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The year ahead

This fair wind can bring us good fortune

So often in the past, the regular Year Ahead feature in Caribbean Maritime has warned, somewhat forebodingly, of dark days for the region’s shipping sector amid an atmosphere of gloom and despondency. A glance back to, say, 2009 or 2010 will clearly show the prevailing downbeat mood at that time.

Yet, fast forward to early 2015 and rarely has there been a more optimistic outlook in the region. There may be a few blemishes on an otherwise cloudless horizon, but the future does look super rosy.

There are, of course, some concerns about the health of the global economy and especially in regard to those nations that so recently were the high flyers. Here we are talking about Russia, China, Brazil and South Africa, four of the five the so-called BRICS, all of which were experiencing economic difficulties of one kind or another as 2014 came to an end.

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Three factors

On the other side of the ledger, the Caribbean optimists point to three factors that will ensure a prosperous year for the region: the falling price of oil; infrastructural development on an almost unprecedented scale; and – an unexpected Christmas present – good news in regard to Cuba.

First, the price of oil. How long oil will stay low is anyone’s guess. But the recent fall in energy prices will help many Caribbean economies. For example, between January and December 2014 the price of benchmark West Texas Intermediate fell from US$ 95 a barrel to below US$ 55. Bad news for Venezuela and probably Trinidad, but good news, it seems, for just about everyone else.

At the same time, the shipping industry sees a direct benefit, with bunker prices tumbling throughout the past year.

It is unclear what impact falling energy prices will have on the Caribbean’s nascent LNG/LPG market. Investment has been made in several new gas import terminals, but the lower cost of importing refined products could delay any decisions about switching over to imported gas for energy generation as the cost of power station conversion would outweigh any savings.

Exaggeration

It’s a slight exaggeration, but is there a Caribbean nation without its own mega-port project? It seems not. While each of the many schemes may make sense in isolation and without the prospect of additional capacity elsewhere, they certainly don’t do so collectively.

Backed mostly by Chinese money, the list of recently completed or planned container hubs mooted in 2014 was a long one:

Antigua: Crabbs Peninsula/Rat Island (US$2.3 billion)

Jamaica: Goat Islands, it’s all gone quiet but maybe Macarry Bay is an option

Puerto Rico: Roosevelt Roads, but unlikely to go ahead

Nicaragua: Monkey Point, linked to the new Grand Canal project

Cuba: Mariel, already open and run by PSA (US$ 900 million)

Costa Rica: Moin, finally getting under way in January 2015 with the backing of APM Terminals.


These are in addition to significant expansion plans at existing ports such as Free- port, Caucedo and Cartagena.

Clearly, not all of these new projects will see the light of day and one or two of the schemes seem to have vanished almost as quickly as they came.

Then there is the project to top all projects, the US$ 50 billion Nicaragua Grand Canal – again backed by the Chinese or, more precisely, by Chinese telecom entrepreneur Wang Jing. The coming year should see more flesh on the bone of this global mega project along with some answers to the many remaining questions, in particular those relating to finance from the canal’s backers.

Whether this particular scheme ever gets built is still open to much speculation. All we can say is that it looked a lot more likely as 2014 closed than it did at the start of the same year, with ‘work’ commencing on 22 December. Excavation, though, was not due until the second half of 2015.

Anyone who listened to the truly remarkable presentation by Dr Paul Oquist – Private Secretary for National Policies for the Presidency of the Republic of Nicaragua – at the CSA AGM in Punta Cana could not fail to be convinced about the serious- ness of those in Nicaragua associated with this world-scale scheme, as are those who listen to President Daniel Ortega’s speeches on the subject. If and when completed, the 278 km transisthmus waterway will give real competition to the soon-to-be enlarged Panama Canal, which according to the latest estimate is set to be completed in early 2016.

Knock-on effect

In news elsewhere that is bound to have a knock-on effect in the Caribbean, China Shipping Container Lines (CSCL) has taken delivery of the world’s largest container- ship. The 19,000 teu newbuilding is powered by the world’s largest diesel engine. So the ships get bigger and maritime facilities – especially canals – struggle to keep up. And this is where the Nicaragua Grand Canal can match or even surpass the ambitions of the global shipping industry.

Bigger vessels are, of course, a recurring feature of the cruise sector. We won’t see the 5,400 passenger ‘Oasis III’ (still unnamed) as CM went to press) until mid 2016, but look out for these new mega 4,000-plus passenger ships in 2015: ‘Anthem of the Seas’ (which will be sailing the Mediterranean in 2015) and ‘Norwegian Escape’ (home-porting in Miami).

It’s an undeniable trend that more and more cruise operators are looking to create their own fully controlled destination some- where in the Caribbean – Norwegian Cruise Line (Harvest Caye, Belize) and Carnival Cruises (Tortuga Island, Haiti) spring to mind. This concept began in The Bahamas and seems to be spreading. For many nations there are two options: to fight it and lose business or to go with it and at least retain some jobs and revenue.

Curve ball

Finally, there is the curve ball that is Cuba. To continue with the baseball metaphor, this excellent news came out of left field in the closing days of 2014 and took nearly everyone by surprise. The decision of the United States and Cuba to normalise diplomatic relations is more than a step in the right direction and was warmly welcome by a range of Caribbean leaders.

It goes without saying that the long-term implications of this decision are likely to be positive for the region’s maritime sector.

But in the short term it is worth noting that Washington has not immediately lifted a ban on US citizens visiting Cuba as tourists. So the south Florida-based cruise sector will have to wait before it can add Havana and other Cuban destinations to itineraries. Assuming goodwill on all sides, however, it must surely follow. In turn, this will mean a huge investment in cruise terminal facilities and the like.

All in all it should be a good year; but in life nothing is certain except death, taxes and, of course, the prospect of two great CSA meetings scheduled in 2015 for Tortola and Cartagena.