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Breakbulk April 2018

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16 The Journal of Commerce | April 2018 Breakbulk & Project Cargo is essential for setting the founda- tion for those bridges. "The people of Puerto Rico are steadily rebuilding their infrastruc- ture, including work to repair or re- place temporary roads and bridges," said Frank Larkin, Crowley's senior vice president and general manager, logistics and commercial services. Crowley now operates 16 vessels between the US mainland and Puerto Rico, including roll-on, roll-on vessels, and flat-deck barges. Competitors TOTE Maritime and Trailer Bridge also have added vessel capacity to haul relief and rebuilding supplies. Foss Maritime recently delivered 498 utility trucks on seven barges to the Port of Ponce in southern Puerto Rico, to support power generation. That shipment, from a coalition of 19 US electrical utilities, included bucket trucks, line trucks, pickups, aerial lifts, and other equipment. But beyond relief and repair operations, virtually no project cargo shipments have been booked for infrastructure improvements, Gonzalez said. Much of the non-con- tainerized commercial equipment shipped to Puerto Rico these days consists of automobiles. Project cargo faces several obsta- cles, led by a shortage of financing for infrastructure improvements that go beyond restoring the island's infra- structure to its pre-Maria condition. Gonzalez said a few small commercial projects are starting to return, but that materials, warehouses, and labor remain in short supply. "There is hardly any materi- als-handling equipment available for hire, and every forklift or crane is tied up in some restoration project, not only for the government side but the commercial side, including every hotel," said Ayesha Diaz, Crowley's general manager for warehousing and logistics in Puerto Rico. Puerto Rico's economic future, meanwhile, remains clouded. Thou- sands of workers have left to seek jobs on the US mainland, acceler- ating a migration that has reduced Puerto Rico's population from 3.9 million to 3.4 million during the last decade. The commonwealth already was struggling with high debt before the storm, and Maria's devastation has further discouraged private or insti- tutional investors from financing long-term initiatives to modernize the island's outdated infrastructure. Although the US federal disaster recovery package of $16 billion that was approved on Feb. 9 supports ongoing infrastructure rebuilding efforts, the funds cannot be used for new ventures that might enhance the longer-term prosperity of the island by upgrading roads, bridges, ports, and electricity grids. Focus Economics, a consultancy that aggregates economic forecasts, expects Puerto Rico's economy to remain in recession this year. The firm's panel of economists estimated in February that Puerto Rico's GNP will contract 4.5 percent in the 2018 fiscal year. The previous month's forecast had been for a 1.8 percent decline. For fiscal year 2019, GNP is expected to grow only 1.6 percent. A change in the US tax law has added a new handicap to Puerto Rican manufacturers by imposing a 12.5 percent federal tax on income generated by patents and licenses by foreign companies. Puerto Rican manufacturers pre- viously paid no federal tax on such patents and licenses. This change leaves Puerto Rico without one of its key mechanisms for maintaining its manufacturing base, which accounts for more than 100,000 jobs and over 30 percent of the commonwealth government's revenue. Rodrigo Masses, president of the Puerto Rico Manufacturers Associa- tion, said manufacturing will remain the "main pillar" of the island's economy, and that Puerto Rico "still maintains sufficient competitive advantages for attracting manufac- turing investment." He noted that manufacturing plants survived Maria in better con- dition than housing, much of which was poorly constructed, and that ports avoided significant damage. Most plants had backup generators that restored electricity within a few days after the storm. The government's revised five- year fiscal plan projects annual fiscal deficits through 2022. In response, Puerto Rico's Financial Oversight and Management Board requested more details on policy changes and creation of an emer- gency disaster fund. Masses said he is optimistic the changes will make Puerto Rico's bloated public sector "smaller and more agile, smarter and more capable — and less expensive. And, so, we will get out of all this crisis with a better community and a more competitive one." l email: With a quarter of the island's residents lacking electrical power, long-term improvements are taking a back seat to rebuilding efforts. Crowley "We now refer to the history of Puerto Rico in two periods — life before the storm, and life aer the storm."

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