Domestic container carriers ramped up capacity by adding vessels, containers and manpower to carry cargo for emergency relief and rebuilding efforts.
Six months after Hurricane Maria made landfall in Puerto Rico on Sept. 20, 2017, domestic shipping companies have revealed that cargo volumes remain high as rebuilding of infrastructure continues and businesses restock inventories.
Ramping up capacity. Major container carriers Crowley Maritime and Tote Maritime Puerto Rico said they deployed additional vessels and containers to help meet the need to move both emergency aid and commercial cargo from the mainland U.S. to the Commonwealth.
Pasha Hawaii moved one of its ships from the West Coast to make eight voyages between Jacksonville and San Juan to support Crowley and Tote’s operations, while Seacor Holdings’ Trailer Bridge subsidiary increased capacity to support relief efforts.
Crowley said that in the wake of the storm, it increased capacity 67 percent to a 16-vessel fleet. It moved more than 8,000 containers under a contract with the Federal Emergency Management Agency (FEMA) and over 40,000 commercial loads – more than 100,000 TEUs since the Port of San Juan reopened on Sept. 23, 2017.
The company ramped up the number of weekly sailings it had between the mainland and San Juan from its fixed schedule of four sailings a week to between seven and nine per week.
Mike Roberts, senior vice president and general counsel for Crowley, said the company’s ability to handle such a large increase in cargo was due in part to the fact that its Isla Grande terminal in the Port of San Juan had limited damage from the hurricane despite the eye of the storm passing nearby.
Jose “Pache” Ayala, Crowley’s vice president of Puerto Rico services, said improvements Crowley made to its terminals in both San Juan and Jacksonville before the hurricane hit were fortuitous.
He explained that in preparation for the entry into service later this year of two new ConRo ships – ships capable of carrying both containerized and roll-on/roll-off (ro-ro) cargo – the company had added three container cranes to its facilites in addition to the ramps used for loading and discharging trailers and other ro-ro cargo. The cranes have made it possible to handle containers arriving stacked on flat deck barges Crowley added to its fleet in the emergency.
Crowley said the first of two new ConRo ships being built by VT Halter in Pascagoula, Miss., the El Coquí, is expected to enter service in late April or early May, while its sister ship, the Taíno, is expected to join in about six months. Like the new ships Tote introduced into the Puerto Rico trade in 2015 and 2016, they will be fueled with liquefied natural gas.
To handle the increased amount of cargo, Crowley added 25 workers at the terminal (it now employs 300) and kept it open seven days a week, with employees working over 100 hours a week. It also doubled the amount of warehouse space it had to 200,000 square feet to support FEMA.
Tim Nolan, president of TOTE Maritime Puerto Rico, said his company saw volumes spike as much as 35 percent on some weeks after Maria, and they were consistently up close to 20 percent. He noted how that was a reversal from a decade long-term decline in cargo that has mirrored the economic challenges Puerto Rico has faced.
Nolan said his company increased its container fleet by 35 percent, adding 3,500 pieces of equipment and additional reachstackers to support terminal operations.
He said there was somewhat of a lull in traffic after Christmas, New Year’s Day, and Three Kings Day, but that cargo volumes have ticked back up and are higher than in a normal first quarter.
Restoring operations. In addition to containers, Crowley started up a special service using five barges dedicated to moving utility poles from Port Canaveral, Fla. and Pier 16 in San Juan. The poles are being used to rebuild the island’s devastated power grid.
Crowley has moved about 43,000 poles made of steel, concrete or wood, as well as 7,000 transformers, and 10 million miles of electrical wire.
Ayala said last week authorities were saying power has been restored to over 92 percent of the island and the U.S. Army Corps of Engineers and the Puerto Rico Power Authority expect that by June, 100 percent of the system is going to be restored. While there are some pockets around metropolitan areas that need to be restored, he said that most of the remaining areas where power needs to be restored are in Puerto Rico’s interiors, including mountainous areas where helicopters will have to be used to move poles and wires.
Crowley moved more than 3,500 loads of breakbulk or not-in-trailer cargo. In addition to generators, these included fuel trucks and bucket trucks.
The company also transported multiple bridges in sections to Puerto Rico to support the roadway reconstruction efforts in the Utuado region. Each bridge comes in sections which are shipped in 16 to 18 containers and on several flatbeds. The company also carried an oversized drill weighing 119,000 pounds used to set bridge foundations.
In the first months after Hurricane Maria, Ayala said that the focus was on relief cargo, including food and water.
When Pasha Hawaii repositioned its ship Horizon Spirit from the West Coast to Puerto Rico, it carried 800 containers filled with 15 million bottles of water to the island.
“Water was the biggest thing and so many generators,” says Sergio Sandrin, president of Aqua Gulf Transport, one of the largest non-vessel-operating common carriers to Puerto Rico.
He said one of his company’s customers was a large battery company. Its shipments rose from one container every one or two weeks to 10 containers a week during the first few weeks after Maria struck the island.
Today, Crowley’s volumes are still double the normal amount, as the company moves materials to help rebuild infrastructure damaged in the hurricane and both manufacturers and retailers rebuild inventories.
