By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

The Bahamas has “dodged a big bullet” and potential 25 percent inflation hike, Super Value’s owner has asserted, after shipping to this nation was exempted from the $1m per US port call fee on Chinese-made ships.

Rupert Roberts and multiple other Bahamian business executives yesterday told Tribune Business that this country and the wider Caribbean have been “saved from economic

catastrophe” after the US Trade Representative’s Office responded to overwhelming push back by eliminating the planned fee for vessels involved in “short sea shipping” to this region.

The move, which removes the threat of “almost double current freight rates” to The Bahamas compared to existing shipping prices, was hailed by local private sector representatives as “just absolutely perfect” and “couldn’t have come at a better time” for businesses, consumers and the wider economy given that it coincided with the Easter holiday.

Robert Sands, Baha Mar’s senior vice-president, told this newspaper that the US climb down will have a “very significant” positive impact for The Bahamas’ largest industry since hotels, in particular, would have been especially hard-hit if the fee was implemented as originally proposed given that resorts import as much as 85 percent of their inputs - especially food and beverage - from North America.

And Chris Lleida, chief executive of Premier Importers, the building materials supplier, said The Bahamas had escaped “inflation on steroids” given that the forecast near-doubling in cargo freight rates would have inevitably been passed on to Bahamian importers and their customers. Describing the US Trade Representative’s Office’s decision as “a game changer”, he added that it must “stick” and “not slide” in future years.

Tim Martin, chief executive and president of Tropical Shipping, which holds a major share of the freight cargo market for New Providence and Abaco, branded the escape from the Chinese-made ship fees as “a huge victory for us and the entire Caribbean region that we serve”. Some nine of Tropical’s 19-strong vessel fleet, equal to 47 percent of the total, are Chinese-made and would have attracted the fee on every US port call.

“This is a great day for us, our customers and the Caribbean region we serve,” Tropical Shipping said in a posting on its Facebook page. “The US Trade Representative has exempted American-owned carriers like Tropical that operate Chinese-built vessels from the new tariffs.

“Our voices were heard, and this victory could not have happened without the relentless advocacy from our Caribbean representatives in Washington D.C, our customers and the many organisations that wrote letters to the US Trade Representative describing the devastating impact these port fees would have had on all of us.”

And Mr Martin, in a subsequent statement which said Tropical Shipping’s clients have dodged a $3,000 increase on the cost of a 40-foot container as a result of the Trump administration backing down, added: ““This is a huge victory for us and the entire Caribbean region that we serve... One of Tropical’s core values is: ‘Responsiveness is our

driving force.’ Caribbean communities were our driving force on this issue, and I can’t thank you enough.”

The proposed Chinese-made ship fees were part of the Trump administration’s drive to “restore America’s maritime dominance”, and reverse the lead China has established in the shipbuilding, maritime and logistics, by driving/incentivising shipping firms to construct new-build vessels in the US if they wish to avoid significant cost hikes.

To give effect to this, the US Trade Representative proposed a fee structure that included an up to $1.5m levy “per vessel entry of a Chinese-built vessel to a US port”, plus escalating charges based on the percentage of Chinese-made vessels in a shipping operator’s fleet and a flat $1m fee per vessel if this percentage was 25 percent or higher.

However, in its decision unveiled late on April 17, just prior to the Easter weekend, the US Trade Representative’s Office revealed that included among “certain Chinese-built vessels not subject to the fee” are those “engaged in short sea shipping - voyages of less than 2,000 nautical miles from certain US ports”. This distance more than covers The Bahamas, meaning all shipping servicing this nation will be exempt.

Super Value’s Mr Roberts told Tribune Business that the sheer scale of opposition to the proposal from the US Trade Representative’s Office, especially from US-based shipping companies and exporters, plus the damage it would inflict on America’s trade surplus with the Caribbean that has been estimated as high as $55bn, meant the original scheme had little to no chance of being implemented.

“I wasn’t too concerned about it,” he revealed. “They just couldn’t let that happen. I probably predicted earlier that would have caused a 25 percent increase in inflation and we’ve dodged that. I think we can all consider ourselves very fortunate now. What’s going to happen ten years from today, we just don’t know....

“We’ve dodged that big bullet. The public doesn’t know how hard Tropical Shipping fought for them, the public doesn’t know how hard Super Value fought for them. I suppose we’ve very probably avoided another 25 percent increase in inflation. The market just could not take that. Everybody’s at maximum budget now, and you put another 25 percent on them? They would not be able to pay BPL, could not pay school fees.”

