Crowley offers frequent service for 'perishable' products.
By Chris Dupin
When John Hourihan, Crowley Maritime's senior vice president and general manager of Latin America services, talks about the importance of serving customers with perishable commodities, he is not just talking about fruits and vegetables.
Crowley offers multiple weekly sailings to its customers in Central America, the Dominican Republic and Haiti. 'One of the strengths that we offer and promote is that we have multiple sailings, what we refer to as speed-to-market,' he said. 'We look to reduce dwell time for the perishable cargoes that we handle. And we deem perishable to be anything that is time sensitive. That is primarily cargo for the apparel business, moving in both directions and reefer cargo, which is primarily moving northbound to the U.S.'
Hourihan oversees four of Crowley's services, three of which sail out of Port Everglades, the other out of Gulfport, Miss.:
' The company offers three sailings a week between Port Everglades and what it calls the 'northern zone of Central America' ' the ports of Santo Tomas, Guatemala; and Puerto Cortes, Honduras. The company also provides overland truck service between those ports and Managua, Nicaragua; and San Salvador, El Salvador. Once a week, one of these strings makes a call in Havana, Cuba, where it carries food and other products permitted under the U.S. embargo.
' The company offers twice-weekly service between Port Everglades and the 'southern zone of Central America' ' a string that calls at Santo Tomas, Guatemala; Puerto Limon, Costa Rica; and Manzanillo, Panama.
' From Gulfport, Crowley offers two sailings a week to Santo Tomas and Puerto Cortes, again providing overland service to El Salvador and Nicaragua.
' The company has also operated a twice-weekly service to Rio Haina, Dominican Republic; and Port au Prince, Haiti.
Haiti Relief. Following the Jan. 12 earthquake in Haiti, Crowley was one of the first carriers to carry relief supplies into the country. Another Crowley subsidiary, Titan Salvage, is building a temporary dock in Port-au-Prince, where the shipping terminal was destroyed by the earthquake.
'We will continue to support wherever we can,' said Hourihan, who added he was impressed with how much the U.S. military and agencies supporting the relief efforts were able to accomplish in the first weeks following the disaster.
'When they are pulling in one direction, it's pretty mighty,' he said.
But with Port-au-Prince knocked out, relief efforts have been complicated, he noted. Crowley's ship, the Marcajama, was one of the first to bring relief supplies to the country following the earthquake, offloading containers in Rio Haina and trucking them to Haiti. The company also devised a system for unloading containers from ships and ferrying them to shore using landing craft-type vessels.
The company suspended its commercial service to Haiti in the aftermath of the earthquake, and is focusing on emergency relief efforts. The Marcajama has now been chartered to the U.S. Transportation Command and the company has chartered another ship so it can maintain its twice-weekly service to the Dominican Republic.
'We have seen this first and foremost as a humanitarian effort,' Hourihan said. But the company was already beginning to think ahead about its role in the normal relief and rebuilding efforts in the country that are likely to last for many years.
Titan will construct a new dock using two 400-foot by 100-foot barges to create an 800-foot berth where ships can offload cargo.
Crowley's principal competitors in Central America and the Dominican Republic include Maersk, APL and Seaboard Marine.
Central America. In February, Maersk Line said it extended its all-water service between Central America to include a New York call in addition to Miami; Savannah, Ga.; Wilmington, N.C.; and Norfolk, Va. It accomplishes this by adding a third ship to a string that travels between Honduras and Guatemala so that it can continue to offer weekly service.
Maersk is touting the smaller 'carbon footprint' of all-water service to destinations along the coast as an advantage to services offered by carriers such as Crowley and Seaboard Marine that operate from South Florida.
senior vice president and general manager of Latin American services,
|'We deem perishable to be anything that is time sensitive. That is primarily cargo for the apparel business, moving in both directions and reefer cargo, which is primarily moving northbound to the U.S.'|
Hourihan agrees that relatively small amounts of cargo to Central America and the Dominican Republic originate in or are bound for South Florida or southern Mississippi around Gulfport. But he said many of the forwarders and consolidators that serve the trade are located in the Miami-Port Everglades area.
The South Florida location is also an important factor in allowing Crowley to offer several sailings a week. The company can make a round-trip voyage to Guatemala and Honduras or Hispaniola in a week. The same is true for its service from Gulfport. (The service to the 'southern zone' of Central America is a little too far, so the company uses three ships to accomplish a twice-weekly frequency.)
To reach customers farther north, Crowley moves many containers between Port Everglades and Jacksonville using the Florida East Coast Railway.
Gulfport has proven to be an attractive choice for shippers moving cargo to and from locations in the Midwest, he said.
