If you want to review the views of a cement manufacturer who went through the chore of doing its own study of how the move to Ponce would affect it, check out this link (in Spanish).
http://www.sanjuancapital.com/noticiasread.asp?r=HLYYBKLOLA
These guys estimate their transportation costs would go up from 4.94 to 12.69 per ton of ore imported. And they would have to close.
Thursday, January 24, 2008
Surprises at the Statehouse (El Capitolio) or...can you be fooled if you know you are?
Before I became the GM of the San Juan Port Commission, I was Mayor Santini's legislative rep. It was my job to, as I liked to explain to friends, "push good bills and kill bad ones". In theory it is easy. Then again, some types of heart surgery are easy too. "You mean sowing on the left ventricle because it has a hole it in? No sweat. We'll be done quickly for you to be able to catch the Late shows tonight..."
It is not, obviously. And neither is legislative work. To the outsider, working it may seem effortless, but it is always the fruit of many years of study, hard work, and dedication. And results are never guaranteed. Lobbying for a bill is no different.
So yesterday, I went to the Capitolio to attend the hearings on the bills that are pending on the Port of San Juan, PC3926 and RCC2074. PC3926 would transfer Piers 15, 16 and Hangar 21 to the City of San Juan. RCC2074 would impose a moratorium on the San Juan Waterfront's reckless divestiture of land to private entities by the Puerto Rico Ports Authority.
The deponents were from Advantage Consulting, retained by PRPA to determine the impact of transferring break bulk cargo operations from San Juan to Ponce.
I was shocked to learn that the plan was to only question these folks "lightly". I was not so shocked the deponents were provided an outline ahead of time for their convenience. But even in highly scripted theaters, things have a way of running amok. Then it is every man for himself.
The Advantage report, prepared for PRPA consumption two days prior to House hearings on the issue in November 2007, concludes that the increase in transportation costs would be only "in the order of one percent" of current freight charges.
At this point I should paraphrase the Master Plan for the Port of San Juan, prepared in 1990 for....tada! the PRPA. It states, more or less, that the major drawback of the port of Ponce is its location, some seventy miles away from the major distribution centers of the island.
This is key to understand why the Advantage folks took PRPA for a ride in reaching the conclusion there would be only a minimal impact on transportation costs, when bringing in cargo through Ponce. Or did they?
You see, cargo comes in a ship, it is unloaded, and most of it goes to warehouses and distribution centers. Guess where most of them are in the island? In the metropolitan area, or roughly from Carolina, Canóvanas, San Juan, Bayamón, Guaynabo, Cataño, and perhaps even Toa Alta and Toa Baja.
This means that a hypothetical sheet of plywood would arrive in Ponce, only to have to be trucked back some seventy miles, to a distribution center around San Juan. That costs money. Quite a bit, in fact.
And that is only the transportation cost. And that was before oil hit $100 per barrel.
And this, my friends, is the beginning of the nightmare for that piece of plywood and the hapless customer who needs it pronto. Advantage assumes the goods would go from Ponce directly to their ultimate destination, further claiming that in that regard, Ponce and San Juan are equidistant from the rest of the island.
Another evaluation on the same topic from Estudios Técnicos, claims that ground transportation costs will increase 67% on year 1, and a further 19% on year 2. Estudios Técnicos prepared that report in May 2007. Keep the date in mind.
Ah, but the clients were different, Vicente Feliciano of Advantage smartly noted. The Advantage study was for PRPA, and the Estudios Técnicos report was prepared for someone else, the Port of Ponce (Port of the Americas). As if that made the conclusion unassailable. Perhaps Advantage should have billed Ponce too, for their report.
Equally tartly, Advantage learned that the Boards of Directors of both PRPA and Ponce have many common denominators, including the President of the Board of PRPA, the Director of the State Department of Transportation and Public Works. Ouch. The existence of reports with deeply troubling and inconsistent opinions should have been known to all concerned. The Estudios report bounced around for six months.
