By Maureen N. Maratita and Oyaol Ngirairikl in Guam and Mark Rabago in Saipan
Ports are the all-important gateways to the Mariana Islands. The companies that do business with and from the ports are the conduit of the goods that businesses and consumers rely on. The challenges include aging port equipment and all-important infrastructures.
PITI, Guam — Top of the list of the Port Authority of Guam’s 2023 Master Plan Initiatives are the three aged gantry cranes, now reaching the end of their 40 years of life, and the port authority has made the decision to replace them and is seeking firm funding.
The port is also looking to urgently replace Golf Pier and F1 Pier, which serve as a primary fuel offloading source for Guam and as a secondary source for the military.
“The Port is actively pursuing federal funding opportunities to assist in the completion of these projects,” says Rory Respicio, general manager for the Port Authority of Guam. “The Port’s number one priority is the replacement of its Ship-to-Shore Gantry cranes. F1 and Golf Pier repair and/or replacement cannot take place at the same time as they are the only 2 Fuel piers on island.”
The port authority is working with Federal Emergency Management Agency officials to review and finalize Typhoon Mawar damages. Respicio says potential FEMA funding opportunities include Public Assistance and Hazard Mitigation. He says the port is also actively pursuing other funding avenues.
“The U.S. Department of Transportation Maritime Administration, Congressional leaders and policy makers, the Department of Defense, and other federal partners (have been) made aware of the port’s key challenges,” he says.
In addition, Respicio says owner agent engineer WSP is finalizing the draft Area A Feasibility Study and Condition Assessment Report that will support future grant applications.
Meanwhile, the port board of directors has already approved Hotel Wharf bond funding be used toward purchase of the equipment. Hotel Wharf was constructed in 1948 and the wharf, as well as its access road also needs upgrading.
“In addition, the port is pursuing U.S. Department of Agriculture financing and is submitting grant applications to the Office of Local Defense Community Cooperation Defense Community Infrastructure Program,” he says.
Berths F2 through F6 handle containers, general cargo, and bulk cargo and date back to the 1960s, and also need upgrading.
The Area A Fuel Storage Facility also needs replacement of above-ground fuel storage tanks and infrastructure, creating an “ideal secondary/alternate fuel depot to support the anticipated fuel capacity requirements of DOD in the Indo-Pacific Theater,” the master plan says.
Through all this planning and work, Respicio says the port is working closely with the Port User’s Group to ensure members have a voice at the table.
“We meet monthly to discuss issues that they want to address and we provide them updates on all of our ongoing projects,” Respicio says.
Jack Scogin, general manager for APL for Guam and the region; says of the port authority’s plans, “The goal is to do more; to make productivity better. When you compare the port with international terminals in Asia, the Middle East, the U.S., obviously their productivity’s higher. … However, we balance that with an understanding that we’re isolated out here. There are certain limitations by nature of geography.”
He says customers of the port always want more service. “But we’re also realistic with what can be done. The port is well aware of what needs to be done and they maximize the resources that they have.”
Charles Emsley, senior operations manager with APL says, “I’m an active member of the Port Users Group; Jack is as well.”
Scogin says the port authority staff are available and answer any impromptu questions. “They make themselves available to us. It’s not like their out of touch or out of reach.”
APL has a fortnightly service to Saipan and weekly to Guam. “The vessel that goes to Saipan comes to Guam first, discharges what’s for Guam and then proceeds on to Saipan.”
APL vessels do not call at Tinian, largely due to their size Emsley says and cargo is barged to that island. “We partner with barge operators that have a local service. Seabridge is the main company that we deal with,” Scogin says.
The Department of Defense is expected to do some harbor work in Tinian, following a marine infrastructure assessment by Navy Seabees in October 2020. While Scogin said work at Saipan’s port would be a massive undertaking. “With the military’s interest in partnering with local communities, but also to maximize the utilization for it’s purposes too, they could be making improvements that have dual purposes, but their primary objective is to support themselves. If there’s a dual purpose, then everybody wins,” he says.
The work by the U.S. military at the Port of Malakal includes the addition of fenders alongside the pier, which will prevent further damage. “Does that mean there’s going to be a higher frequency of commercial vessels that call in? Not likely, because you need volume for a commercial carrier to participate.” But Scogin said, “It will lend reassurance to certain regulatory rules that are in place.”
As to billion-dollar contracts for military construction, he said, “The dollar value doesn’t exactly translate to a rush of cargo all at one time. These are probably two, three, four, five-year contracts spread out over time. You might get 10 to 15 containers a week that you need.”
Scogin said what the construction sites can accommodate in container deliveries is also a consideration.
There has been a modest increase in cement being shipped, he said.