2009 was a tough year for the Central America trade, in large part because of weakness in the apparel trade.
'Our volumes, and we believe this reflects the market, were off somewhere between 20 and 25 percent,' he said.
According to the Commerce Department's Office of Textile and Apparel, the U.S. imported about 2.6 billion square meter equivalents (SMEs) of garments from the countries that are part of the Dominican Republic- Central America Free Trade Agreement (CAFTA-DR) in the 12 months ending November 2009, about 23.9 percent less than the same period a year earlier. The value of those imports were $6.18 billion, about 18.9 percent less than in the period a year earlier.
Besides the Dominican Republic, the CAFTA-DR countries are El Salvador, Guatemala, Honduras, Nicaragua and Costa Rica. They combine to account for about 12.3 percent of U.S. apparel imports as measured in SMEs.
That's far less than the 40 percent SME market share that China has. But as a bloc, the CAFTA-DR countries are the source of more apparel imports for the United States than any other individual country, including the second-largest, Vietnam, which has a 7.5 percent share as measured in SMEs.
Hourihan said the garment industry has evolved in Central America over the years as trade laws have changed.
Originally trade preference was given to garments assembled from cut fabric shipped from the United States to offshore factories in the Caribbean. Then it became possible to still get preferential treatment for garments made from bolts of cloth shipped south. Today, Crowley ships a lot of yarn that is spun or woven into fabric, then dyed, cut and assembled into garments that are reimported. Sometimes this work is done in several different Central American countries.
There are some 900 companies in the garment industry in the five Central America CAFTA-DR countries, said Carlos Arias, director of Vestex, Guatemala's Association of the Garment and Textile Industry, at a seminar in February in New York on CAFTA-DR sourcing. The 900 break down to about 475 apparel companies, 76 textile companies and 349 manufacturers of accessories or services.
Managing the flow of partially finished goods between manufacturers in Central America as well as raw materials and finished goods has become one of many services Crowley offers.
'For some customers, we act as the 3PL or 4PL to manage not just Crowley's container movements but those of other carriers,' Hourihan said.
This increases the efficiency of transport and reduces the number of empty containers. For example, a container carrying yarn to a knitting mill can be reloaded with fabric and then brought to a cutting house, then reloaded with finished garments.
'There is usually a pool of equipment at each of these facilities and we are managing that,' Hourihan explained. 'There is a lot of coordination in making it as efficient as possible.'
Julie Hughes, president of the United States Association of Importers of Textiles and Apparel, said at the same New York conference that U.S. demand for apparel imports appears to have been growing since November.
Mark D'sa, a senior director of sourcing at the Gap, said despite the rapid growth of garment business in countries such as China and India, Central America, and Guatemala in particular, have many advantages. These include textile mills to support clothing industries, competitive pricing, elevated workmanship and the ability to offer products made from a wide variety of fabrics.
He also agreed the region's proximity to the United States may also be an important asset if a 'cap and trade' law puts a price on carbon producing. If that happens 'it is going to force a lot of apparel to be sourced closer to home,' D'sa predicted.
Hourihan said the trade is beginning to show some encouraging signs in 2010.
'For me it's a question of how many years out will it take to get back to where we were. And I'm not sure if it's going to be two, three, four or five years,' he said. 'Hopefully once things get on an upswing we could all be surprised.'
Produce Fruitful. One area that did hold up well in 2009, said Hourihan, was the produce market. Bananas, of course, are a major export from Central America, but most of that fruit is carried in dedicated fleets for Dole and Chiquita.
Crowley carries many melons and is benefiting from an expanding list of fruits and vegetables approved for import by the U.S. Department of Agriculture, Hourihan said.
'Central America is becoming more and more the fruit and vegetable basket of America,' he said, supplying products such as cucumbers, snow peas and root vegetables.
According to the USDA, though far smaller than Mexico, which shipped 2.9 million metric tons of fresh vegetables to the United States in 2008, Costa Rica, Guatemala, the Dominican Republic and Honduras shipped a collective 175,000 metric tons of fresh vegetables to the United States in 2008.
Cuba Trade. Crowley has been serving U.S. exporters selling products to Cuba for eight years. Hourihan noted the company is only allowed to carry a limited number of licensed commodities. Poultry and powdered milk are among the leading commodities, but he said exports of other products including timber and medicine are also permitted.
Only exports are allowed, he noted. 'The stock in trade for a carrier is to seek balance in a trade. But with Cuba you are starting out with an imbalance. But it has worked O.K. for us, and we appreciate being able to serve it. We believe in free trade so we are prepared to serve the trade and we would like to grow with it if change comes.'