Friday, February 3, 2023

Secretary-designate Cidre: This is No Time to Raise Terminal Fees

By on February 24, 2021

An aerial view of San Juan Bay’s cruiseship and cargo ports three days after Hurricane María, Sept. 24, 2017. (ESM/CB)

Ports Director Says He Will Ask Federal Maritime Commission to Intervene

SAN JUAN — Economic Development Secretary-designate Manuel Cidre said Wednesday that he does not endorse the proposed distributor fee increase, or freight loading and unloading charges per cargo unit, slated to come in effect March 1, which add $25 per container to address terminal security.

“The public policy of this administration is to foster the competitiveness of our island, reducing the cost of doing business, positioning Puerto Rico as a globally competitive jurisdiction. This is not the time to raise tariffs when we are going through a pandemic and the economy is hardly showing signs of recovery,” Cidre said in a statement. “Likewise, this is not the time for increases in loading and unloading fees, or for cargo transportation tariffs, both would have adverse consequences for economic development.”

Regarding the fee raise by terminal operator Luis Ayala Colón (LAC), the executive director of the Puerto Rico Ports Authority (APPR), Joel A. Pizá Batiz, said the “Federal Maritime Commission is the federal entity with exclusive jurisdiction in these matters,” which he “will be contacting…to evaluate this proposed rate increase in light of the 1984 Shipping Act” and “evaluate whether the fluctuations in said costs are reasonable.”

A 2020 study published in Marine Policy, which looked at 20 key elements affecting port competitiveness, found that among them, the “main factor is the costs at the terminals, precisely the costs that this measure affects,” reads the Economic Development and Commerce Department (DDEC by its Spanish initials) media release.

“At a time when we are looking into options to make up for the inventory tax, which we know how it affected costs after Hurricane Maria, we cannot continue to increase costs at port terminals,” Cidre added. “We need to project ourselves as a globally competitive hub, and by increasing costs we will not be able to compete with other destinations that do not have the same capacity or strategic location as Puerto Rico.”

According to an Organization for Economic Cooperation and Development (OECD) report that looked at the competitiveness of ports globally, Puerto Rico’s port system has been characterized by 40 years of inactivity. 

“Port costs are intimately tied to their competitive position,” Cidre said. “The addition of new costs will continue eroding our competitiveness, particularly during these times.”

Ports Director Píza said he has been speaking with industry executives about the increase over the past few weeks

“The Port Authority has a real commitment to ensuring competitiveness and commercial diversity at our docks,” he added. “That is why, in June 2020, the Ports Authority recovered three docks that are now public (M, N and O) and 15 acres of land in the Puerto Nuevo port area. We reiterate that every link in the supply chain is important. However, we call for consumer protection to be our priority.”

According to an LAC “notice to the trade” document obtained by Caribbean Business, a new terminal tariff will go into effect at its San Juan terminal facility on March 1. 

These new rates include a $25 per full unit terminal maintenance fee; a $17.50 per full unit terminal security fee; a $45 per gate move “gate charge not covered by stevedoring/terminal contract”; a $35 per unit mount and discharge picks; $90 per inspection of containers; and $160 for “sold unit handling charges.” 

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