While damage to the glass breakwater needs to be repaired at the port, the facility was able to open shortly after Typhoon Mawar hit Guam in May. “Kudos to the port,” Scogin says. “They had the main road in and out of the port cleared within three days, despite the fact that there was every rock and debris strewn across it.”
The ability for the port to start operating, and the ability for trucks to start moving are the two important factors, he said. While Scogin did not come to Guam until after Mawar, he praised the Coast Guard for its speed in allowing the port to open. “I think there were very cooperative discussions and engagements, with everybody helping each other out.”
APL brought in four generator packs from Japan to help with port efforts to clear containers. Emsley said that due to generator damage some customers could not take as many containers as usual. “They were not able to take containers out of the port as fast and flip them back as empty.” He said the port helped by “keeping the port open 24 hours and manning the gates. It was awesome.”
Scogin says the Coast Guard’s increased activity in the Pacific is a plus. “We welcome that. … I don’t think we expect anything untoward to happen on this side. Maybe on the Western side of the Philippine islands we’d expect things to be a little bit re messy.”
APL’s inbound route is to Guam to Saipan, to Korea and Japan and then back down. Cargo from Asia is loaded in Busan, Korea’s largest port.
APL has two new ships in its fleet. Scogin says, “We’re very excited about it.” There are two ships in rotation that bring cargo down to Guam. “The cargo is fed into our ships by larger ships. Off the West Coast of the USA, we have six U.S. flagged vessels. They go to Japan, Korea, then China. Of those six ships we currently have in rotation, we’re going to replace five of them, but we’re putting six new ships in rotation.” After the upgrade, APL will have seven ships in service rather than six and every week will have cargo off the West Coast.
The ships are named for U.S. presidents. For cargo to the islands, Scogin says, “It will be a steadier flow, a more consistent predictable flow because we can go for six weeks with service off the West Coast, and then we have to wait for one week before the next rotation starts again.”
He says APL will be able to offer better consistency for customers. On May 24, the first of the new vessels, the President Adams will depart Los Angeles.
Scogin says Guam’s economy was trending upward in 2002 as reflected by cargo; 2023 volumes were down due to Typhoon Mawar, less federal COVID funding and fewer tourists. He says “2024 expectations are steady and hopefully incrementally higher.”
APL is proud to be in Guam, Scogin says. “We plan to be here for the long term. Our customers value competition. They recognize the benefit from having multiple options.”
The Port Users Group is largely comprised of carriers that use the port on a regular basis.
Patrick Bulaon, vice president and general manager for Guam/Micronesia of Matson Navigation Co. says, “We get together regularly on a monthly basis.” He says of the Port Authority of Guam’s management team, “They’ve kept us very well informed of all their plans.”
The condition of the port’s infrastructure is well known. The cranes were not new when the port received them from the Port of Los Angeles in 2009.
Bulaon says, “The cranes are obviously front and center.”
He says the port is well aware that it not only needs to replace the cranes, but that funding needs to be solidified. Matson supports the efforts of GovGuam and the port authority.
“They’re very focused on drumming up support at the federal level to provide grant funding – whether it’s through MARAD (the Maritime Authority) at the Department of Transportation or FEMA — there’s a lot more focus after the typhoon. We’re very supportive of their plans — pursuing funding through multiple funding sources and ideally that will come through in a grant,” he says. “There hasn’t been any discussion of raising rates to support the investments.”
As to the piers for fuel and cement, Bulaon says what the port needs is redundancy “for fuel especially but cement is important really to support the construction industry.”
While Guam’s economy has risen post-COVID, he says, “In general, we still see soft parts of the economy where demand hasn’t returned; all the tourism spending and all the hotels and restaurants associated with those visitors.” Even local consumer spending has softened up, he says.
“The upside we see has come from the construction industry. It’s mostly in conventional cargo; things that don’t go in a container,” Bulaon says speaking of heavy equipment and vehicles.
“There’s a finite amount of spending that will happen, whether it’s visitor arrivals or our own local consumer spending. I don’t know that the pie has grown.”
The general lack of labor in Guam has touched Matson also. “We are looking to fill vacancies in Guam,” he says. We’re hopeful.
“Guam’s not where it needs to be; people have left Guam to a certain degree.” New businesses on the island are positive developments, he says. “There’s a lot of really good things happening, but we’ve still got to get tourism back, we’ve got to attract and train local talent and get people to come back to Guam.”
Bulaon says geo-political events or the threat of them have affected growth. “That’s what’s spurring a lot of what we’re seeing in our economies; not just in Guam, but throughout the region — Department of Defense spending on construction.
“We’re quite excited about the opportunity. I think Matson’s ready to handle the growth.”