It soon became apparent that PRPA wanted to predetermine the outcome of the Advantage study, and it selectively furnished Advantage with facts that would lead to the inevitable conclusion that going with the break bulk cargo to Ponce was a good idea.
When our Advantage folks began feeling cornered at the hearing, they began making caveats. Ah, it was ONLY the break bulk coming in through piers 13 and 14, none of the other piers (15 and 16) was going to be affected.
They cavalierly ignored the fact that the operators for break bulk operate on piers 13 and 14 AND 15 and 16, and that these small companies would be effectively unable to operate simultaneously in Piers 15 and 16 in San Juan and God knows where in Ponce. Net effect? They would also have to clear out in Piers 15 and 16, leaving that space free for other, non maritime uses.
The home run was scored inadvertently by Rep. Angel Pérez when he asked the circumstances behind the contracting between PRPA and Advantage. Initially, Advantage stated they presented a "proposal". How come, were they mind readers? Such proposal had to respond to some kind of PRPA input or request. Finally they admitted it was so...was it a phone call, or a meeting, they were not clear as to how it came about.
This was the onset of Legislative Alzheimer's disease.
Finally, the date was more or less pegged to October 2007. How was it so that then, in less than a month, they had completed such a complicated analysis?
The answer was unexpected and left most people's mouths agape.
They were able to present this report in less than a month's time, because it was "based on another report that was prepared on the same premise (that is, switching the break bulk cargo) to Yabucoa port." When was that study prepared? In 2006. Who was it for?
The Puerto Rico Ports Authority.
In my legislative work, I have been witness to many embarrassing admissions. This one broke the charts.
Feeling further cornered, Advantage defended their outcome, stating that the move to Ponce was viable because, otherwise,a new pier would have to be built in San Juan [The lineal pier San Juan proposes in Hangar 21 area].
The weighing in of San Juan alternatives was not included in the study (as they had been pre-discarded by PRPA), but I reckon that by now Feliciano had to pull all the stops.
Feliciano stated they took the cost figure of $200 million they were provided by Bonilla for the Hangar 21 lineal pier construction expense as a valid one. Facing such a staggering amount, any move to Ponce would be less expensive.
The ball flew out the park when they said that eventually, all the warehouses would move to the south of the island.
At that point I wondered whether the ushers were adding anything funny to the water glasses at the deponent's table.
I bet Mr. Feliciano nad his sidekick would have rather been adrift somewhere in the Mona passage, than sitting at the business end of that legislative inquiry. After all, it was to be a quick hearing... that ran amok.
My take is that it always takes two to dance. PRPA wanted a result, and provided selective information to lead to what they needed. Advantage, on the other hand, recycled a previously delivered and paid for product whose existence was not known publicly until yesterday to allow PRPA chief Lcdo. Bonilla to advocate for the transfer to Ponce.
The fact is, no self respecting firm would allow itself to be bent this way to obtain a result. But then again, they kept their client happy. Total customer satisfaction. This is the difference between helping a client make a decicion, and justifying a decision already made.
The conclusion to all of this is that now, more than ever, Rep. Chico's Economic Development Committee is convinced the Moratorium is needed to stop this merry go round at the Port of San Juan.
From the State controller's website, here is the contract info for Advantage and the PRPA:
www.ocpr.gov.pr
It is not, obviously. And neither is legislative work. To the outsider, working it may seem effortless, but it is always the fruit of many years of study, hard work, and dedication. And results are never guaranteed. Lobbying for a bill is no different.
So yesterday, I went to the Capitolio to attend the hearings on the bills that are pending on the Port of San Juan, PC3926 and RCC2074. PC3926 would transfer Piers 15, 16 and Hangar 21 to the City of San Juan. RCC2074 would impose a moratorium on the San Juan Waterfront's reckless divestiture of land to private entities by the Puerto Rico Ports Authority.
The deponents were from Advantage Consulting, retained by PRPA to determine the impact of transferring break bulk cargo operations from San Juan to Ponce.
