Puerto Rico trade outlook uncertain following debt restructuring

Ocean carriers Crowley Maritime and TOTE Maritime Puerto Rico have both invested heavily in services to the financially troubled commonweath and will be watching closely as it endeavors to restructure $123 billion in public debt and pension obligations.    It’s too early to tell how the decision last week by Puerto Rico to restructure $123 billion in public debt and pension obligations, essentially a form of bankruptcy reorganization, will affect shipping volumes to the island, according to two of the container carriers that serve the U.S.-Puerto Rico trade.
   Crowley Maritime, one of the major carriers to the island, said it “has a longtime commitment to serving Puerto Rico, and while Puerto Rico’s economic health is stressed at this time, Crowley remains optimistic about the island’s future.”
   The Jacksonville, Fla.-based firm said it is “evaluating the recent action taken by Puerto Rico authorities and is monitoring the situation closely.”
   Last year, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which created a bankruptcy-type process called Title III that Puerto Rico decided to invoke last week.
   Crowley supported PROMESA because it “was intended to provide essential tools to help stabilize Puerto Rico’s economy,” the carrier said.
   “Shipping volumes remain stable and critical investments are moving ahead, including our company’s investment in upgrading the Isla Grande terminal and pier and building two new, LNG-powered combination container/roll-on roll-off (ConRo) ships,” added Crowley. “We will partner with the appropriate parties to work through the challenges and look forward to serving a stronger Puerto Rico.”
   Back in March, Crowley launched the first of those two LNG-powered ConRo vessels, the El Coquí, which will enter service later this year, and a sister ship still under construction is scheduled for delivery in the first half of 2018. Those ships will replace barges that Crowley currently operates to and from Puerto Rico.
   “I think the jury’s out,” said Robert Browne, the chief executive officer of Aqua-Gulf Transport, a large NVOCC serving the Puerto Rico trade. He said gauging whether volumes are slowing is difficult as the business is seasonal, generally picking up in October each year and continuing through Christmas.
   “We’re going to go into the doldrums in July and August,” he said, noting that many carriers use that slow season to clean the hulls of vessels and do other maintenance and inspection work.
    And last year, volumes to and from the Caribbean island were actually quite healthy, said Browne.
   Statistics from the Port of Jacksonville show container volumes to and from Puerto Rico were up 5 percent in the fiscal year ending Sept. 30, 2016, the best year since the fiscal year ending Sept. 30, 2011. Auto volumes, however, were down 33 percent during the same time period.
   Both Crowley and its main competitor in the Puerto Rico trade, TOTE Maritime Puerto Rico, have invested heavily in building new ships for the Jones Act trade between the U.S. mainland and Puerto Rico. TOTE introduced new ships, also powered by LNG, in 2015, but declined to comment to American Shipper on the recent financial developments in Puerto Rico.
   Both Crowley and TOTE operate cargo services between Jacksonville and San Juan, Puerto Rico, as does Trailer Bridge, which operates a barge service. Crowley also runs a service between San Juan and Pennsauken, N.J. on the Delaware River.
   When Crowley’s new ships are completed, it and TOTE will operate self-propelled vessels, but they could face more vigorous competition in the future from Trailer Bridge, even though it still uses barges.
   Last September Trailer Bridge announced it had entered into an exclusive joint service with trucking and intermodal giant J.B. Hunt Transport that will provide shippers with “unprecedented access to an unlimited container base throughout the United States and a continuous throughput to Puerto Rico,” according to a statement from the company.