The increased presence and activity of U.S. Coast Guard Micronesia/Sector Guam in the region is a plus, Bulaon says.
“I think it’s great. Their role is to provide safety at sea and keep commerce going. We work very closely with them in the Port Users Group.”
Matson transships to Saipan, to include with Seabridge Inc. The Port of Saipan has a different operation to Guam, Bulaon says.
“They don’t operate huge gantry cranes. They have plenty of space there in the container yard and a smaller crane. The transshipments that come from Guam are usually on a barge, a smaller vessel.”
Cargo into Saipan has declined, due to lack of tourism and lower local spending, Bulaon says, as well as people leaving. “Saipan has a lot of challenges. What they relied on in the past is not there anymore.”
Matson has seen a significant increase in cargo to Tinian. Bulaon says, “In container cargo there’s been a huge increase … but what you will see going forward is a lot of construction material to support the runway projects there.”
Matson welcomes that business, Bulaon says. “We’re very well aware of who all the players are. We’re fully engaged on all the opportunities.”
Matson has two new RORO or roll on, roll off vessels that it’s put into the service that runs to Guam for conventional cargo. “I think we’re poised to handle this kind of growth,” Bulaon says. “It’s good timing.”
Donovan Paulino, general manager of Guam Pak Express, says it too have experienced an uptick in work, particularly with the military community.
“A majority of our shipments are business or military related. The region is looking at a minimum of $2 billion per year in federal spending. We at GPX realize that we are at the very tip of the spear as it relates to shipping and logistics since these activities are one of the first needed to develop and grow the economy of the island and region,” Paulino says. “The local shipping and logistics industry helps the region become more prosperous while ensuring defense and security of our region.”
GPX, which began business in 2000, contracts with shipping, airlines, and international logistics companies throughout the Pacific region and globally as members of the International Association of Movers.
According to Paulino, the challenges in the last few years have eased but haven’t disappeared. The company’s team worked through the pandemic and typhoon recovery.
“We have experienced inflation or increases in costs in most aspects of our business including utilities, real property, raw materials, fuel, equipment, and labor. Doing business today is simply more expensive than prior to COVID and the typhoon,” he says. “We are making adjustments to our internal and external processes to shoulder these additional costs before asking our customers to pay more.”
Paulino says Guam Pak expects to see steady growth in Guam over the next five to 10 years as the military buildup progresses.
“More materials, cargo and people will bring more opportunities to Guam and the region,” he says, and while the port authority officials work through their challenges to support this growth, the challenges include the supply chain and labor issues.
“There are many challenges not only at the Port Authority but also throughout the entire supply chain in the mainland United States and the region. The port authority and shipping companies continue to invest at increasing capacity, which is one of the main focuses of our industry,” he says. “Of course with labor shortages in Guam, meeting those challenges will take all of us working together toward a common goal for economic growth.”
PUERTO RICO, Saipan — Just as the U.S. Air Force has been shoring up Tinian’s airport infrastructure, the Commonwealth Ports Authority essentially wants to mirror that and partner with the U.S. Navy in modernizing its aging seaport infrastructure.
Jose C. “Joe” Ayuyu, president of McDonald’s of Guam and McDonald’s of Saipan, and chairman of the board of the CPA; says — in consultation with Gov. Arnold I. Palacios, he wants to float the idea to the U.S. Department of Defense to improve Saipan, Tinian, and Rota’s seaport infrastructure so they can be used as alternative ports if anything untoward happens to U.S. naval facilities in neighboring Guam.
“The CNMI government hasn’t invested in our seaport facilities for a long, long time. It hasn’t changed, but what’s new is a lot of conversation is taking place specially with the governor. He’s working with key members of the federal government. The plan is, we’re pushing the idea of getting funding either straight from the federal government or in conjunction with what the military is planning for the area — Tinian and the entire Marianas,” he says
Ayuyu says the military doesn’t look at Tinian as just Tinian and is more inclined in looking at the bigger picture — the entirety of the Marianas.
“As you know, the regional concerns with China doesn’t involve just the CNMI but is also looks at the entire region. I’m not going into details, but this is what I learned from visiting and talking to military officials. Coming in as a businessman, my role is to try and continue the conversation on what we can do to improve our economy.
The port is just one part of that equation, he says. “On the ports side, what I would like to see is a closer relationship with the military. The reason for that is they have the money and we don’t. They have the need for some of these ports and we need to emphasize that. If it’s a small piece of their plan, we want to talk it big so that they know, ‘We’re interested in getting these ports developed,’” he says.
Ayuyu says the CPA wants local seaport facilities to be able to accommodate large ships, but not necessarily the U.S. Navy supercarriers that occasionally visit Guam.
