Gov. Vázquez: Unlike last administration, I’m looking at Port of San Juan agreement closely

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

Will write to Maritime Commission as Justice Dept. investigates Puerto Nuevo Terminals

SAN JUAN — In a statement Wednesday evening, Puerto Rico Gov. Wanda Vázquez said that unlike the previous administration, she was letting the Federal Maritime Commission (FMC) know she would object to the collaborative agreement it allowed between Port of San Juan terminal operators were it to affect commerce or consumers.

The governor pointed to wanting to ensure that the agreement between terminal operators Luis Ayala Colón and Puerto Rico Terminals does not affect competitiveness, reduce transportation services or increase their costs. 

If the resulting Puerto Nuevo Terminals venture is detrimental, the governor assured she would “make the corresponding determinations in the best interests of Puerto Rico.”

Vázquez further noted that although she has already requested a Justice Department investigation, she was also looking into the details of the agreement whose opponents believe could affect competition, resulting in poorer, costlier service for consumers.

“According to what I have been informed, under the public policy of the previous governor, no objection was presented before the FMC about the said merger. It is our duty to establish that [our] position is in contrast to the [previous administration’s] and that, certainly, I will promptly address the concerns and complaints about the jurisdiction of the government of Puerto Rico, as well as the scope of the agreement and its implications on consumers and commerce in Puerto Rico,” Vázquez said.

The FMC allowed the collaborative agreement between the adjacent Port of San Juan terminals to go into effect Aug. 29. However, the commission noted concern about the agreement’s impact on the market, saying it would monitor it closely.

The commission did not reach a consensus on the threshold question of whether the agreement comes within Shipping Act jurisdiction, Commissioner Michael Khouri said in an FMC press release, adding that “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. The Commission will take necessary measures to ensure that the agreement is not implemented in a manner that violates the Shipping Act.”




Federal Maritime Commission concerned about Puerto Rico terminal agreement

(Screen capture of (www.ayacol.com)

Will monitor Puerto Rico Terminals, Luis Ayala Colón joint venture as it may reduce service, increase cost

SAN JUAN — The Federal Maritime Commission (FMC) approved a joint venture between two adjacent terminals at the Port of San Juan. The agreement went into effect Thursday.

Under the terms of the Puerto Nuevo Terminals LLC Cooperative Working Agreement (FMC Agreement No. 201292), marine terminal operating companies Luis Ayala Colon (LAC) and Puerto Rico Terminals (PRT) will form a new company, Puerto Nuevo Terminals (PNT), with its membership units held 50/50 by the two owners.

“This agreement will allow the parties to more efficiently leverage existing assets, as well as planned, private investments in infrastructure and technology to better serve carriers, shippers, truck drivers and other port users. Additionally, it will provide carriers a modern and well-maintained terminal at the Port of San Juan, delivering significant benefits to Puerto Rico’s consumers and businesses,” reads a PNT statement.

However, concerns about the agreement and its impact on the marketplace will lead the FMC to adopt a more vigorous oversight plan than its traditional monitoring program, the commission said in a separate release.

PNT will acquire, through assignments, leases, sub-leases, transfers, and other corporate means, all terminal services agreements, land leases, cranes, yard equipment and other related assets from LAC and PRT.

Thereafter, PNT, through its single management team and board of directors, will negotiate and enter 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 normal operation of a marine container terminal, the FMC explained, adding that LAC and PRT will “withdraw from that business leaving PNT and the Crowley container terminal as the only two container terminal operators” in San Juan.

The commission is concerned that, once the agreement takes effect and PNT begins operation, “the resulting reduction in competition may produce an unreasonable reduction in transportation service or an unreasonable increase” in transportation cost.

The commission acknowledged that “many parties” filed comments that expressed serious concerns about the potential impact on competition as well as on transportation costs and options under this agreement. However, it said the concession maintains 2019 rate levels through 2020, “with the limited exceptions being changes in labor rates, insurance surcharges attributable to natural disasters, or an energy cost adjustment factor based on the actual cost of fuel and/or electricity.”

Despite allowing the agreement, the commission assured it intends to “examine available options to ensure the PNT Agreement does not violate the Shipping Act,” saying it will order an “enhanced monitoring regime” for the agreement with “extensive disclosure of business and marketplace information required.”

The FMC said it may order investigational hearings or a special report order requiring the parties to provide information.

“The Commission 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. The Commission will take necessary measures to ensure that the agreement is not implemented in a manner that violates the Shipping Act,” Commissioner Michael Khouri said in the FMC’s release.

“Consistent with its regulatory responsibilities, the FMC will monitor this joint venture, which will share assets and planned investments that are essential to maintaining reliable and competitive service for domestic and international trade at the Port of San Juan for decades to come. We look forward to continuing to fully cooperate with the FMC, and to working with relevant stakeholders, as the PNT agreement is implemented,” PNT said about the commission’s concerns.




Puerto Rico retail, food distribution groups reject alleged shipping agreement

(Courtesy)

Warn of potential transportation cost increases; lawmaker to introduce measure requiring probe, action by Ports Authority

SAN JUAN – Saying urgent action against the potential merger of two of the companies that control the entry and exit of products to Puerto Rico, the president of the United Retailers Center (CUD by its Spanish acronym), Dr. Jorge Argüelles Morán, and the executive vice president of the Chamber of Food Marketing, Industry & Distribution (MIDA), Manuel Reyes, said the move puts at risk not only businesses but also the island’s population.

The focus of a public hearing chaired by the Rep. José Aponte Hernández on Thursday was the merger of the Luis Ayala Colón company with Puerto Rico Terminals, an affiliate of TOTE Maritime, whereby Puerto Nuevo Terminals would operate a seaport and provide services in the Port of San Juan.

“Right now, we have four shipping companies that serve Puerto Rico individually. With this merger, the TOTE company would end up dominating 70% of the transportation. This would leave in the hands of TOTE and Crowley absolute control of tariffs, container offloading, and schedules to lift merchandise from the dock, as well as who can enter the port of San Juan. Undoubtedly, this commercial union would imply a nefarious monopoly for the country,” CUD’s president said in a joint statement.

For his part, Reyes said it was “frustrating to see how in Puerto Rico we minimize the costs and difficulties that merchants have to bring their merchandise while the whole world is constantly fighting to have a competitive and interconnected maritime transportation system, through which 90% of the world trade in goods is conducted.”

At the hearing, the minority delegation favored House Resolution 1371 to reject the cooperative agreement between maritime companies. Both Aponte and the minority spokesperson, Luis Vega Ramos, questioned a lack of action by the Port Authority.

“That they have not made a formal consultation either to the Governor or to Fortaleza [the governor’s office] nor to Justice is unacceptable. I think it is an abdication of the responsibilities of the Ports Authority,” Vega Ramos said.

Rep. Aponte warned that “if the merger takes place, Puerto Nuevo Terminals will have full control of the international cargo entrance to Puerto Rico.”

The lawmaker said he was introducing a measure to initiate an investigation and that requests immediate Port Authority action before the Federal Maritime Commission, which regulates the oceanborne international transportation of the United States.