Logistics Executives See Shipping Hub Potential in Cuba

Logistics Executives See Shipping Hub Potential in Cuba
U.S. businesses touring freight sites find modern facilities along with
decaying infrastructure and "endless" possibilities for American exports
By LORETTA CHAO
March 29, 2016 2:51 p.m. ET

U.S. logistics executives who toured Cuba's shipping facilities say the
island nation has potential to be a key shipping hub for the region, but
that heavy bureaucracy and poor infrastructure pose significant hurdles.

Officials from 18 logistics companies completed a trip to Cuba last
Friday—coinciding with President Barack Obama's historic visit to the
island—in which they watched operations at the Port of Mariel and met
with prospective partners, including ProCuba, an organization promoting
foreign trade and investment in the country.

They said Cuba may be an ideal location for cross-docking, or re-sorting
and distributing, cargo from large "post-panamax" ships to smaller
vessels headed for U.S. ports. That could include ships from Asia with
cargo bound for East Coast ports that aren't equipped to handle the
bigger ships, which can carry 14,000 or more twenty-foot-equivalent
units, or TEUs, a standard measure for container cargo.

"Their location is absolutely perfect to be a hub…to push freight into
northern Mexico, or all along the southern coast, and even up to our
ports that don't have that deep draft on the eastern side," said Sue
Spero, president of transportation brokerage firm Carrier Services of
Tennessee Inc. Being able to get goods to market "a few days quicker is
huge for us," she said.

The logistics companies, in a trip organized by the Transportation
Intermediaries Association, or TIA, joined other U.S. businesses that
met with Cuban officials as the president visited the island nation.

The Obama administration viewed Mr. Obama's trip as a critical market in
its moves to normalize trade relations with Cuba after a 50-year trade
embargo. Although the White House and Havana have opened the door to
more travel, tourism and some business dealings, important limitations
on trade in goods and services remain in place and would have to be
removed by the U.S. Congress.

Members of the logistics delegation, organized by the Transportation
Intermediaries Association, or TIA, said agreements such as a
multimillion-dollar deal under way for Starwood Hotels and Resorts
Worldwide Inc. to manage hotels in Havana will start a flow of goods
across the Straits of Florida for the hospitality business.

American companies also are looking to export commodities, frozen foods
and consumer goods to Cuba, said Robert Kemp, chief executive of
Pennsylvania-based DRT Transportation LLC. "You're talking about
building a society for 12 million people that hasn't been touched for 40
years," he said. From construction materials to the consumer market, the
possibilities are "endless," Mr. Kemp said.

Mr. Kemp said it was clear from visits to cargo sites that Cuba needs
big improvement in its transportation infrastructure. Local operators
told the group that the easiest way to move freight 700 miles from one
end of the island to the other is by sea, not truck or rail, he said.
"The fact that it's easier to put it on a boat tells all about the
infrastructure that you need to know," he said.

There are bureaucratic hurdles as well. Logistics companies must strike
partnerships with local operators which are state-run, though a
free-trade zone at the port allows investors to operate warehousing with
100% ownership, executives said.

Meanwhile, officials told the group they are keen on "preventing their
cultural identity from being compromised," said Ms. Spero, of Carrier
Services. "They don't want to see Starbucks in the barrios of Havana."

Still, the group found the Mariel port to have modern facilities,
including the ability to handle refrigerated shipments and weigh truck
entering or leaving the container terminal.

The port, which is under development by Singapore-based terminal
operator PSA International, has attracted additional investment from
container ship operator CMA CGM SA, which said last year it would build
a logistics hub including warehousing.

Write to Loretta Chao at loretta.chao@wsj.com

Source: Logistics Executives See Shipping Hub Potential in Cuba - WSJ -
http://www.wsj.com/articles/logistics-executives-see-shipping-hub-potential-in-cuba-1459277476