Tuesday, Oct 24, 2017
Industry & Trade | North America & Caribbean | Dominican Republic

The ocean is the new highway


5 years ago

Mr. Teddy Heinsen (left) and Mr. Anibal Piña (right), President and Executive Director of The Asociacion de Navieros
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Mr. Teddy Heinsen

President of Association of Shipping

According to President Heinsen and the Executive Director, Mr. Anibal Piña of Association of Shipping, the waters provide the perfect slipstream to transport goods in and out of the Dominican Republic.

Dominican Republic is doing very well, after many years of sustainable growth, stable development and a GDP (Gross Domestic Product) growth rate. The importance of port infrastructure.

MR. TEDDY HEINSEN: Something unique has happened in the Dominican Republic. Ten years ago, the ports were privatized. There was a Greenfield project with a concession from the ports authority to develop a new port. This together with the Twin Towers terrorist attack meant that the ports had to upgrade their security measures. As a result, we had to invest a lot of money in port infrastructure in terms of security and the capacity to manage the port. I think this is a great achievement on the part of the private sector.
At the same time, the port was viewed as a transshipment port in the region, given that our island is positioned in a unique location. For example, the Dominican Republic is on the route that a boat coming from New York has to take. They can stop here and do transshipment before going to Central America.

It takes five to six days from here to New York.

MR. TEDDY HEINSEN: Five days, and to Miami it takes two and a half or three days. But you have to look at the requirement for a shipping line for the ten biggest firms in the world, who may be the biggest customers in Europe. This line has traffic coming from Asia, Central America, Europe, North America and South America. The idea is to be able to use the capacity of the ships. The concept is very similar to an air route to Miami, which is a hub. When people look at a port becoming a hub, they look at the costs. 

Costs need to be reduced in ports in order to become competitive.

MR. TEDDY HEINSEN: We have competition – we are not the only ones in the Caribbean. In the Caribbean there are four or five other ports, which have much more capacity than the Caucedo.Port Currently the competition amounts to the shipping lines, and the customers which can give business to the port or not. We are talking about the Free Port, Kingston, several ports in Panama, and in Cartagena, Colombia. These are our main competitors. Thank God there is a lot of volume of cargo. The Panama Canal is going to open soon, and this will automatically multiply the volume passing through this port, and as such will mean that we will have to expand our ports. Ships passing through this Canal will be 15 meters deep.

The volume of ships going through the Panama Canal is increasing.

MR. TEDDY HEINSEN: Between 4 and 5,000 thermal vans pass through it currently, and the capacity is going to increase to 12,000. This will mean that these ships will only be able to enter ports with the right depth and level of security required. Currently, a ship coming from Europe stops here, and then it stops in Venezuela, Colombia, Panama and then goes to South America. But these large ships will only be able to stop in one or two ports, which are able to serve them. Consequently, the business of a hub, combined with the business of a free port goes hand-in-hand, and will be very attractive for shipping lines.

This country is increasing its exports, which means that ports have to increase their capacity, DR Is attracting a lot more trade than other areas around the world.

MR. TEDDY HEINSEN: Yes, that is correct. The Port of Caucedo originally managed 400,000 movements. But now in the second phase, it is managing 1.2 million, and in the third phase we are going to manage 2.5 million movements, only 300 of which are local. The rest is all international.

Is the Dominican Republic able to become an alternative to the Panama Canal?

MR. TEDDY HEINSEN: Not an alternative, but rather it will complement the Panama Canal. We have to complement the Canal, because if not, they will go somewhere else.

This sector has made a significant contribution to the country’s economic development, and it is true that after the Twin Towers terrorist attack, security has to be increased. The Executive Director of the Red Nacional de Transportes Terrestres (National Ground Transport System) stated that they control the security on trucks to the ports.

MR. TEDDY HEINSEN: Everything possible has been done. We only have to develop an x.ray system in Rio Haina, and this has still not be done because there are some local laws which we believe are not correct. These laws restrict the development of an x-ray by the Customs Service. This has delayed things a little when it comes to having everything that is required for two ports which are certified accordingly.

The Association has been running for some time now.

MR. TEDDY HEINSEN: The individual companies that are members of our association are making Investments. The Association does not invest, but it opens up doors so that private investment can take place. Our main objective currently is to ensure that the two laws that govern us are updated accordingly. The Ports Authority Law 1970 and the Customs Law 1959 are both completely obsolete. These two laws do not give us the right amount of protection, which ensures that investors feel secure and protected by the right laws. This for us is one of the greatest issues we are going to have to overcome.

