Wednesday, March 25, 2020
By Neil Hartnell
Tribune Business Editor
Nassau’s main commercial shipping port yesterday pledged that slashing all tariff rates by 50 percent for the next month will ease the COVID-19 pain for “the masses rather than the select few”.
Dion Bethell, Arawak Port Development Company’s (APD) president and chief financial officer, told Tribune Business that the measures unveiled yesterday were designed to “flow through” the entire Bahamian supply chain with the ultimate effect of reducing food prices for hard-pressed consumers.
Apart from cutting all rates and fees for 30 days with effect from this Monday gone, APD also announced that April’s rent/lease payments will be waived for all tenants at its Gladstone Road break-bulk Freight Terminal.
And it is increasing by 140 percent the time that full container load (FCL) containers and vehicles can remain on APD’s Arawak Cay premises without incurring storage charges. This ‘free’ period was also extended from 10 days to 24 days with effect from Monday for 30 days, and will apply to goods that arrive from that day on.
Mr Bethell, in a letter to the shipping carriers and licensees serving APD’s Nassau Container Port, said: “APD Ltd is committed to assisting the Bahamian public and the commercial shipping companies during this time where the COVID-19 virus has created uncertain conditions for the country at large.
“The expectation is that the reduction in tariff rates are passed on to the importers and, ideally, consumers.”
The APD chief told Tribune Business that the concessions were designed to impact all Bahamians and residents who, as the economy grinds to a halt due to the tourism industry shutdown, face increasing hardship as a result of mass unemployment and reduced incomes.
“That’s APD’s way of trying to make some contribution that ought to reach the masses rather than the select few,” Mr Bethell said of the tariff rate cuts. “By going down on the rates by 50 percent for 30 days, the expectation is those savings will trickle down in some way to the importers and consumer.
“Other than making a contribution to the Government, we feel it will be best to lower our rates where they will have a larger impact and where that converts into savings in the food stores or on some other product. Our savings will be on imported cargo brought into the country rather than on any service.
“That was the thought process behind coming out with some savings in this manner. Given that we import 95 percent of what we consume, we thought this would have the best impact in terms of contributing to our country at this most difficult time as the economy comes to a standstill.”
APD’s concessions were yesterday hailed by the Bahamian private sector as “a big gift” to consumers that should result in lower prices at a time when many workers, in particular those in the resort and tourism industries, are facing the prospect of no or reduced income.
“They’re giving the consumer a break,” Rupert Roberts, Super Value’s president, told Tribune Business. “In times like this anything that helps the cost of living is good. That’s a big gift from APD to reduce port fees by 50 percent.”
Jeffrey Beckles, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, added: “In a word, huge. It’s a great sacrifice and is an exceptional gesture that shows how the private sector is working together.
“It gives some breathing room, and allows those entities importing vehicles to have them stored at a more secured facility rather than face the risk of putting them on their site and have someone steal them.”
The extent to which such savings are felt by Bahamians depends on whether the port fee reductions are passed on at all stages of the supply chain - either fully, partially or not at all.
This requires the cargo shipping companies serving the Nassau Container Port, chiefly Tropical Shipping and Mediterranean Shipping Company (MSC), to reflect the cost reductions in the bills of lading (freight costs) they present to Bahamian importers, wholesalers and retailers. These entities must then pass the savings down the supply chain until they reach consumers.
“Given the extraordinary state we find ourselves in globally, and as a nation, we felt we needed to do something,” Mr Bethell explained. “This ensures we benefit many, many Bahamians through this effort rather than a select few.
“We hope that [port tariff cuts] flow through the carriers, and then through the wholesalers and retailers, so that the general public will be able to see some sort of price reduction at the counter. That’s where it’s needed most; on the grocery items and food products.”
APD typically charges the shipping companies and importers multiple fees, including charges associated with landing, cargo handling, stevedoring, storage, security and gate fees, so such wide-ranging and deep relief should produce benefits for all consumers.
Turning to the storage fee relief provided to vehicle importers, in particular, Mr Bethell said this would alleviate the dilemma of being unable to insure, license and inspect vehicles so they could legally get on the roads amid the COVID-19 shutdown.
“Rather than having large amounts of people here, which is difficult to manage and adhere to social distancing protocols we need to comply with, we felt it best to suspend the release of vehicles at this time,” the APD chief told Tribune Business. “We increased the storage duration so that it would not be a financial burden to importers.”
Mr Bethell acknowledged that APD and its shareholders, who include the Government and shipping industry with 40 percent equity interests each, would take a financial hit as a result of the measures unveiled. He did not comment on whether they would throw the port operator off the guaranteed 10 percent internal rate of return (IRR) target it is supposed to maintain annually.
Asked whether APD would consider extending the fee cuts and other concessions, Mr Bethell said this would be assessed “on a case-by-case basis depending on what lies ahead” and the impact to its financials. He added that the company had sought to look beyond the Government’s immediate 11-day national lockdown and “pushed it out” for a 30-day period that will last through April 22.
Describing the port operator as “the gateway to The Bahamas for goods”, he added APD had asked as many persons as possible to work remotely from home in accordance with the Government’s latest COVID-19 emergency powers Order until the crisis had eased.
However, given its status as an “essential service” that is to remain open, Mr Bethell said the likes of crane operators, security personnel and gate handlers were still working on-site - albeit in reduced numbers.
While this “will not compromise safety”, Mr Bethell added that “there may be elements of efficiency that we have to sacrifice” in turning around cargo vessels as a result of the smaller workforce.