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Frankel Speaks Out On Port Of The Americas’ Future

Former consultant’s resignation due to project’s direction; still studying Jones Act phase out


April 25, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Ernst Frankel, the global maritime industry expert hired initially as consultant for Puerto Rico’s Port of the Americas transshipment port, has decided not to continue at the post after seeing the project go in a different direction from what he had envisioned, he said in an exclusive interview with CARIBBEAN BUSINESS.

"I worked on the project as long as former co-manager Francisco Bruno was project manager. After [transshipment port manager] Hector [Jimenez Juarbe] came on board, they started hiring too many consultants and my decision was to step aside. This is not the way I am used to working on a project, but I wish them good luck," said Frankel.

According to the former port consultant, he planned to accompany a group of transshipment port managers to Singapore last October to meet with potential operators and carriers (CB June 18).

"This was when they started reinventing the wheel and adding on consultants with little experience regarding the Caribbean and U.S. maritime regulations. So I chose not to continue with the project," he said.

Frankel is not sure Puerto Rico will be able to find an operator for the Port of the Americas at this late date.

"In 2000, shipping companies were booming, able to invest in new facilities, and looking for new opportunities. The companies made huge profits, but these petered out about a year ago. Today it is a very different story. The Caribbean is a small portion of the world and a [transshipment port] depends on South and Central America to develop as a gateway. Unfortunately, [South and Central American] economies are in trouble right now and things do not look too bright. So the Caribbean itself is not a very good market and port operators are barely holding on," Frankel said.

When asked when was the best time to market Puerto Rico’s transshipment port worldwide, Frankel said, "Not today. Maybe one year from now. Besides, you can’t get any money from an operator without a final commitment date. And the [Port of the Americas] permitting process is still not finalized," he said.

According to the consultant, in a few weeks he will deliver a study on the economic impact of the Jones Act on the island. "I’ve just arrived from Washington, D.C. where I was talking to Jones Act experts about possible strategies that Puerto Rico’s administration can take regarding a gradual withdrawing of Jones Act regulations," said Frankel.

Frankel emphatically denied that he had tied the success of Puerto Rico’s transshipment port to the elimination of the Jones Act. "In 2000, and while I worked on the transshipment port project, my recommendation was for domestic trade to continue operating in San Juan. We could then take advantage of the 350,000 foreign trade containers that were forced to be handled under cabotage laws simply because there are no alternative operations.

"Once the transshipment port was up and running, foreign trade cargo would naturally flow towards the island’s southern port. My remaining tie with Puerto Rico is to finish a cabotage study that will calculate how much the Jones Act costs to the island’s economy and what it would gain if it was phased out in reduction of costs and market accessibility," said Frankel.

Frankel insisted, "The Jones Act is a political issue that is not going to be resolved for a couple of years. In the meantime, we must keep transshipment and domestic cargo separately–one port in San Juan and the transshipment port in the south. Moving domestic cargo to the transshipment port makes no sense."

Frankel joined the Rossello administration’s transshipment development project in 1999 as the project’s architect. A Massachusetts Institute of Technology professor, Frankel has developed close to 70 transshipment ports worldwide.

When the current administration came into office in 2001, Gov. Sila Calderon said she would support the port’s development in Guayanilla. But she relinquished to Mayor Rafael ‘Churumba’ Cordero’s political insistence and divided the initial planning process in two ports–one in Guayanilla and the other in Ponce.

This Caribbean Business article appears courtesy of Casiano Communications.
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