I was shocked to learn that the plan was to only question these folks "lightly". I was not so shocked the deponents were provided an outline ahead of time for their convenience. But even in highly scripted theaters, things have a way of running amok. Then it is every man for himself.
The Advantage report, prepared for PRPA consumption two days prior to House hearings on the issue in November 2007, concludes that the increase in transportation costs would be only "in the order of one percent" of current freight charges.
At this point I should paraphrase the Master Plan for the Port of San Juan, prepared in 1990 for....tada! the PRPA. It states, more or less, that the major drawback of the port of Ponce is its location, some seventy miles away from the major distribution centers of the island.
This is key to understand why the Advantage folks took PRPA for a ride in reaching the conclusion there would be only a minimal impact on transportation costs, when bringing in cargo through Ponce. Or did they?
You see, cargo comes in a ship, it is unloaded, and most of it goes to warehouses and distribution centers. Guess where most of them are in the island? In the metropolitan area, or roughly from Carolina, Canóvanas, San Juan, Bayamón, Guaynabo, Cataño, and perhaps even Toa Alta and Toa Baja.
This means that a hypothetical sheet of plywood would arrive in Ponce, only to have to be trucked back some seventy miles, to a distribution center around San Juan. That costs money. Quite a bit, in fact.
And that is only the transportation cost. And that was before oil hit $100 per barrel.
And this, my friends, is the beginning of the nightmare for that piece of plywood and the hapless customer who needs it pronto. Advantage assumes the goods would go from Ponce directly to their ultimate destination, further claiming that in that regard, Ponce and San Juan are equidistant from the rest of the island.
Another evaluation on the same topic from Estudios Técnicos, claims that ground transportation costs will increase 67% on year 1, and a further 19% on year 2. Estudios Técnicos prepared that report in May 2007. Keep the date in mind.
Ah, but the clients were different, Vicente Feliciano of Advantage smartly noted. The Advantage study was for PRPA, and the Estudios Técnicos report was prepared for someone else, the Port of Ponce (Port of the Americas). As if that made the conclusion unassailable. Perhaps Advantage should have billed Ponce too, for their report.
Equally tartly, Advantage learned that the Boards of Directors of both PRPA and Ponce have many common denominators, including the President of the Board of PRPA, the Director of the State Department of Transportation and Public Works. Ouch. The existence of reports with deeply troubling and inconsistent opinions should have been known to all concerned. The Estudios report bounced around for six months.
It soon became apparent that PRPA wanted to predetermine the outcome of the Advantage study, and it selectively furnished Advantage with facts that would lead to the inevitable conclusion that going with the break bulk cargo to Ponce was a good idea.
When our Advantage folks began feeling cornered at the hearing, they began making caveats. Ah, it was ONLY the break bulk coming in through piers 13 and 14, none of the other piers (15 and 16) was going to be affected.
They cavalierly ignored the fact that the operators for break bulk operate on piers 13 and 14 AND 15 and 16, and that these small companies would be effectively unable to operate simultaneously in Piers 15 and 16 in San Juan and God knows where in Ponce. Net effect? They would also have to clear out in Piers 15 and 16, leaving that space free for other, non maritime uses.
The home run was scored inadvertently by Rep. Angel Pérez when he asked the circumstances behind the contracting between PRPA and Advantage. Initially, Advantage stated they presented a "proposal". How come, were they mind readers? Such proposal had to respond to some kind of PRPA input or request. Finally they admitted it was so...was it a phone call, or a meeting, they were not clear as to how it came about.
This was the onset of Legislative Alzheimer's disease.
Finally, the date was more or less pegged to October 2007. How was it so that then, in less than a month, they had completed such a complicated analysis?
The answer was unexpected and left most people's mouths agape.
They were able to present this report in less than a month's time, because it was "based on another report that was prepared on the same premise (that is, switching the break bulk cargo) to Yabucoa port." When was that study prepared? In 2006. Who was it for?
The Puerto Rico Ports Authority.
