Hurricanes make operators review transshipment strategy

The increasing force of hurricanes that have been hitting the Caribbean region, with severe impact on trade and operations in some of the major ports, have made large shipping companies to reexamine their hub strategies for cargo transshipment operations internationally. This was recently reported in Fairplay magazine, specializing in maritime affairs.

Under the headline, “How record-setting Hurricane Irma could impact shipping”, Fairplay’s chief editor, Greg Miller, warned that the most powerful hurricane ever recorded in the Caribbean basin could affect centers (hubs) such as the Freeport Container Port (FCP) operated by Hutchison Port Holdings, in the Bahamas.

The hurricanes in the Caribbean are a continuous threat for shipping companies.The center is the hub of Mediterranean Shipping Co. (MSC) and, to a lesser extent, its partner in the 2M alliance, Maersk Line. Fortunately, the potential risk did not materialize, as reported at the 47th Annual Meeting of the Caribbean Sea Association (CSA), held from October 9 to11 in Bridgetown, Barbados.

However, the impact on the port complex and other ports in the region last year by Hurricane Matthew and the possible recurrence of highly destructive phenomena, triggered by climate change, has made shipping companies reassess whether they should concentrate their transshipment operations in Caribbean ports.

The fear of the impact of these natural phenomena is repeated every year during the hurricane season in the Caribbean, which runs from June to November.

This year, hurricanes Irma and Maria were classified as category 5, but Irma was considered the strongest ever recorded in the Atlantic Ocean outside the Gulf of Mexico and the Caribbean Sea. Its most damaging effects were felt in Puerto Rico, which did not figure as a transshipment center under the Jones Act, and the small islands of Antigua and Barbuda, St. Maarten and Tortola.

The damages from Maria were so severe that Crowley closed indefinitely its operations in Puerto Rico, St. Thomas, St. Croix, St. Maarten and Rio Haina.

In his article, Miller recalls that, although less intense (category 4), Matthew struck the port of Freeport on October 6, 2016, which, at that time, had nine gantry cranes in operation (one was destroyed by a fire that same year). The hurricane put six cranes out of service, leaving only three in operating condition and forcing the shipping companies to use the Caucedo alternating ports in the Dominican Republic and Cristóbal in Colón, Panama, the latter operated by Panama Ports Co., subsidiary of Hutchison.

“The volume of full containers increased 95% in the first seven months of this year, versus the same period in 2016” due to the impact of Matthew,”

Miller reports that Matthew is not the first major hurricane to affect services offered by MSC through the Freeport hub. “In March 2010, a tornado destroyed a gantry crane and killed three workers, forcing the shipping company to divert much of its cargo (mainly to Caucedo) in the following months.

The hurricanes in the Caribbean are a continuous threat for shipping companies.

The hurricanes in the Caribbean are a continuous threat for shipping companies.

“Fairplay has been informed by executives from the Caribbean port community that MSC has been increasingly concerned about the permanent threat of hurricanes to its transshipment services in the Bahamas and is, therefore, exploring options at other regional hubs,” said Miller.

The information was confirmed at the closing time of The Bulletin by a port executive participant in the 47th Assembly of the CSA. “Fortunately, hurricanes have not affected a major transshipment center in the Caribbean, but the operators are exploring options for the future,” he said.

He commented that, to the good fortune of the shipping companies, on the eve of the start of operations of the enlarged Canal, many ports extended their capacity to attend to Neopanamax ships, which has allowed the major shipping companies to have an oversupply of port capacity in the Caribbean.

“This over capacity will increase even more when the port of Moín begins operations in two years,” in Limón Bay, Costa Rica. He said that the “hurricane factor” is one of two aspects that are driving the major shipping alliances to reexamine their strategies. The other is to restructure their service networks, to make them more efficient and profitable.

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