Navigating Miami's growth: for shippers and cruise lines alike, Miami's seaport is the strategic gateway to the Americas

South Florida CEO, Jan-Feb, 2005 by Doreen Hemlock

As the world's largest cruise company, Miami-based Carnival Corp. has plenty of choices of where to base its fleet. But despite a trend to place ships in more central locations like New Orleans and New York, the company still opts to base more of its Carnival-brand cruise liners in Miami than anywhere else.

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It is not just hometown loyalty driving that decision. Miami offers travelers ample air links through its international airport, and the port is close to the world's top cruising destination, the Caribbean region. Indeed, the cruise business is so buoyant these days that Carnival recently chose to switch one of the five ships based in Miami to a larger vessel that is able to carry nearly 1,000 passengers more per trip.

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Small import-export firms find similar advantages in Miami too. When Spain's Pascual Dairy Inc. looked to expand sales in the Americas, the family business chose Miami as its hub, thanks in part to frequent cargo sailings from Spain to Miami and then onward to its main markets in Central America.

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"Working through Miami makes transit times much faster," says Gabriel Pascual, vice president of eight-year-old Pascual Dairy, based in Coral Gables, which now sells more than $5 million a year in food products across the Americas.

Yet not all is smooth sailing at Miami's prime asset for shipping. The Port of Miami is feeling the strain from bustling trade and cruise traffic on its limited space on a landfill isle near downtown Miami.

In fiscal year 2004, the seaport set a new record for cargo--surpassing 9.2 million tons, with yet another record in freight forecast this fiscal year. Cruise traffic dipped slightly but is poised to rebound to roughly 4 million multi-day passengers in fiscal 2005, says Port Director Charles A. Towsley.

Keeping up with such huge volumes is tough, especially for the firm that runs the port's busiest cargo terminal, the Port of Miami Terminal Operating Co., better known by the acronym POMTOC. Importers at POMTOC's terminal decry delays that can last several days. And truckers complain of long waits for pickups, pinching their per-load pay and fueling labor strife that led to a two-week walkout in mid-2004. The strike ended when a federal court ordered the truckers back to work and into mediation.

This year, the seaport is aiming to ease those growing pains. Two huge new cranes purchased for approximately $10 million are to start operating in the first quarter. An expanded gate system with 18 lanes, instead of the eight open in late 2004, should ease access for trucks hauling freight. Plus, POMTOC is upgrading technology to speed cargo handling and help users better track merchandise, Towsley says.

In addition, the port is finishing a $60 million cruise passenger terminal that should help accommodate an increased number of mega-ships, which can handle 3,000 passengers or more, he adds.

"We have to become more efficient to grow," says Towsley, who took the helm at the seaport in 1998.

Growth at South Florida's busiest seaport has indeed been staggering, as Miami-based shipping line Seaboard Marine Ltd. illustrates. Launched in 1983 to ferry melons from the Caribbean Basin region, Seaboard last year handled a whopping 3 million tons of cargo in Miami, making it the seaport's single largest carrier. The company now employs 1,400 worldwide and 510 in Miami.

This year, Seaboard expects cargo volumes to rise another 5 percent, and to accommodate the increase the company will add more staff and two more ships to its 28-ship fleet, Seaboard vice president Jose Perez-Jones says. The outlook is bright, say company executives, because Latin America and the Caribbean economies are poised for their third straight year of gains.

But there is a cloud on the horizon for Seaboard too: United States import quotas on most of the world's apparel trade ended Jan. 1. The move is expected to cause manufacturers to shift most clothing production for the US market from the Americas to China, where labor costs tend to be lower and the fabric industry more developed. Perez-Jones is worried because more than 10 percent of its business depends on Seaboard sending fabric to the Caribbean Basin and hauling back assembled garments--statewide, a multi-billion-dollar a year business.

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To help slow the apparel shift to Asia, Perez-Jones is backing passage of a trade agreement between the US, the Dominican Republic and Central American nations called the Central American Free Trade Agreement, or CAFTA. The pact would give an edge particularly to the Caribbean Basin by allowing finished garments produced there to enter the US duty-free, while Chinese garments pay duties of up to 36 percent.

"We're hopeful we can pass CAFTA and work together to integrate the 'third border of the United States,'" which spans the Caribbean and Central America, keeping Florida trade vibrant, Perez-Jones says.

Still, as business grows, users are feeling the squeeze from congestion at the port.