Slow pace of shipments to Puerto Rico persists months after hurricanes
SAN JUAN – Two months after Hurricane María wreaked havoc in Puerto Rico, the flow of goods available in the island’s supermarkets has yet to reach the inventory levels enjoyed before the historic storm hit, Chamber of Food Marketing, Industry & Distribution (MIDA by its Spanish acronym) representatives said Tuesday.
According to the organization’s count, using a sample of 10 companies, 2,032 shipping containers with food are delayed. MIDA Vice President Manuel Reyes explained that part of problem causing delays is attributable to the cargo capacity of the ships that arrive in Puerto Rico’s ports.
Adding to the low-inventory issue, Reyes argued, is the municipal tax these products pay before being sold, which prevented supermarkets from having enough food stored before September’s hurricanes.
The rate for this inventory tax varies by municipality, as well which companies are granted an exemption. The economist José Caraballo believes the tax was “poorly designed” because businesses pay municipalities for merchandise that has not been shipped. In addition, he expressed concern that, in practice, municipalities “arbitrarily” grant exemptions from this tax to mega-stores, giving them an advantage over local companies.
MIDA executives said the tax measure “penalizes companies for having inventory” and that if there had been a greater amount of merchandise before the storm-related disruptions, “we would depend less on the agility of transportation systems.”
Among the alternatives MIDA proposes to alleviate the inventory-tax issue is raising either the sales and use tax (IVU by its Spanish acronym) or the municipal license fee, known as “patente.”
In a press conference Tuesday, Reyes explained that cargo capacity to the island needs to be increased because ships are not only arriving with merchandise, but also humanitarian aid.
Distribution chain jammed
Moreover, the president of Econo supermarkets, Eduardo Marxuach, said the distribution chain was affected before Hurricane María due to problems with stateside ports such as temporary closures after hurricanes Harvey and Irma.
“The supply chain had been affected since August. Hurricane Harvey in Houston [Texas] required closing the port temporarily,” Marxuach said. “That meant that many of the products that came to Puerto Rico moved through the Port of Jacksonville. That has created a jam.”
In addition, Hurricane Irma forced the temporary closure of Miami’s maritime and air ports, so the flow of products from Florida was paralyzed for a week. Marxuach said there is also the possibility that low winter temperatures result in some stateside ports halting operations as well.
Meanwhile, the president of Professional Market Research (PMR), Francisco Cabrero, found that the decreased flow of goods has resulted in 37% fewer products available on store shelves. Before María, this figure averaged about 15%, 7 percentage points higher than the stateside average. This indicates $175 million in losses, according to the calculations of a study his firm prepared for MIDA.
Despite occurring slower than preferred, Castro believes half of the supermarkets that have yet to open, 6% of the total before María, will resume operations shortly. Also, several MIDA members emphasized that the flow of merchandise will not produce an emergency.