Hand in hand with Northern Mariana Islands seaports emerging as alternative ports for U.S. Navy vessels is Ayuyu’s plans to develop the NMI cruise ship industry and a ferry highway connecting Saipan, Tinian, Rota, and Guam.
“The cruise ship idea is something I like and that would involve dredging and expanding the Port of Saipan (Charlie Dock). Another idea we’re pushing is the ferry highway. We’re trying to convince the military again to use the idea of a Saipan-Tinian-Rota ferry as an alternative for transportation.”
Ayuyu has already broached the idea to various high-ranking military officers of a similar ferry system to the one in Alaska, and to provide seed money to link Saipan, Tinian, Rota and Guam via a ferry system, so that people and cargo can be moved regularly.
“That would certainly benefit the military, but in addition will also help our local economy. It can accommodate cars, trucks, military building materials, agricultural products … ,” he says.
Such a system would benefit residents and tourists who could drive onto the ferry and provide an alternative to air transport.
“[We want to] create a small military-related economy to support the CNMI economy. In Hawaii, without the military and only tourism and agriculture, Hawaii won’t be as prosperous as they are now. I call the military the anchor tenant in Hawaii.”
Ayuyu says, “In good and bad times they are there and provide billions of dollars to the economy every year. Without the military, Guam will be in the same boat as us. We want the military to also be our anchor tenant to assure our people in down times, we’re not left alone. Right now, we have no industry. Nothing.”
So far, he’s gotten nothing but good responses from the U.S. Department of Defense, he says which is happy that the NMI is open to working with the military.
“Certain sectors of our society are opposed to the military, and they have their own reasons for this. But overall, the military is a good institution, unlike before where they come into an area and develop the area without regard to anything. We now have a professional military that does care about the community.”
He said it should be understood the military’s mission is also aligned with the NMI’s mission of national security.
The CPA chairman says the only salvation for the NMI to finally modernize its seaports, which he estimates are 40 years behind, is partnering with the military.
“We haven’t done anything with the ports for many, many years now… we’re way behind and we need a lot of work on our port facilities.” He says the ports are functional and repairs are probably done regularly. “But we’d like to improve it more to provide opportunity for the future. We definitely need that and that’s [where] we come in and say to the military, ‘Please work with us.’”
Ayuyu says the military has its mission and therefore its own interest in the NMI. “Let’s try and take advantage of that interest if that fits into our interests also. It makes a lot of sense.”
Jose T. Quan, operations manager for Saipan Shipping Inc.; says there needs to be a collaborative approach in improving the capabilities of the commonwealth’s seaports operations.
“I urge the Commonwealth Ports Authority to persist in collaborating with its stakeholders, actively listening to their concerns and ideas aimed at enhancing the seaport’s operations. Each stakeholder plays a vital role in partnership with CPA and various government agencies such as CNMI Customs & Biosecurity, the Bureau of Environmental Health, the United States Coast Guard, and Customs & Border Patrol. Strengthening these partnerships is crucial as it enables us to collectively anticipate changes, adapt swiftly, and maintain progress. As the saying goes, ‘A rising tide lifts all boats,’ emphasizing that collective efforts benefit everyone involved,” he says.
Specifically, Quan says the CPA must adopt a long-term plan on how to continue to make the islands’ seaports viable to aid in future economic development.
“By executing master plans tailored to each port, it aims to enhance their berthing capacities, accommodate larger vessels, and establish regular shipping schedules. Improving the efficiency of our ports is paramount, as it directly correlates with the number of ships we can accommodate. With increased ship arrivals, we anticipate a boost to our economy, providing businesses with reliable services for importing goods worldwide. This strategic enhancement ensures our ports remain competitive and contribute significantly to economic growth,” he said.
Established in 1956, Saipan Shipping Company, Inc., fondly known as “SaiShip,” has been committed to providing efficient and reliable surface transportation services to and from the CNMI. It facilitates the importation of around 7,000 metric tons of cargo annually.
SaiShip, which operates mainly out of Saipan where it has subagents on Tinian and Rota to facilitate cargo operations in each respective port, is the agent for several prominent ocean carriers including Matson Navigation, Kyowa Shipping Lines, and Seabridge Inc.
Arrivals occur frequently throughout the week, typically on a weekly or biweekly basis, depending on the specific schedule of each carrier.
“The seaport is where the pulse of the CNMI can be felt. Increases in cargo volumes directly reflect economic vitality, while decreases signal economic downturns. As we progress into 2024, we’ve observed shifts in cargo volumes across our seaports. At this juncture, we can only remain optimistic and hope for positive developments,” Quan says.