Page 9: of Maritime Reporter Magazine (August 2003)

Dear Editor:

Clayton Cook's article on the U.S. shipbuilding market was a thoughtful review, as one would expect from such a knowledgeable source whose contribu- tion and commitment to the marine sec- tor is well known.

His review of the non-contiguous liner trades characterized the Puerto Rico fleet as "antique," and accurate descrip- tion of the self-propelled vessels serving the trade. That section, however, did not mention the tug/barges now serving the

Puerto Rico lane. Today the majority of the marine freight moving between the mainland and Puerto Rico moves on tug/barge systems. These tug/barge sys- tems are newer than the self-propelled vessels. In our own case, the weighed average age of our fleet is some six years or one-fifth that of the self-pro- pelled vessels in the trade. For a variety of reasons, tug/barge systems are more suited to handle the higher cube equip- ment that has been commonplace on the mainland for over a decade. Puerto Rico is increasingly well served by tug/barge systems and no discussion of the Puerto

Rico liner trade could be complete with- out discussing what is now the dominant and still growing model. Indeed, one consistent change in a trade that has been quite turbulent is the increase in the collective tug/barge share, which was less than one-third a decade ago.

Reeves & Associates, a recognized independent expert in the domestic marine sector, recently completed an excellent analytical overview of the

Puerto Rico liner trade, highlighting among other things the effect of tug/barge economics and higher cube equipment. As an example, the report stated: "Rather than being technologi- cally backward, the U.S./Puerto Rico trade is in synch with the state of the art in the U.S. mainland logistics, enabling

U.S. and Puerto Rican shippers to effec- tively integrate their U.S. mainland-

Puerto Rico traffic flows into their over- all North American distribution strate- gies. For example, Wal-Mart is able to pack a load for Puerto Rico in just the same way as it would for a destination within the 48 mainland states. With an integrated truck/marine system built around commodious 53-ft. equipment and very cost efficient tug/barges, we believe that we are the most "in synch" with mainland distribution systems of all the carriers serving Puerto Rico.

It's my view that the past and the future of the Puerto Rico lane can be best understood by recognizing the underlying cost differences in tug/barge and high-cube equipment systems com- pared to self-propelled vessels and typi- cal marine equipment. We believe that tug/barge systems built around high-

August 2003 11

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