By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian small business expectations that 2025 would be “a year of stability” have been dashed by the global economic turmoil unleashed by Donald Trump, a consultant to the sector revealed yesterday.

Mark A Turnquest, founder of the 242 Small Business Association and Resource Centre, told Tribune Business that many merchants and entrepreneurs fear the “tremendous” 30-40 percent reduction in electricity costs enjoyed during the year’s first two months will now be outweighed by the uncertainty and loss of confidence caused by the US president’s trade and tariff policies.

While agreeing it is “a no brainer” that The Bahamas will benefit by being exempted from the $1 per port call fee that the US had planned to levy on Chinese-made ships, he added that its imposition would have merely provoked further price hikes for local consumers and a loss of sales, plus reduced profits, for merchants and vendors.

Relieved that one potential “tremendous burden” has been eliminated, Mr Turnquest told this newspaper: “We were just slowly getting over the shipping cost increases and inflation from COVID. We thought that, before Trump came into power in January, this would be a year of stability.

“We really thought this was going to be a year of stability because our electricity bills went down. We were really optimistic this would be a year of stability. We don’t know what will happen in the summer, but we’ve seen a tremendous reduction in electricity costs year-over-year. It’s almost a 30-40 percent fall. That was in January and February compared to January and February of last year.

“We were also very pleased not to have any disruption or electricity outages. There were one or two, but those took place at night instead of the day. It did not impact or affect any of us. There were no complaints.” The US Trade Representative’s Office, in unveiling its Chinese ship reversal, eliminated the fees for all vessels involved in “short sea shipping” of less than 2,000 nautical miles.

That covers The Bahamas and wider Caribbean region, and ensures they are totally exempted from levies that would have near-doubled existing freight costs and sent prices for local firms and consumers soaring. “It’ll be great because we don’t have to make any adjustments in the near term,” Mr Turnquest said. 

“That is a major victory for us because we were really concerned. We were on pins and needles. We are small. We don’t have no what I call capital to waste in reference to an increase in prices that is unexpected. This is something that’s very beneficial to us. A rise in shipping costs is a rise in product costs, is a rise in prices, and will be a reduction in sales and a reduction in profits. It’s simple economics.

“The consumer has the power, especially with small businesses, because we don’t have the fire power to compete with big business. The most important thing for us is to compete with moderate prices, excellent customer service, and high employee loyalty. We don’t want anything to negatively affect us because we don’t have the capacity to make any adjustments in our prices. We are maxed out on prices and profit margins.”

Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour division head, said the US climb down on the Chinese-made ship fee was “just about perfect and couldn’t have come at a better time” ahead of the Easter holiday.

“I think everybody was getting really jumpy and wondering by how much the cost of living was going to increase, not just in The Bahamas. That’s the best news we could have had,” he added.

The proposed Chinese-made ship fees are 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.

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.”