JO - Ships by-passing Kingston for cheaper Dominican Republic port. Importers severely inconvenienced.
Ships by-passing Kingston for cheaper Dominican Republic port. Importers severely inconvenienced.
by Ingrid Brown Sunday Observer reporter
Sunday, August 27, 2006
Some ships continue to bypass Kingston's port, taking their cargo directly to the Dominican Republic, from where it reportedly takes more than another week getting to Jamaica - a move which has severely inconvenienced importers.
At least one shipping line said the decision to bypass Kingston had nothing to do with congestion at the port but with the huge cost savings as a result of cheaper operational fees at the Casado Port in the Dominican Republic.
Cargo ships at the Kingston port. (Photo: Michael Gordon)
"The decision for using Casado as a transshipment hub has nothing to do with congestion at Kingston. It is a service change with saves us a lot of money," explained Graham McAllen, general manager of Hapag Lloyd which accounts for 3,500 of the 15,000 containers of domestic cargo coming to Jamaica annually.
"They operate at a lower cost than we do here in Kingston in terms of their loading and discharge fees and so on," he said.Asked if he foresaw more lines joining the decision to call into the Dominican Republic to save on cost, McAllen was unable to say.
"It is an independent decision, depending on what their own strategy and tactics are, so that is unanswerable by me," he said.
However, Christopher Kennedy, former vice-president of the Customs Brokers Association and managing director of Eagle and Whale Custom Brokers Limited, said importers were still experiencing lengthy delays in getting cargo back from the Spanish-speaking country.
He pointed out that although congestion had eased somewhat at Kingston's docks, importers were now faced with a new dilemma, with the cargo vessels showing they were unprepared to wait hours to get a berthing space."It is not sometimes in the interest of the vessel to wait to get a berthing space in Kingston and so the cargo gets left somewhere else and to get it back here is when we experience some real challenge," he said.
"Most of these vessels can't afford to lose a day or even a half-a-day... and the wait is sometimes more than a day for berthing space," he told the Sunday Observer.Kennedy said it was problematic having to wait a week for another vessel to take the cargo to Jamaica.
"A client has a container that got here last week but the vessel had to wait a day-and-a-half to get a berthing space and the line said it would be unprofitable for their business so they bypassed Kingston, dropped the container off in the Dominican Republic and it finally got here this week," he said two weeks ago.
Some ships from the lines, Hapag-Lloyd and Hamburg-Sud, CSAV and CMA-CGM, which collectively operate under West India Transatlantic Steam Ships (WITASS), plan to continue to bypass Kingston's port.
McAllen said that those ships currently calling at the Dominican Republic would continue to do so while those now coming into Kingston would remain the same.Port Authority of Jamaica (PAJ) assistant vice-president for public relations, Pat Bellinfanti, admitted that the recent congestion, among other issues, had forced some other ships to opt for that route, but insisted that it was not a significant number.
However, he sought to reassure that next month all those ships now calling at the Dominican Republic would return to Kingston.
"One or two other lines would not send the amount of ships that would normally be coming here, so that there was an easing which helped in conjunction with measures we undertook," he explained. "But in September, they will be resorting to their full schedule."
He pointed out that the acquisition of new equipment at the Kingston port should considerably reduce the length of time it takes to unload the ships.
However, a local agent for one of the shipping lines, who requested anonymity, told the Sunday Observer that they wanted to ensure that the congestion was completely cleared before they returned fully to Kingston.
"When we come in and there is no space for us to berth, then that delays our schedule and causes us to be late going through the Panama Canal," he insisted.Ships that arrive at the Panama Canal later than their scheduled time are required to pay US$100,000, in addition to all other fees.
Bellinfanti said the congestion at the port could occur any day as it was usually dependent on ships getting to the port on schedule.
"You can have congestion any day because ships are leaving, say three different ports and arriving here late, in which case the congestion is not our fault," he said.He further explained that it may suit the line, depending on what they are carrying, to continue to another port and then send the containers back.
But Kennedy was unimpressed with Bellinfanti's assurance, saying: "I know, for example, that lines have recalculated their whole schedule."
"We have done export containers that normally leave on a west-bound vessel to take it directly to the United States... Now they have to put them on an east-bound vessel which goes down to Panama and then transships them, so you are talking about containers that used to take five to six days now taking 14-16 days," he explained.
Kennedy said there were clients who had to put the cargo on an east-bound vessel, which added another 12 days sailing time.
"The Panama Canal has to set up a schedule, and each line gets a specific time, so if they get there late it throws off the schedule and they have to wait hours to get back in line, costing them a lot of money and time," he said.This delay, Kennedy noted, had caused a ripple effect in the industry as some manufacturers have had to pass on these delay cost to consumers.
"A lot of them have been operating on just-in-time inventory and the delays have thrown out their whole production schedule," he added.
He said some manufacturers had to stock more raw material, now causing them to tie up capital, because they were not certain if the raw material was going to get here on schedule."We find that they are increasing their prices to compensate for that expensive money they have to borrow to tie up in raw materials so they don't run out, and that is a challenge I know for a fact," he said.
However, McAllen said the importers should not experience any delays from his shipping line as long as there was no congestion at the port."During June and July, when congestion was still a problem here in Kingston, it delayed our feeders and berthing so that had an onward reaction," he disclosed.
A consequence of that, he said, was that cargoes could not be picked up on time and brought out of the Dominican Republic. "We now have two feeder voyagers a week between Casado and Kingston. So long as there is no congestion in Kingston then the issue of delay will be no more," he said.
He also told the Sunday Observer that the congestion surcharge which was being levied by that shipping line had been withdrawn as of August 15.
Hapag-Lloyd and Hamburg-Sud, CSAV and CMA-CGM had imposed a congestion surcharge of US$146 per 20-foot container and US$292 per 40-foot container in June.