Oct 27, 2016
Cuba in the 40s and 50s was a playground for the rich and famous. The country’s economy was fueled by U.S. investment: some legal, some not so legal. A rich trade in coffee and tobacco found its way to America and the Cuban middle class imported everything from wearing apparel to washing machines. All that ended in 1959 when rebels under Fidel Castro tossed out Batista and threw Cuba into the dark ages.
Castro and Cuba’s Economy
Upon seizing power, the government nationalized factories and plantations; cutting free enterprise and reducing trade with the West. Commerce with the United States ceased to exist. During the next five decades policies of isolationism and heavy reliance on aid from China and Venezuela further reduced Cuba’s trade with the outside world. A once vibrant import and export market shrunk, taking infrastructure with it and placing the nation’s transportation resources far below those of the West.
Cuba’s Emerging Market
Economic reform begun under Fidel’s brother Raul led to increased privatization of business and growth within the middle class. A 2013 Brookings Institute study indicated 30 to 40% of Cuba’s population could be considered middle class when judged against other Latin nations. The report further acknowledged that consumption of foreign goods hampered by trade restrictions with the U.S. would change once embargos were lifted. Cubans aspire to own many of the products other middle class societies take for granted.
The Healing Process Continues
In December of 2014 President Obama and President Raul Castro announced the normalization of relations between Cuba and the United States. This step marking the beginning of trade recovery comes at a time when ocean carriers are placing larger vessels directly in Cuba’s path. What this will mean to Cuba’s economy depends on how much development ports and infrastructure will need to be accomplished to bring the nation up to speed.
Cuba’s Railroad
Under Fidel, Cuba relied heavily on Russian aid to help keep her railway running. After the breakup of the Soviet Union and waning interest from socialist trading partners in Europe, Cuba’s railroad fell into disrepair. In the early 1960s British Rail began funding the purchase of locomotives to upgrade the system. This endeavor was halted by the U.S. embargo. During the early 21st century China and Venezuela invested in the system and modest improvements were made. In preparation for an economic boom that trade with the West might bring, the government is investing $1.3 billion through 2021 to modernize its railroad. In addition to track work and new engines, the national railway will add computers and upgrade its communications with a fiber optic network.
Are Cuban Sea Ports ready for Big Ships?
As trade between Cuba and the Western Hemisphere increases, containers will hit the quays at the nation’s ports. There are three container ports in Cuba: Santiago de Cuba, Havana and Mariel.
Santiago de Cuba, a Traditional Port
The City of Santiago de Cuba was established by conquistadors in 1516. The port grew as the city prospered and modernized to handle cargo as needed. In 2015 Chinese investments totaling $120 million funded expansion of the Guillermón Moncada Port to create a multipurpose facility. Scheduled for completion in 2018, the new terminal will feature 758 linear feet of pier capable of handling smaller Panamax class vessels up to 40,000 dwt.
Port Havana Maintains its Footprint
Looking at the profile for Havana, it becomes evident the government is content to maintain status quo. Port of Havana Container Terminal features 1476 feet of berth with a 32-foot depth alongside. Three gantry cranes and one mobile shore side crane are Panamax class. Operating on 45 acres, the port appeals to local business because of its proximity to the city center and liberal hours of operation. Yard equipment is sufficient to handle what will soon be considered small container ships operating in the Caribbean trade. It becomes obvious that the Port of Mariel located less than 35 miles from Havana will receive funding needed to bring that facility up to speed.
Mariel, a rising star on Cuba’s Map
Nine hundred and sixty three nautical miles north/northwest of Cristobal lies the Port of Mariel Cuba. Interestingly enough it is only 43 miles north of the Dominican load center of Santo Domingo. In terms of serving the Caribbean, Mariel is in range. Built on the site of an old submarine base, Mariel is big ship ready and the government is aggressively promoting expansion to maximize trans-load cargo. Built in 2014 by the Brazilian conglomerate Odebrecht S.A., the port is operated by PSA Ports International. Four Post Panamax cranes cover 2,296 feet of quay giving the port an annual capacity of 800,000 TEUs. Within the next four years an additional 984 feet of berth will be added supported by two Neo-Panamax cranes. The main channel currently deep enough for Panamax ships will be dredged by 2017 to accommodate VLCS class Neo Panamax vessels. Brazil has helped to finance just under $600 million of the ongoing construction, which will add an additional 5,577 feet of quay and facility upgrades boosting the annual capacity to over 3 million TEUs.
Cuba Emerges
Closer to the U.S. Gulf and South Atlantic than other trans-load points in the region, Cuba will be an asset for carriers looking to connect cargo from intermediary ports to the U.S.
This year the Cuban government and the Virginia Port Authority signed a cooperative agreement to increase trade and establish a direct service between Virginia and Cuba. With deep water, a sizable throughput capacity and Super Panamax Cranes, Mariel’s transition from national to international port is assured. Who will be the first to offer direct container service from Mariel to the United States?
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