3rd Quarter Letter from the President

3rd Quarter Letter from the President
A Letter from the President of National Shipping

In June, I attended MIDA’s annual Food and Beverage conference in San Juan at the Convention Center. MIDA is the Chamber of Food Marketing, Industry, and Distribution and is the voice of the food industry. This is the largest annual food and beverage event. A few years ago, the convention was held at the El Conquistador Hotel in Fajardo. However, moving the venue to the convention center allowed more people to attend. There were over 3000 attendees, and the exhibition hall easily accommodated them. Set in a prime location in San Juan, the Convention Center is known in the Caribbean as a prime place to host trade shows, exhibitions, and concerts. The Convention Center is an impressive venue and the largest of its kind in the Caribbean.

The conference’s takeaway was that food and beverage imports remain soft due to a shrinking population and the impact of inflation. This year, March versus April food inflation was measured at 0.1%, while beverages increased by 1.7%. There is a big push for local Puerto Rico brands, especially in the alcohol sector.


MIDA has had a long, contentious relationship with the Jones Act carriers. I am not sure when it started but since our entry into the trade in 2013 the relationship has been strained. I believe the angst has eased a bit after the global transportation rate shock of 2020-2022. Ironically, the same volatile conditions exist today with rates spiking from China to the U.S. East Coast close to $9,000/container. The global carrier’s capacity is being absorbed with longer routes while allocating NVOCCs less capacity in favor of bona fide cargo owners (BCOs).

Global shipping is market-driven whereas Jones Act services are consumer driven. This is one of the key differences no one seems to acknowledge. Whether it is commercial trade, national security, or homeland preservation, the Jones Act carriers provide a dependable, predictable, and rate stable service for the non-contiguous US trades. People have argued against the Jones Act since its inception 125 years ago. The Jones Act traces its history back to the Navigation Act of the 17th century. These acts provided the host country’s flag vessels with exclusive trading rights that controlled commerce and protection for their colonies. The Navigation Act lasted about 200 years and provided a framework for the cabotage laws of the 20th century.

While consumption remains soft, the industrial side of imports to Puerto Rico is seeing larger volumes of cargo related to sustainable energy projects and overhauling the current grid. On the sustainable side, large volumes of solar panels, lithium batteries, and microgrids are being rushed to the island ahead of the new increased tariffs of 50% duty for solar panels sourced from China. Electric cars duty from China increased to 100% duty.

Regarding the current infrastructure projects aimed at improving the power and transmission of energy on the island, we are pleased to have successfully and safely shipped a 150–ton transformer from Houston to San Juan in June. Many more transformers are in the pipeline.

This past quarter, we made an inducement call to the northern port of Haiti, Cap Haitian. We carried 2,000 tons of USAID cargo—rice and beans. The stark reality is that Haiti is the most populous country in the Caribbean, with a population of 11.5 million, but it lacks vital infrastructure to support the population. In Haiti, there are 2 airports and 2 seaports capable of handling containers.

On a comparative basis, Puerto Rico has 13 airports and 10 seaports of entry for one quarter the population of Haiti.

The third quarter starts the hurricane season. We have already been impacted by Alberto closing the Port of Houston last week. NOAA is warning of an active hurricane season this year given the warm ocean temperatures. We are now in our 11th year serving Puerto Rico and remain well prepared for inclement weather and the welfare of the trade.

On the ‘behind the scenes’ marine operations, Mr. Russell Harriman has joined as the National Glory Superintendent. As a licensed marine engineer, Russell brings the technical experience to ensure the National Glory maintains its high-performance level. We are excited to welcome both gentlemen to our team.


Wishing you and your families a safe and enjoyable July 4th Holiday!

Sincerely,

Torey Presti
President of National Shipping of America