There will be a 7.4 percent increase in tariffs at the Nassau Container Port (NCP) beginning on June 8, but this increase could be adjusted downwards by at least 18 percent if Arawak Port Development Limited can successfully attract car shippers to offload vehicles at the Nassau port rather than Prince George Wharf, Guardian Business has learned.
Confirming the level of the rate increase to $28 per twenty-foot equivalent unit container (TEU), Arawak Port Development Limited (APD) executives said it represents what is now needed to offset cost rises experienced by the company over the previous two years when the tariff was not raised. The increase is said to reflect the level of service and operations of the port today.
However, the rate rise is likely to raise concern among retailers and the public about the effects on prices for consumers.
Dion Bethell, chief financial officer for the NCP, said: "Up until recently, a lot of the investments would've been considered works in progress, as we bring them into service, there's a cost associated with maintaining them, and then there's the depreciation and financing side."
With 30 percent of its main "one-stop shop" administration facility leased by tenants such as Bahamas Customs, the Department of Environmental Health Services, Tropical Shipping and - in the very near future - the Mediterranean Shipping Company (MSC), Mike Maura Jr., CEO of Arawak Port Development Company, pointed to the additional cost incurred from adding these tenants - who will use utilities and other facilities - to the building. The tenants do not pay rent, as the services they provide are deemed integral to the services the port exists to provide, suggested Maura.
Other cost increase drivers are increases in amounts owed by NCP to the government. This year, NCP will pay $5.8 million to the government in the form of various fees, including a landing fee of $40.79 per container, which is increased annually based on inflation; this expense is beside any dividends that will be paid to the government as a 40 percent shareholder in the port, it was noted.
Meanwhile, the company made the decision to discount fees for small Bahamian shipping companies by 50 percent, in light of the difficulty local companies face in achieving economies of scale.
Overall, however, Maura emphasized that the company has managed to control costs as a proportion of its income, despite not having experienced the level of imports coming through the port that it had initially projected - particularly regarding Baha Mar-related and vehicle imports.
The company is also now focused on boosting efficiency levels at the port - a move which should provide customers with better value for money. In January it was voted the most productive port in the region, beating 23 others, by the Florida Shipowners Group, which handles the majority of the trade in the Caribbean.
The introduction of a new system that will allow computerized management of each container's location, along with other efforts to enhance efficiency, has the potential to further increase productivity at the port by another 20 percent, estimated Senior Operations Manager Richard McCombe.
In the area of financing costs, Bethell noted the company's success in raising capital in its private placement - which allowed it to cut its interest costs significantly - should enable it to pass on the cost savings in the long term.

Vehicle imports
But it is the question of vehicle imports - which have yet to switch over to the NCP as included in the company's financial projections - which has the greatest capacity to impact the rate increases that are coming down the pipe for port clients.
At present, around 75 percent of vehicles imported come into Prince George Wharf, said Maura. Given the landing fees on cars this number represents a $400,000 annual income potential that the NCP is trying to snag.
Maura added: "If the agents supported the relocation of those ships to this port and the port department supported that vessel calling here, that tariff increase [could] be less than it is today - in the area of $23 as opposed to $28.
"Our focus right now is talking to the agents and having them make a business decision for themselves. We are approaching it from the point of view that there is a potential customer out there. We need to understand what their needs are, and we need to satisfy their needs and make it a win-win."
Maura confirmed that should the car imports move over to the NCP, the tariff increase set to take effect in June will be reduced.
The company is also looking to reach out and grab more business in the form of providing training and other consulting services to other ports, such as the North Abaco facility presently under construction.
Maura said that if the company is successful in this initiative, this too should positively impact any future rate increases going forward.
"We're also doing it because we're proud of what we've been able to accomplish. This is like a mini Port of Miami, Port Everglades, Jacksonville, and it's completely foreign to what was here before. And we've done it with 100 percent Bahamians. A lot of training...but local talent and expertise."
Meanwhile, Maura again sought to dispel claims that increases in overall shipping costs highlighted by business operators such as Andrew Rogers of Bahamas Aluminium Manufacturers and Nassau Glass can be blamed on the port.
Maura said that overall costs paid are a combination of components, much of which is driven by shipping companies.
"It's far more complicated than people realize," he stated.

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