Mr Lleida added of the US pull back: “To me I think it’s like a game changer in the sense we obviously have very little control over it, but kudos to Tropical, MSC and other operators that went in to bat for The Bahamas and the region and saved us from economic catastrophe. Those increases would have been passed on to importers and consumers, and it would have been inflationary on steroids...

“I don’t know what the actual costs would have come out to be, but we cannot stop importing. What do we do? Shut up shop and do domestic production 100 percent? It’s impossible. The GDP of the region is actually pretty significant, and the majority of it goes to the US.

“I’m happy to hear that [ship fee exemption] and hope this sticks because too many of these things slide. Hopefully we stay on the good side of the balance sheet for the duration and don’t have this craziness imposed upon us.”

As for the hotel and tourism industry’s perspective, Mr Sands said: “I can tell you that for the entire Caribbean this is a very positive development, and it’s a positive development for The Bahamas and certainly for all the hotels within the

islands of The Bahamas as well as other retailers.

“This is very significant. This is part of the battle that, I think, as a result of the negotiations and diplomacy has ended on the positive side. We still have work to do in terms of the country being impacted by tariffs, but certainly part of this pie has been addressed with respect to the transportation element of the cost of goods coming into the Caribbean and, certainly, the islands of The Bahamas.”

Asked about the benefits of avoiding the Chinese-made ship fee for the Bahamian tourism industry’s cost competitiveness, Mr Sands added: “It’s significant. I would say it’s in excess of 75 percent, 80 percent of all inputs we consume, particularly food and beverage-type items, maybe not all are produced in the US and maybe they are shipped from the US, maybe it’s as high as 85 percent.”

In a nod to the continued uncertainty, and impact on consumer and business confidence, caused by Donald Trump’s trade and tariff policies, the senior Baha Mar executive pledged: “We’ll continue to chip away at some of those headwinds we have been confronted with, but the good news is that where there’s unity there’s strength.

“A collaborative effort by all commercial shipping companies, the tourism industry, came together with a unified voice and it’s ended in a very positive result.” Rupert Pinder, assistant professor of economics at the University of The Bahamas (UoB), agreed that with the Chinese-made ship fee concerns now eliminated The Bahamas can focus its attention on the Trump tariffs and threat they pose to tourism and growth.

“I think it’s a positive move,” he told Tribune Business of the decision by the US Trade Representative’s Office. “I don’t think it totally removes some of the concerns one would have with respect to the potential for a recession. It doesn’t remove the threat totally, but is certainly a step in the right direction in terms of mitigating the concerns with respect to inflationary pressures. It just removes one element of complexity in the whole thing.”

Tropical Shipping, in its last feedback to the US Trade Representative’s Office, had warned that the original proposal would disproportionally impact carriers such as itself - and their clients in The Bahamas and wider Caribbean - because their smaller vessels mean they have fewer shipping containers over which to spread the huge fee increase that would result.

“The typical loaded TEUs (twenty-foot equivalent units) on the vessels serving the Caribbean are approximately 850 TEUs per vessel. The fees per entrance of a vessel to a US port as set out in the proposed action, if applied to vessels of this size, would almost double current freight rates in the region with an average freight increase of approximately $2,500 per 40-foot container,” it warned.

“As a comparison, if you applied the proposed $1m fee to a vessel that calls on a single US port directly from China carrying 16,000 nominal TEUs, it would increase the cost per 40-foot container by only $125.

Many witnesses highlighted the disproportionate and crippling impact the proposed action would have on smaller or specialty vessels typically operating short sea routes. Broadly applying port fees per short sea ships, similar to ocean-going, long haul ships, would place a massively disproportionate burden on our smaller vessels, increasing costs between 100 and as much as 500 percent.”

And pointing to the likely impact for its own cost structure, Tropical Shipping added: “Tropical vessels enter the Port of Palm Beach 15 times per week on average. Under the proposed action, and based on our current fleet of vessels, Tropical would be charged port fees of $11.25m per week ($750,000 x 15) or $585m per year.

“Fees of this magnitude unquestionably threaten the ability of Tropical to continue operations. The added port entry fees for Tropical would necessarily have to be spread by Tropical across all operating costs for freight inbound to and outbound from the United States on its arriving vessels subject to the proposed fees.”