Public and private sector co-operation is needed to improve port operations in any country, said Carlos Urriola, senior vice president, Carrix Inc, the world's largest privately- held marine and rail terminal operator. The company, headquartered in Seattle, Washington, is the parent company of SSA Marine, Tideworks Technology and RMS (Rail Management Services), and is responsible for regulatory affairs at Manzanillo International Terminal in Panama. "In order to develop ports and logistics activities, there must be a national project and that will not change with changes of government. The public and private sectors must work together to achieve this," he told the Business Guardian via e-mail on March 20.
He said the Panama Canal Expansion will be operational in 2015 and each country has to decide how it will develop its own ports. "Each country must decide the role it is going to play. T&T has been very successful in the gas industry. We do not see a reason why T&T cannot be successful in the logistics sector," he said. Urriola said diversification of the Panamanian economy is very important. "Panama's economy has depend mainly on the Panama Canal, just like T&T on oil and gas, but we have to develop other sectors of the economy and other regions of the country. That is why you have to diversify the economy. This worked in Panama and we feel that can also work in T&T," he said. He gave examples of how the improved Panamanian port has made the economy one of Latin America's strongest. "There has been more than US$2 billion in port investment by the private sector.
About 20 per cent of the gross domestic product (GDP) comes from the maritime sector. There are more shipping lines calling at our terminal and more competition, resulting in better freights. There have been 100,000 20-foot equivalent units (TEUs) in 1995 compared to six million TEUs in 2013. There have been shipping lines establishing their planning centre in Panama. And well-paid new jobs," he said. Apart from replying to the Business Guardian's questions via e-mail, Urriola had spoken the week earlier at AmCham T&T's annual general meeting (AGM) ago at the Hyatt Regency Trinidad hotel, Port-of-Spain. He spoke on Panama's experience of the imperatives of effective port operations for competitiveness and sustainable economic development.
Diversify markets Hugh Howard, president, AmCham T&T, in expanding on Urriola's presentation, said T&T must diversify its markets to diversify its economy, which raises the question of how to move goods and attract foreign investors. Howard referred to Otaviano Canuto, who is a vice president at the World Bank, who said that trade logistics is key to economic competitiveness and growth. "If we are diversifying the economy, we must ensure we can handle increased shipments, improve the clearance process for goods and the infrastructure related to the quality of transport must be of such, you can track consignments," he said. Panama port privatisation Howard said the ports owned and operated by Panama's government were not performing efficiently. "In 1994 when the government realised the operations of the port were not efficient and Panama was not benefiting from its strategic position, and the Canal was only used by shipping companies as a transit route, they invited private investors to establish container terminals." "This company, of which Urriola was senior vice president, was the first private company that established a container terminal.
When port operations became diversified, you had private as well as government operations. In 1994 Panama was doing in the order of 100,000 TEUs. However, in 2012, the port handled seven million TEUs," he said. Privatisation was partially responsible for greater efficiency. "What you had in Panama was what you now have in T&T: very strong trade unions. The government-owned facilities found themselves boxed in by agreements where workers did not think it was necessary to have high levels of productivity, which is needed for efficiency." All this changed when the private sector entered and devised new contracts with unions, which included profit sharing and other incentives to increase labour efficiency, he said.
In terms of private investors getting involved, Howard believes foreign and local private sector partnership is one option to be explored. "In terms of technical expertise, you may need a foreign partner that possesses these expertise and financial wherewithal." T&T's strategic location Howard said Urriola pointed out that T&T is strategically located to be a major port. "T&T could become a logistics hub where you can have transshipment and ships coming from all parts of the world to T&T. And transshipments take place from T&T to Latin America to West Africa to North America to Europe. The timing of it is very important.
Our competitor would be Venezuela, but because of the political situation in Venezuela, there is not the inclination for large companies to invest there, and this leaves T&T in a position to take those opportunities." Howard referred to Urriola saying T&T can have privately-operated terminals working along with the current state-run ports. "What would happen is the Government would invite private investors to establish container terminals. Any private investor would come in and assess the possibility of this," he said. Howard said T&T must improve its efficiency and competitiveness to avoid difficult times. "Unless we improve our efficiency, we will be in deep economic trouble. Whether you can get the current system to improve in its efficiency or whether you need to have alternatives with greater involvement of the private sector, that is a decision that will have to be made," he said. He said T&T has a short time to improve port operations to match international standards.
"Some people have expressed the view that T&T needs to get on with proper port operations within the next three to five years, failing which, T&T might missed the boat completely," he said. A port for La Brea Howard questioned whether the Port of Port-of-Spain is the ideal location for the country's biggest port. "It is at the centre of the city. There is no place for a free trade zone there if one is established. As far as I am aware, it still remains talk that the port would be relocated." He said La Brea would be a location with "tremendous opportunities" for port activities. "Several years ago when companies like Shell operating in Point Fortin Shell, La Brea was a very active port, although the infrastructure was not of the best.
Now there are all the lands available there and some of the activities taking place now, like construction of drilling rigs." He referred to the highway to Point Fortin project, which will improve road infrastructure and complement a full-scale port in La Brea. "So if the private sector gets involved in a container terminals on a port, there would be other activities centre around that port area." "Any attempt to relocate the Port of Portof- Spain as a state-owned entity would have challenges from an industrial relations point of view," Howard said.
