A Letter from the President of National Shipping
I typically write the quarterly letter reviewing where we have been, our present state, and what we see for the future. However, this quarter the approach will be more macro about our company since we are celebrating our 10th year serving Puerto Rico.
National Shipping did not take the normal path entering the Jones Act trade. The National Glory, formerly known as the ‘MV Yalta’, a general cargo ship, was arrested for carrying contraband and forfeited to the US Government. National Shipping purchased the vessel at a Tampa Court auction and registered her in the USA gaining the ‘coastwise endorsement’ to trade in the Jones Act trades. Recognizing that a general cargo is not economical under the US Flag, we converted her to a small container ship. The National Glory was built in Poland not the USA which is a key Jones Act requirement only with few exceptions – one being the Forfeiture Act sale. The other exception is a ‘salvage vessel’ performed in USA waters.
With the prompting of a large beverage exporter from Houston, National Shipping of America launched its service on May 29, 2013. We experienced our ‘baptism of fire’ as we were direct competitors with long incumbent Horizon Lines. While we knew Horizon’s days were numbered, it was a matter of ‘when’. Matson purchased Horizon at the end of 2014 – ceasing operations in Puerto Rico. Matson wanted Horizon’s Alaska service.
Sailing at less than 50% capacity made for a painful 15 months and this is where the company was fortunate to have an owner that is well versed and experienced in the shipping industry – Dr. C.C. Chen. More noteworthy was that Dr. Chen founded Wan Hai Lines in 1965, now the 10th largest global container carrier. Dr. Chen understands shipping cycles and the capital requirements to start and sustain a service.
The 10 years that ensued were nothing short of a roller coaster ride. Awakening to learn of the loss of the El Faro in 2015 was by far the most shocking and deeply felt. In 2017 the fierce impact of Maria so devastated the island that it has not yet fully recovered. There were two more hurricanes within 2 weeks of Maria that struck both Texas and Florida all within our trade route. The natural disasters were followed by the onset of Covid 19 in early 2020. Our lives changed almost immediately and we were required to adapt to a new life coping with the virus. Broken supply chains and inflation increased all our costs across the board. In between all these disasters, the National Glory made three successful rescues of Cuban refugees. Roller Coaster? It was more like going 9 rounds in the ring!
In 2021 we established a new southbound call in Port Everglades. This opened two new markets. The first is what we call the M-10 of the American Marine Highway – Houston to Port Everglades. The program sponsored by the Maritime Administration promotes Houston to Port Everglades via ocean versus the traditional truck service. The economic, environmental, and social issues are compelling to take trucks off the road. Secondly the South Florida call enabled us to offer direct, fast service to San Juan. We sail on Sunday and arrive in San Juan Wednesday morning.
2022 was a retrenching year. We underwent an expensive drydock to meet the changes mandated by the International Maritime Organization (IMO) – mostly emission standards and ocean preservation initiatives. The scrutiny by the regulatory bodies increased for older vessels since the El Faro casualty. We invested in new hatch covers for the National Glory at a cost of $2.2M. All vessel improvements contribute to extending the vessel’s life.
Shoreside, I am pleased to advise that we have invested in a new system platform to manage our customer service and back office/documentation processes. The new system will improve efficiencies for both the shipper and carrier. We have customized the new platform with specific Puerto Rico applications. The plan is to phase in the new system by the end of the quarter.
As we look forward to our next milestone, our goal is to provide uninterrupted service from our main load centers in Houston and Port Everglades. We recognize Houston as a key market for Puerto Rico as it relates to Industrial chemicals, plastics, and beverages. As a long time supplier of energy, Houston is becoming a major source of power transmission and distribution equipment for Puerto Rico.
We are optimistic with the island’s commitment under PR100 to reach 100% renewable energy sustainability by 2050. While the plan seems ambitious, it is fully supported by the local government, DOE and FEMA. For now, solar is taking the lead in generating renewable energy. Solar power is now affordable to middle- and low-income wage earners through a generous grant system sponsored by the central government and supported by the two agencies mentioned. The amount of $9.5B is earmarked for various projects that support renewable energy sources as well as refurbishing current power transmission and distribution facilities.
Another strategic feature of our service is Houston’s proximity to the Mexico border. After the supply chain meltdown, large USA importers are adapting a ‘near sourcing’ strategy to bring manufacturing closer to consumption. Investment in the border trade is a bright spot.
Located in the Rio Grande Valley, Texas produce is second only to California. Products like onions, oranges and peppers are just a few items that are being regularly imported to Puerto Rico.
Houston remains a strategic port for Puerto Rico for any cargo originating west of the Mississippi. By eliminating close to 1000 inland miles stateside, the Houston gateway provides economic and environment advantages for select cargoes.
On the eve of our 10th Anniversary, we wish to thank you for your support over the past decade and wish you ‘Fair Winds and Following Seas’ in your endeavors.
With warmest regards during the Holy Week.
President of National Shipping of America