4th Quarter Letter from the President

4th Quarter Letter from the President
4th Quarter Letter to our Customers

October 1, 2021
San Francisco, CA

I always enjoy writing the quarterly letter as it allows me to recall the highlights and low points of the last quarter, reflect on current conditions and get an outlook for the next three months.

I am pleased to report that we completed 19 scheduled sailings between Houston, Port Everglades, and San Juan since the beginning of the year. While we did experience delays in the second quarter due to inclement weather in Houston, our YTD record for on-time service was at 88% overall and 100% in Q3.
In the third quarter we faced the continuation of escalating prices and lack of truck power stateside.
The vessel’s largest cost item today is fuel. We have seen a 40% increase in the price of oil since January 1st. The pundits are forecasting $90/barrel by end year.

Regarding the lack of truck power, the boom in imports and shortage of drivers has created a perfect storm nationwide. As the pandemic unemployment assistance (PUA) stopped in September, we all wait for the labor force to return. Everywhere you look you see hiring signs. While we cannot directly correlate current labor force as it impacts trucking, it is felt in and around ports where labor to work vessels and containers remain short. This creates log jams that translate in less ‘turns’ for truckers which mean less service at higher prices. With the average age of truckers in USA around 55 years old and the younger generation not enamored with the industry, the outlook for trucking remains extremely tight.

The fourth quarter is starting where the third left off. The challenges are more prevalent starting with an active hurricane season. There have been 15 named storms or hurricanes in the 3rd quarter that we safely navigated.

Company – wise, we remain committed to Puerto Rico during these challenging times. While the global trades have witnessed unprecedented rate increases and supply chain delays, we have done our best to hold rates and provide dedicated service to and from Puerto Rico. As a Jones Act carrier, we recognize our role as a ‘lifeline’ to the island.

Whether it is transporting the daily requirements in maintaining the quality of life standards or in time of emergency, National remains committed -now in our 9th year- in serving Puerto Rico. I have said this before, the Jones Act carriers are more of a ‘utility’ rather than just a port-to-port service provider.

I think everyone is expecting a guarded recovery from the pandemic. While arrivals at Luis Munoz International Airport have reached levels close to pre-pandemic, the rush to board cruise ships is slow at best. The first cruise vessel arrived in San Juan on September 5th. The tourism board feels that the cruise business will return to pre-pandemic levels in the first quarter of 2022. The optimism points to the positive indicator that 72% of Puerto Rico’s population is vaccinated. Many people correlate the re-starting of the cruise business with the percentage of the population inoculated. Puerto Rico is way ahead of the other Caribbean nations in this effort. The solidarity of the island remains unified for the cause of the common good. Puerto Rico needs to be commended.

The fourth quarter continues with the redefining of work habits, consumption patterns, and lifestyle changes. The labor force returning to the office on a 9 to 5 basis after Labor Day did not take place and now pushed out to the first of the year. During this transition period the supply chain will remain under severe stress. As they say, ‘the chain is only as strong as its weakest link’. Right now, and for the immediate future, the weak link is inland transportation and in particular, trucking.

We ask your help and cooperation in working closely with our team as it relates to this critical piece of the supply chain to insure ‘on time’ service.

Looking ahead to 2022, I would like to advise that our National Glory will be performing her 5-year drydocking from February 2-23. We will be sending announcements along with a new schedule in the coming week.

In the meantime, from all of us at National, we wish you good health during the Autumn Season.

Sincerely,

Torey Presti
President of National Shipping Agencies, Inc