In my legislative work, I have been witness to many embarrassing admissions. This one broke the charts.
- Assuming the smarty pants here was Advantage, when PRPA accepted the the Ponce study, how come it did not strike PRPA as familiar analysis...from 2006, just the preceding year?
- Did Advantage resell work twice to PRPA...and PRPA knew about it and paid for it?
Feeling further cornered, Advantage defended their outcome, stating that the move to Ponce was viable because, otherwise,
The weighing in of San Juan alternatives was not included in the study (as they had been pre-discarded by PRPA), but I reckon that by now Feliciano had to pull all the stops.
Feliciano stated they took the cost figure of $200 million they were provided by Bonilla for the Hangar 21 lineal pier construction expense as a valid one. Facing such a staggering amount, any move to Ponce would be less expensive.
The ball flew out the park when they said that eventually, all the warehouses would move to the south of the island.
At that point I wondered whether the ushers were adding anything funny to the water glasses at the deponent's table.
I bet Mr. Feliciano nad his sidekick would have rather been adrift somewhere in the Mona passage, than sitting at the business end of that legislative inquiry. After all, it was to be a quick hearing... that ran amok.
My take is that it always takes two to dance. PRPA wanted a result, and provided selective information to lead to what they needed. Advantage, on the other hand, recycled a previously delivered and paid for product whose existence was not known publicly until yesterday to allow PRPA chief Lcdo. Bonilla to advocate for the transfer to Ponce.
The fact is, no self respecting firm would allow itself to be bent this way to obtain a result. But then again, they kept their client happy. Total customer satisfaction. This is the difference between helping a client make a decicion, and justifying a decision already made.
The conclusion to all of this is that now, more than ever, Rep. Chico's Economic Development Committee is convinced the Moratorium is needed to stop this merry go round at the Port of San Juan.
From the State controller's website, here is the contract info for Advantage and the PRPA:
www.ocpr.gov.pr
 | 3135 | 2008-000055- | ADVANTAGE BUSINESS CONSULTING, INC. | 10,000.00 | Vigencia Vencida | 08/31/2007 | 09/01/2007 | 09/30/2007 | SERVICIOS MISCELANEOS NO PERSONALES | Autoridad de los Puertos |
| 3135 | 2008-000085- | ADVANTAGE BUSINESS CONSULTING, INC. | 31,250.00 | Registrado | 10/17/2007 | 10/17/2007 | 06/30/2008 | SERVICIOS TECNICOS | Autoridad de los Puertos |
Monday, January 21, 2008
Amateur Radio Operators Provide Eager Audience
I was fortunate enough to be asked to address the annual meeting of the Puerto Rico Amateur Radio League in Salinas. I am an amateur radio operator (WP4NPV) but traditionally, the speaker chooses a subject that has little or nothing to do with Amateur Radio. I chose to speak about the Port of San Juan and the challenges it faces.
This was not an easy crowd. The people in that room came from all possible backgrounds and professional ad nonprofessional backgrounds, from all over the island. Most are not from the San Juan metropolitan area. My task was to bring up the subject and inform about what the problem is, according to us, the effect it will have, not just on San Juan but on all of the island's residents and commerce, and what was it that the City of San Juan is doing about it, preparing to operate the Port of San Juan and firming up our proposed course of action.
I spoke without notes, for about fifty minutes. No one moved from their seats. In that time, I explained what the San Juan Waterfront project proposed to do (develop all the area from the Old San Juan Pier 1-6 and around the corner Piers 7-10 and through Pier 14) as a pedestrian walkway, shops, etc. All non maritime uses, including a marina for large exotic yachts.
One of the first key points I made was that no one has any objections to the massive development proposed. However, I pointed out that such development would have immediate consequences The first one was that any cargo operations in those piers would have to be moved elsewhere, as the nonmaritime use was completely and utterly incompatible with the original intended cargo transfer use.
Immediately, people understood that the Waterfront project required a relocation of the cargo activities that are now carried out there.
