By Wayne Chargualaf

Hermosa

The shipping industry on Guam has remained relatively flat for the second year in a row, outside of an uptick in shipping volume resulting from Super Typhoon Yutu relief efforts, according to industry leaders. However, with strong signs that several projects for the long-delayed military buildup will be released soon, a spike in shipping activity is expected.

“We remain upbeat and positive as everyone is looking forward to the military realignment and construction projects that will come up,” Bernadette N. Valencia, vice president and general manager for Micronesia and Okinawa of Matson Navigation, says. “We expect an uptick in the coming years.”

Valencia

More than $780 million in projects related to the military buildup have been awarded in the past year according to Lt. Col. Marcus Reynolds, executive officer for Marine Corps Activity Guam. There is also optimism due to the tourism industry. Although visitor arrivals dropped throughout much of fiscal 2018, there has been a steady upward trend since November 2018.

“We are seeing tourism is picking up and hotels are at max capacity so all of that will probably translate into higher volumes as we head into the summer and the end of the year,” says Charlie Hermosa, general manager for Guam and Micronesia at American President Lines Ltd.

Aside from fluctuations in tourist activity, hotels tend to follow a fairly regular cycle of construction and renovation activity, according to Randall Tutor, vice president of sales for Approved Forwarders, a freight-forwarding firm that is a sister company to DeWitt Guam.

“Most hotels are going to renovate every seven, eight or nine years depending on the competition,” Tutor says.

Freight forwarding companies play a role in the shipping industry by helping businesses make the most economically sound decision as to timing, frequency, terms of sale and other factors related to shipping goods. This is especially useful for Guam businesses, many of whom may not ship enough product to fill an entire container.

“It’s an interesting business,” Tutor says. “You’re going to see our containers on the same ship with our competitors. As a freight forwarder, we know that the services we provide around the freight forwarding are what make the difference.”

Because of this Tutor says that freight forwarders tend to compete primarily on service.

“When you need to provide all the goods for a 12-story hotel or 17-story hotel, that becomes a fairly complex project and there are a lot of costs involved,” Tutor says. “The people managing those projects need a good forwarder that has the skills and experience to manage those projects.”

Berking

Corine Berking, president of DeWitt Guam, says activity in other sectors of Guam’s economy show promise for the shipping industry as well.

“We do see some new business in the food sector with a new supermarket going up in Maite, a new Japanese supermarket chain breaking ground and the expansion of another grocery store at a second location in Barrigada [American Grocery],” she says. “Everything is tied to our economic growth as an island. I wish there were other industries that we could expand upon but they’re few and far between.”

In spite of this positive trend, there remains a limit on the number of projects that can be built on Guam due to the island’s persistent shortage of H2-B workers, the number of which was drastically reduced by the federal government starting in 2015. Guam has had some relief on this front thanks to recent versions of the National Defense Authorization Act, which is updated and brought up for renewal on an annual basis. However, the act only authorizes H2-B workers for projects directly related to the military buildup. Efforts continue to loosen restrictions on H2-B workers for Guam.

President Donald J. Trump’s trade war may also play into the future of Guam’s shipping industry, although the island has yet to feel a direct impact.

“We’re keeping an eye on what’s going on in the mainland U.S. with the tariffs,” Hermosa says. “Of course, we’re in a different position when compared to the mainland, but we just need to keep an eye on that because a lot of stuff does come to the island from there.”

Respicio

Regardless of economic and political developments, the island’s shipping industry is only as good as its port. According to Rory Respicio, general manager for the Port Authority of Guam, the Port Authority is making every effort to make sure Guam’s port can meet the needs of the island. To this end, Respicio says the port’s capital improvement projects are making good progress.

As part of its five-year capital improvement program, the port is working to develop specifications and a request for proposal package to purchase a new gantry crane during fiscal 2021 to bring its total of working gantry cranes to four. Contractors were selected to repair Golf Pier and the main waterline and both are currently in cost negotiations with the Port.

The port’s wharfs are also targeted for renovation, although their respective projects are still in the funding stage. The Port Authority is in the final stages of completing an environmental assessment for the Hotel Wharf rehabilitation and access roadway repair project. Upon satisfactorily completing the assessment, the United States Maritime Administration will obligate a $10 million Department of Transportation grant for the project. Port representatives also met with its revenue bond counsel in San Francisco to re-program $7 million from the $17.5 million earmarked for the port’s new administrative building to renovate the F-1 wharf. Respicio says the meeting was “very successful” and the port received “guidance, concurrence and support” for its plan. On May 31, Sen. Clynton E. Ridgell of the 35th Guam Legislature introduced Bill 149-35 to amend the law pertaining to financing improvements to the port to allow the reprogramming of $7 million for the F-1 wharf to go through.

Projects that have been completed in the past year include the expansion of the container yard and break bulk area, whose footprints were increased by another 4.6 acres and 9 acres, respectively. To date, more than $16.9 million was spent on acquiring new equipment such as toploaders, forklifts, tractors and other container yard equipment.

To understand any area’s shipping industry is to understand its relationship with its neighbors. Valencia says that, because of Guam’s position in the region, it stands to benefit from development throughout the Pacific.

“Throughout the region, whether it be through the World Bank or the Pacific Development Bank, our Micronesian brothers and sisters are getting grants and projects approved to improve their infrastructure and things like that,” she says. “Guam is still our hub for transshipment to the Northern Mariana Islands, Palau and the Federated States of Micronesia, so Guam would certainly benefit from increased activities throughout the islands. We’re very positive about the future in the Guam and Micronesia region.”