We ended the second quarter commemorating in June the 10-year anniversary of our Puerto Rico service. We celebrated this milestone at La Concha with over 125 guests. Customers, vendors, employees, and friends enjoyed the evening of meeting and celebration. It was nice to see the return of social events that were interrupted by Covid.
The island is taking a breather as cargo volumes from stateside have decreased approximately 17% year over year. Large inventories ordered due to the supply chain meltdown are still being drawn down. While tourism is strong, it represents less than 10% of the GDP. The larger segment of GDP is the industrial base led by pharmaceuticals and electronic devices. These industries contracted with the elimination of the 936 tax benefits in 2006, but still maintain a healthy presence on the island. Covid -19 highlighted our vulnerability to foreign-made products especially as they relate to healthcare.
Stemming the flow stateside of the young generation requires Puerto Rico to revitalize industry on the island whether technical or agrarian. Towards that goal Puerto Rico has embarked on an aggressive energy plan leading to be self-sufficient in energy by 2050, with aggressive milestone targets in the years 2025 and 2030. Today the island is 3% renewable energy sufficient. To achieve this goal Washington has been very supportive.
The combined efforts of the Department of Energy, FEMA, and the local government, are leading the way under PR100 to improve the current system but moreover, transition to decentralized grids which will be fed by solar and wind-generating electricity. The personal involvement of Janet Granholm as the Secretary of DOE has focused on investment strategies that upgrade the current grid on an interim basis until the island becomes energy self-sufficient. The DOE-funded $1B in February for strictly renewable energy projects. The focus is mainly to build microgrids that can support hospitals, schools, and smaller communities.
However, the larger share of funding is coming from FEMA in the amount of $5B from Fiona which is earmarked to improve the current system. The justification for investing in the current system is that these types of generators can produce large amounts of electricity relative to their size and can be deployed quickly.
The biggest benefit for the island would be to reduce their electricity expenses and make them comparable to the stateside, which would give the residents and industry a steady supply of power at a reasonable price strengthening industry’s competitiveness.
On more of an immediate front, all eyes are on the US Farm Bill in September. Puerto Rico currently is enrolled in the nutritional program called NAP, which can trace its roots to the 1974 the Food Stamp program. The farm bill proposes that Puerto Rico converts to the supplemental program called SNAP. The latter offers broader enrollment with higher benefits. The SNAP program is available to all US citizens stateside. If included in the Farm Bill, there will be an immediate stimulus of consumption on the island as currently, 1.4 M of the population benefit from the current program. For SNAP the enrollment period is for 5 years.
I am pleased to report that our vessel, National Glory, is performing well, as evidenced by 100% on-time arrivals for the first half of the year. The company’s investment last year in new hatch covers, a specialized hull coating, and a saltwater ballast system have improved vessel efficiencies and in compliance with International Maritime Organization (IMO) regulations reducing emissions and preserving our oceans.
National Shipping would like to thank you for your support over the past 10 years and send you our best wishes for an enjoyable July 4th holiday