Sandrin said his company is still shipping large numbers of generators because the power supply is still tenuous. He said retailers say consumers have even changed buying habits because of uncertainty about power – buying limited amount of food because they are concerned food might be spoiled if power went out.
Meanwhile, although TOTE did not have a FEMA contract, TOTE’s Nolan said it worked with a number of charities, including the Red Cross, Catholic Relief and other church charities.
He said the company shipped a number of large generators to hospitals and other organizations.
Terminal challenges. Both Crowley and TOTE said their operational expenses increased as a result of additional equipment they brought on, higher electric bills, hours worked by employees and congestion at the terminals.
For example, before Hurricane Maria, Crowley averaged less than 1,000 containers at its marine terminal. At one point after the storm, as many as 5,000 containers were at its facility.
“Obviously, that had a tremendous impact in lost productivity and everything is more difficult to do on the terminal,” said Roberts. “But the team did a very good job of normalizing the throughput… out of the gate and back into the gate, and chipped away at that volume. So my understanding is that for the last couple of months and maybe longer, the average of the number of loads on the terminal is around 2,000. We’ve made progress, but there is still a way to go to getting back to normal times.”
Nolan said TOTE’s terminal also became a seven-day-a-week operation and saw the number of containers at its terminal skyrocket from about 300 to 500 before the storm to a peak of 2,200. That number has now come down to about 600-700, and the company has chartered a barge to bring those containers back to the mainland where they can be taken off hire.
Nolan noted that trucker turn times at the terminals rose from an average of 30 minutes to as much as two or three hours when congestion got really bad, but have since come down to about 45 minutes.
Traffic congestion and problems at delivery locations meant that containers were not returned as quickly. Nolan said that where his company traditionally had 700 to 800 containers off dock at customer locations, that number jumped to over 2,000 at one point.
“For people who had challenges at their warehouses, we became storage facilities with our containers,” he explained.
Bearing the cost. Both TOTE and Crowley said these additional costs were not passed on to customers.
“Our goal was to flow cargo for the island and support the island in their recovery,” said Nolan.
“I can say without any kind of doubt that they (the shippers) have not felt and we are not going to find out even one customer, at least a Crowley customer for sure, that can argue that their ocean rate has increased due to the hit of this hurricane,” said Ayala. “I say not only as a Crowley employee, but as a Puerto Rican, one of the things that makes us more proud is that we saw how Crowley obviously showed their commitment, unconditional commitment to the people of Puerto Rico.”
Sandrin of Aqua Gulf agreed, saying, “Prices haven’t really been driven by the ocean carriers over the last six months,” but by what has been happening in the trucking industry.
“So much of the trucking capacity got eaten up by FEMA, and so that drove a bubble in pricing,” he said.
Trucking products to customers in Puerto Rico has “had its challenges with power and traffic lights down, things of that nature. It’s a little slower, maybe more of a challenge navigating the roads, but product is getting to them,” said Sandrin. However, with about 70 percent of freight staying in the San Juan metro area, he said truckers “just plow through it. Hats off to them. Even with our customers who are out a little more deeper into the island, they found the routes and they found the ways to get the product out there.”
Sandrin also said shipping costs to Puerto Rico, as in many other parts of the country, are going to continue to be driven by trucking.
“Now as we head toward April 1 with the ELD (electronic logging device) mandate, we’re looking at again the pricing to keep going up on trucking,” Sandrin said. “A frequent lane for us is Atlanta to Jacksonville (where both Crowley and TOTE sail from). A driver would make that run about 4 times a week, and now with the new ELD, he gets hung up somewhere an hour here, an hour there, suddenly he’s out of hours and that driver is now only making that run 3 times a week and he still needs to get paid like he’s four times a week, otherwise they walk away. That is forcing the 20 to 30 percent rise in the intermodal rates that we’re seeing on the East Coast.
“This last six months – I’ve been in this business 27 years – have been the most challenging ever,” he said. “It’s unbelievable what we’ve dealt with in Puerto Rico.”
Jones Act conundrum. The efforts by these companies come at a time when the Jones Act, in particular its application to Puerto Rico, is under attack.
The Jones Act requires cargo moving between U.S. ports – including on routes from the mainland to Puerto Rico, Hawaii or Alaska – move in vessels that are built in the U.S., owned by U.S. companies, registered in the U.S. and crewed by U.S. citizens.
Long time Jones Act critic John McCain introduced a bill last October to exempt Puerto Rico from the law.
Platt, a unit of S&P Global, wrote last week that, “The Trump White House is studying the feasibility of a permanent Jones Act waiver for Puerto Rico,” citing multiple sources it said requested anonymity.
The American Maritime Partnership, a group that represents domestic shipping companies, said the services offered by Jones Act carriers are reliable and cost effective. It noted that Jones Act carriers to the island routinely offer carriage in 53-foot containers and trailers, which is more economic than normal shipping containers.
The Jones Act carriers also face plenty of competition from carriers moving goods from locations other than the mainland U.S., the American Maritime Partnership said, adding how two-thirds of the vessels calling at the Port of San Juan fly foreign flags.