The Agreement that would enable Luis A. Ayala Colón (LAC) and Puerto Rico Terminals (PRT) to form Puerto Nuevo Terminals (PNT), has been present in public discussion. As often occurs with these matters, much confusion and different public opinions have emerged.
The Puerto Rico Ports Authority (PRPA) does not regulate these joint agreements. PRPA is merely the landlord for the two entities that held lease contracts prior to the agreement.
Given the circumstances I find it important to clarify some facts about the approval process.
This piece does not advocate either for or against the Agreement; the intention with these words is to merely state the facts surrounding the Agreement and why the PRPA, at this moment, is not in a position to deny a legally authorized entity the right of doing business in Puerto Rico.
The Federal Maritime Commission (FMC) is an independent agency created in 1961 with the aim of ensuring a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices.
Amongst its objectives, the FMC reviews and monitors agreements between ocean common carriers and marine terminal operators (MTOs).
It’s very important to highlight this given that the United Sates Congress, through the “Shipping Act of 1984”, held that cooperatives agreements will take effect immediately after 45 days, unless the FMC prevents its execution. The FMC can extend that period if it presents a “Request for Additional Information”.
That was precisely what happened with the PNT Agreement. The FMC evaluated and requested additional information about the agreement and PNT, entity that would operate a marine terminal, provide container stevedoring, terminal and related services in the Port of San Juan. PNT will then acquire the leases, sub-leases, transfers, cranes, yard equipment and other related assets from LAC and PRT.
According to the Shipping Act, in order for the FMC to prevent the execution of a cooperative agreement, it must find evidence of: reduction in competition, unreasonable reduction in transportation service or an unreasonable increase in transportation cost or that it substantially lessens competition in certain covered services.
Regarding the PNT agreement, the FMC, by a majority of its members, found that although those who oppose the agreement presented “concerns”, this was not sustained by evidence that would enable the Commission to pursue preventing the agreement by presenting an injunction in federal court.
However, the FMC seeks to address some of these concerns regarding the future effects of the Agreement during the coming years. The remedy voted on by the FMC was to implement an enhanced monitoring regime with extensive disclosure of business and marketplace information required, amongst other investigative hearings and special reports orders.
In conclusion, the PNT Agreement does not eliminate shipping companies and has the objective to increase efficiency in the container stevedoring services in the Port of San Juan. Nevertheless, the FMC has approved some monitoring mechanisms that would prevent unfair effects in the market.