That was a good time to explain what kind of cargo we were talking about, breakbulk cargo.
The audience then had a basic primer on how cargo is transported by ship: containers (which were perfected a few decades ago for traffic between Puerto Rico and the mainland), liquids (molasses, petroleum products--fuel and lubricants) bulk cargo (iron ore, concrete, grain), neobulk (vehicles) and breakbulk. It was easy for them to understand why some things cannot be put in containers. Some things do not fit in containers, some are so heavy that would exceed the weight capacity for a container, and some are too bulky that too few would fit in a container. Yet others are not containerized for other reasons (not economical to send empty containers back to where the wood originates).
At any event, people were pretty clear as to what breakbulk cargo was ("carga suelta"). They also learned that it was being unloaded where there would soon be pedestrian walkways. It was time to explain the next ingredient, the proposal from the Puerto Rico Ports Authority to have the breakbulk cargo operations relocate to the Port of Ponce, almost seventy miles away.
One of the audience members later commented "there was no need to be a expert to understand how a relocation of these operations to Ponce would immediately result in a significant price increase on the cost of such goods."
And he was right. I explained how it was determined that there would be an increase in transportation costs of 67% on year 1, and a further 19% on year 2. You could hear a pin drop at that point.
To drive the point home, I used an example of a very ordinary item, which actually comes in as breakbulk: a 4' by 8' by 1/2 inch sheet of plywood. Suddenly, people understood the issue of the Port operation was not merely an issue "over there" in San Juan, but one that would have immediate effects all over the island.
To cap off further devastating effects, I mentioned the loss of skilled jobs in San Juan, the indirect effect on the local economy, the increase in prices for the remaining port services in San Juan, and the fact the Port of Ponce officials have stated they are not very interested in handling breakbulk, as their core business will be container transshipment.
Finally, I explained what San Juan proposes, a transfer of Piers 15 and 16 to let the City handle breakbulk, as the Ports Authority has declared itself unable to do. The solid industry support behind this proposal was underscored at the talk by narrating how we responded when the industry came to the City, in a seeming effort of last resort.
Lastly, Hangar 21---a 50 cuerda parcel of land recently acquired by PRPA from the the federal government was mentioned as our proposed site to develop and construct a new pier to minimize the impact of the elimination of pier space from piers 7-14.
Additionally, the two bills before the Puerto Rico House of Representatives were discussed,
RCC2174 (moratorium on San Juan Waterfront land conveyances) and PC3926 (transfer to City control of Piers 15, 16 and the area around former Hangar 21 in Isla Grnde).
I am glad I went there and I am even more glad the audience went home understanding the importance the Port of San Juan plays on their daily lives, even if they did not know it.
This was not an easy crowd. The people in that room came from all possible backgrounds and professional ad nonprofessional backgrounds, from all over the island. Most are not from the San Juan metropolitan area. My task was to bring up the subject and inform about what the problem is, according to us, the effect it will have, not just on San Juan but on all of the island's residents and commerce, and what was it that the City of San Juan is doing about it, preparing to operate the Port of San Juan and firming up our proposed course of action.
I spoke without notes, for about fifty minutes. No one moved from their seats. In that time, I explained what the San Juan Waterfront project proposed to do (develop all the area from the Old San Juan Pier 1-6 and around the corner Piers 7-10 and through Pier 14) as a pedestrian walkway, shops, etc. All non maritime uses, including a marina for large exotic yachts.
One of the first key points I made was that no one has any objections to the massive development proposed. However, I pointed out that such development would have immediate consequences The first one was that any cargo operations in those piers would have to be moved elsewhere, as the nonmaritime use was completely and utterly incompatible with the original intended cargo transfer use.
Immediately, people understood that the Waterfront project required a relocation of the cargo activities that are now carried out there.
That was a good time to explain what kind of cargo we were talking about, breakbulk cargo.
