Crowley celebrates 50 years of maritime cargo transportation service in Puerto Rico

as printed in Caribbean Business May 27, 2004

Maritime cargo carrier Crowley Liner Services celebrates 50 years of doing business in Puerto Rico this year, having beaten 16 carriers over time in the transportation of domestic cargo between the U.S. mainland and Puerto Rico.

As a liner shipping company, we are pretty much focused on the Caribbean, said Crowley Chairman, President, and CEO Tom Crowley Jr. during an exclusive interview with CARIBBEAN BUSINESS. We are never going to be an international carrier like Maersk or APL. Our focus is to provide a higher level of service in this specific marketplace.

In Puerto Rico, we are very focused on the transport of department stores goods, building products, and automobiles, where we really can add value and provide better service than the bigger guys. We are a very strong regional player, offering five sailings a week. If a customers cargo is rolled off one voyage, they dont have to wait until the following week to get their cargo shipped; they roll on the next day. We are looking at improving the services that we have and are trying to build more customer loyalty through that avenue, said Crowley.

In 2003, Crowleys market share in the U.S. mainland-Puerto Rico trade market was estimated at 38% as it handled 730.8 million tons of cargo worth $413 million (compared with 596.2 million tons of cargo worth $329.8 million in 2002 with a 31% market share). The company has been a consistent market leader in the past five years for several reasons, including its equipment variety, the hundreds of units available at its Isla Grande terminal, and the services it offers its customers.

Crowleys cargo transportation system flows through four port terminals in the U.S. Philadelphias terminal offers one sailing weekly and Floridas Jacksonville terminal four sailings a week. Floridas Fort Lauderdale terminal is where most Central American operations originate while Crowleys Mississippi Gulf port specifically services Central America and Cuba. In Puerto Rico, Crowleys 83-acre terminal has a triple-deck unloading ramp that allows for eight-hour turnaround to service the five weekly sailings in addition to a Friday sailing to Jacksonville.

Keeping ahead in Puerto Ricos competitive market is a must for Crowley; it earns approximately 25% of the companys annual revenue. Over the past five years, the company has invested approximately $173 million in Puerto Ricos terminal, including such areas as tug and barge refurbishment and dry docking; terminal equipment and infrastructure; and cargo carrying equipment (new containers, reefers, flatbeds, chassis, etc.) The company estimates its annual direct and indirect economic impact on the islands economy at approximately $200 million.

Split in two geographical regions
The company is separated into two geographical regionsthe Puerto Rico / Caribbean and the Dominican Republic / Central America divisions. Its most recent market addition was Cuba in 2003 when the carrier was certified by the U.S. government to transport agricultural and medical products to the embargoed island.

We made the distinction between the two markets because they are very different, said Crowley. Puerto Rico imports many consumer goods, making it a thriving economy with a tremendous amount of southbound trade from the U.S. mainland Then there is the manufacturing industry, where we carry manufacturing products northbound. With a competitive four sailings a week, our roll on / roll off operation and 53-foot containers, Crowley offers a lot of value to customers.

Crowleys Dominican Republic / Central America business is more oriented toward manufacturing. Cargo is made up of products manufactured in Central Americaapparel and other goods. The economy down there isnt as strong as Puerto Ricos, but we are starting to see more consumer goods imported into Central America, which is starting to become similar to Puerto Ricos trade, said Crowley.

Expanding business opportunities
Most products [transported to Cuba] are bulk goods and chickens that are carried in bulk ships, said Crowley. We are carrying the overflow from what originates in the U.S.

Cuba is the newest market and certainly the fastest growing, with a tremendous need for goods. But the political issues are certainly there and the islands future is very uncertain.

During the first sailings, we found that the shippings legal process was very complicated, such as making sure we had all the permits necessary in the U.S. and Cuba, said Crowley. It had never been done and we were charting new ground. One sailing was aborted but we didnt give up and were eventually successful. It has worked out very well for us as we are using Crowleys southbound sailings to Mexico to stop in Cuba and the Central America northbound sailings in the same way. So far, weve averaged about 70 reefers a month and our vessels hold 300 units so were talking about 25% of the ships capacity.

Another opportunity Crowley is taking to expand its business is in logistics. The company began Crowley Logistics (CL) several years back. CL is mostly concentrated in Central America and the U.S. mainland since Puerto Rico is fairly serviced because logistics and warehouse companies offer their services.

We are pretty much focused on the Caribbean as a strong regional carrier, especially in Puerto Rico as it is a mature market for us, said John Douglass, Crowley Liner Services senior vice president and general manager for Puerto Rico and the Caribbean. There arent many other opportunities for us to expand our services. We serve Puerto Rico, the eastern Caribbean, the Dominican Republic, and all of Central America. So the Caribbean hub is pretty much covered.

Regarding plans to reserve the Bay of San Juan for cruise ship and tourism business, Crowley Vice President and General Manager for Puerto Rico Roberto Lugo isnt concerned.

The gubernatorial candidates running for this election have adopted some of the ideas of the Puerto Rico Shipping Association [of which he is president]. One is to have all the Old San Juan area for cruise ships as well as building a linear berth from Ramp Bravo all the way to Pier 15. This project has been on the back burner for the past eight or nine years, but we proposed it first. It hasnt been done because even though the government said they would do it, construction requires a lot of capital and is very costly. But Crowleys Isla Grande terminal wouldnt be affected because there would be a larger area where we could add space closer to our facility and turn over those sections that are farther away.

Crowley is proud of the companys employees, who after all are the ones who handle clients deal with the cargo, and operate the equipment. Crowleys terminal in Puerto Rico is considered the largest ro-ro [or roll-on / roll-off] terminal in the Western Hemisphere. A study done by the Ports Authority to measure the number of throughputs versus the number of acres in the terminal indicated that it was the most efficient terminal in the world. Our containers are always moving and we are proud of this, said Crowley.