A New Transshipment Hub Underway in Puerto Rico

Port Of The AmericasIn a direct challenge to the competing transshipment ports in Jamaica and the Bahamas, Puerto Rico has embarked on one of the Caribbean’s most ambitious port expansion projects. Located in Ponce on the southern coast, the US$750 million Port of the Americas would become the region’s first cargo transshipment hub in what is considered U.S. territory.

When the construction project is completed in 2012, the expanded port at Ponce would be able to handle as many as four Panamax-size vessels, which are the largest ships that can traverse the Panama Canal, each with a capacity of 8,000 to 10,000 TEUs – or 20-foot equivalent units – in containers. Like competing transshipment hubs, huge container ships arriving at the Port of the Americas will have cargo broken down and then shipped in smaller vessels to other U.S. and Caribbean ports.

Puerto Rican port authorities aim to vie for traffic from global shippers currently using established transshipment hubs in Kingston, Jamaica; Freeport, the Bahamas; and Panama, according to Dave Sanford, the director of navigation policy and legislation at the American Association of Port Authorities in Washington.

“We’re excited about Port of the Americas because it represents the first East Coast offshore transshipment facility under a U.S. flag,” said Sanford, who attended a project management workshop about the project.

“The geographic positioning is ideal, and the Commonwealth of Puerto Rico and the Puerto Rico Ports Authority have already made a sizeable investment in the project, which has progressed very well,” Sanford said.

Regional competition for cargo is fierce and growing, even more so in the current environment of falling trade volumes. In 2006, for instance, Jamaica convinced global shipper Maersk Line to move its Caribbean transshipment hub from Panama to Kingston. In 2007, the Port Authority of Jamaica borrowed nearly US$40 million to finance construction to more than double Kingston’s annual container capacity, from 1.5 million to 3.2 million TEUs.

In the Bahamas, the Freeport Container Port, which privately owned and operated by Hutchison Port Holdings, lies just 65 miles from the Florida coast along several heavily trafficked north-south and east-west trade lanes. Freeport has a capacity of 1.5 million TEUs.

The first phase of the Port of the Americas – a 1,200-foot pier that can accommodate four modern cranes – was completed in 2005. The port’s entrance channel was then dredged to a depth of 50 feet, the deepest in the Caribbean. The channel for the Port of San Juan in the island’s capital is 38 feet deep. 

“That depth is the main differentiating factor between our port and others in the region,” said executive director Ramón Torres Morales, who stepped down at the end of 2008 after eight years at the helm of the port.

The second and third phases of the project included the development of 18 acres for container storage with a capacity of 700,000 TEUs — and the purchase of three gantry cranes. The fourth and final phase of the project will involve widening the channel and adding more storage capacity for a total of more than one million TEUs.

Even when completed, the Port of Americas will fall short of its competitors in terms of capacity.

The island government will hire a private operator to manage port operations, according to José Ramón Pérez-Riera, the head of Puerto Rico’s Department of Economic Development and Commerce.

Until the Port of the Americas opens, the nearby Port of Ponce continues to operate, serving Puerto Rico’s second largest city. It handles about 600,000 tons of bulk cargo per year, primarily exports of scrap metal, chemicals and cement; and imports of coal, lumber, molasses and gypsum. Only 1,114 containers were imported in the 15-month period of July 2007 through September 2008, the most recent period for which statistics are available. 

Planning for Port of the Americas began in 2002, when the island’s port authority selected Ponce over San Juan, a decision based on the cost of development, land availability and environmental factors.“It was anticipated that the Port of San Juan would reach capacity by 2010,” said Pérez-Riera.“Therefore a new port was needed that could take advantage of our geographic position along major maritime routes.”

The expansion project is expected to generate trade-related jobs and. The port authority is seeking to establish industrial zones in Ponce that it estimates would create more than 12,000 direct and indirect jobs in the coming decade.

The port authority also introduced an environmental mitigation plan that calls for the acquisition of 590 acres in the nearby coastal wetlands of Finca La Esperanza, as well as the installation of a network of artificial reefs and underwater trails in the vicinity of Ponce Bay. The ultimate goal: 21st century eco-tourism that would generate even more jobs. 

The port’s former executive director Torres Morales said the port management had taken to heart the goal of“sustainable development.”

“The Port of the Americas Authority deeply understands it social role of pursuing economic enhancement through an international-caliber port, while maintaining the right balance with our environmental surroundings,” he said.

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