The audience then had a basic primer on how cargo is transported by ship: containers (which were perfected a few decades ago for traffic between Puerto Rico and the mainland), liquids (molasses, petroleum products--fuel and lubricants) bulk cargo (iron ore, concrete, grain), neobulk (vehicles) and breakbulk. It was easy for them to understand why some things cannot be put in containers. Some things do not fit in containers, some are so heavy that would exceed the weight capacity for a container, and some are too bulky that too few would fit in a container. Yet others are not containerized for other reasons (not economical to send empty containers back to where the wood originates).
At any event, people were pretty clear as to what breakbulk cargo was ("carga suelta"). They also learned that it was being unloaded where there would soon be pedestrian walkways. It was time to explain the next ingredient, the proposal from the Puerto Rico Ports Authority to have the breakbulk cargo operations relocate to the Port of Ponce, almost seventy miles away.
One of the audience members later commented "there was no need to be a expert to understand how a relocation of these operations to Ponce would immediately result in a significant price increase on the cost of such goods."
And he was right. I explained how it was determined that there would be an increase in transportation costs of 67% on year 1, and a further 19% on year 2. You could hear a pin drop at that point.
To drive the point home, I used an example of a very ordinary item, which actually comes in as breakbulk: a 4' by 8' by 1/2 inch sheet of plywood. Suddenly, people understood the issue of the Port operation was not merely an issue "over there" in San Juan, but one that would have immediate effects all over the island.
To cap off further devastating effects, I mentioned the loss of skilled jobs in San Juan, the indirect effect on the local economy, the increase in prices for the remaining port services in San Juan, and the fact the Port of Ponce officials have stated they are not very interested in handling breakbulk, as their core business will be container transshipment.
Finally, I explained what San Juan proposes, a transfer of Piers 15 and 16 to let the City handle breakbulk, as the Ports Authority has declared itself unable to do. The solid industry support behind this proposal was underscored at the talk by narrating how we responded when the industry came to the City, in a seeming effort of last resort.
Lastly, Hangar 21---a 50 cuerda parcel of land recently acquired by PRPA from the the federal government was mentioned as our proposed site to develop and construct a new pier to minimize the impact of the elimination of pier space from piers 7-14.
Additionally, the two bills before the Puerto Rico House of Representatives were discussed,
RCC2174 (moratorium on San Juan Waterfront land conveyances) and PC3926 (transfer to City control of Piers 15, 16 and the area around former Hangar 21 in Isla Grnde).
I am glad I went there and I am even more glad the audience went home understanding the importance the Port of San Juan plays on their daily lives, even if they did not know it.
Wednesday, January 16, 2008
Welcome to the Port of San Juan Blog!
Opening remarks for the Port of San Juan Blog.
It just occurred to me that the public would be interested in having up to date information on what is happening at the Port of San Juan. Maybe even outside of Puerto Rico.
The events here are of crucial importance to the residents of the island, a US territory with a population of nearly 4 million US citizens. The Port of San Juan is the island's principal port of entry for maritime commerce. It has been so since San Juan, the Capital City, was founded in its original location in 1508 and its current location in 1521. Yes, it was that far back. To give you an idea of how far ago that was....when Boston was being founded, San Juan had had a functioning City government for over a hundred years.
The first few posts will be designed to bring you up to speed as to what is going on, and the various controversies surrounding the most magnificent natural harbor in the Caribbean, and one of top 50 ports in the United States.
It just occurred to me that the public would be interested in having up to date information on what is happening at the Port of San Juan. Maybe even outside of Puerto Rico.
The events here are of crucial importance to the residents of the island, a US territory with a population of nearly 4 million US citizens. The Port of San Juan is the island's principal port of entry for maritime commerce. It has been so since San Juan, the Capital City, was founded in its original location in 1508 and its current location in 1521. Yes, it was that far back. To give you an idea of how far ago that was....when Boston was being founded, San Juan had had a functioning City government for over a hundred years.
The first few posts will be designed to bring you up to speed as to what is going on, and the various controversies surrounding the most magnificent natural harbor in the Caribbean, and one of top 50 ports in the United States.
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