports on the island is paralyzed, we are completely helpless,” he stressed.
Báez also pointed out that during the last legislative session, ACDET, along with other private sector leaders, mayors, the executive branch officials and lawmakers agreed to identify alternatives to the tax. However, he said, despite the insistence of ACDET and the coalition of associations that have joined the private sector’s appeal, no results have been achieved.