Being Caucedo and Haina the biggest ports, what other ports trade?

MR. TEDDY HEINSEN: There are several ports in the Dominican Republic, including Puerto Plata, which is located close to the free port and Miami. It is a lot closer than here. This has been relatively successful in terms of mobilizing cargo, but what is happening in the Dominican Republic is what is happening in many other areas around the world – cargo volumes are focused on low-cost areas/costs. This is happening in Caucedo, where containers are moved. In Haina, containers are moved, but there is lots of general cargo, individual cargo etc. They are ports that we are developing in line with current requirements.

There is an American ‘Just in Time’ program when one produces for the whole week and then all the ships leave at the weekend, so they are in Miami on Monday. This is an extraordinary advantage for local industry.

Where do most of the goods come from?

MR. TEDDY HEINSEN: Our number one partner is the US. We are working a lot in the clusters of perfumes, plastic and cocoa. Different businesses are developing. Tourism is the biggest sector in the Dominican Republic, and we have remittances and traditional exports such as sugar, coffee and cocoa (although coffee not so much now). We have to develop clusters so we can start developing a wide range of products.

In the shipping sector, how can you make the most of the relations between the US and the Dominican Republic?

MR. TEDDY HEINSEN: We are just a transporter. The business in itself has to be revitalized, as a buyer and a seller, with a new product. We are developing thermal vans right now which keep fruit for up to 27 days, and this means that we can sell our organic food in Russia. This is a big thing, because before it was seven or eight days. It barely reached a European market. They are even looking at it reaching Saudi Arabia. If you have to innovate, this is the best way. But with regard to the rest of it, we are just transporters.

Ports and airports have to adapt to the different regulations that the US for example requires you to comply with.

MR. TEDDY HEINSEN: We are already doing this for the ports. The only way we could improve relations further in this sector would be with the x-rays.

MR. ANIBAL PIÑA: The PVP code has been developed by the US, and this the most important aspect with regard to security in ports. The Dominican Republic is an example of certifying this code. In this country and in almost the region we have all the ports certified City Pad. We are talking about maximum security. The ports that have been certified BASC are Haina and Caucedo. So we comply with this regulation to the Top. All security issues are well-defined and we apply them.
We are currently developing the most important program in the world in terms of security in trade, which are the Authorized Economic Operators. Haina has just been certified. Haina manages more than 60% of the cargo that goes to the US, so the only thing we need are the x-rays, like Mr. Piña said. We are complying with all the standards in terms of security.

What are the most important exports coming out of the Dominican Republic?

MR. TEDDY HEINSEN: A considerable amount of exports go through the free port, but in addition to this, we have a lot of cocoa and many refrigerated products. 200 thermal vans with banana come out of here weekly. Lots of iron-nickel comes out of here, as well as gold.

You had your 63rd anniversary very recently. What are the objectives for the Association now, and what initiatives are you taking?

MR. ANIBAL PIÑA: We wanted to ensure that all that is taking place is sustainable. So we need international accreditation. We received quality certification in 2008, which means that we need to have clear objectives and indicators. We are always measuring our objectives. Our main objective is institutionalization and the strengthening of the institution. This is key for any institution – if you do not have a strong institution, you are not going to have strong objectives. Secondly, you have to take part in creating capacity. We have to create the conditions so that in the country there is an agile system. If we need someone at a certain level, we either train them or bring them from abroad.

What are you doing to train people?

MR. ANIBAL PIÑA: We have institutional agreements with various public institutions. We are looking at signing agreements with universities. We signed an agreement with the Minister of the Environment and the Attorney General of the Republic, and we have almost signed an agreement with the Escuela Nacional de la Judicatura. This means that the training will be two-fold – we will not only be able to train our associates and create capacity to manage our company, but those who have to administer the ports will also receive feedback from us. We have to strengthen the knowledge. We are going to be a model in the region, because we are not aware of other countries that have this initiative. We do not have a specialized tribunal in shipping and ports issues, but if they know the business, our needs and the opportunity, and the international regulations, then that is much better. We are working on this basis.

Clearly promotion in itself and increasing awareness of how port and shipping activity benefits the country’s economy is essential for us. We clearly have specific objectives, but it is basically about creating capacity, institutional strengthening, promoting our activities and increasing awareness. We have been recognized by the World Economic Forum for our infrastructure; we went up seven places in the ranking. We are the most advanced in the region. We have the ports, the security and the capacity to provide services. If we work on this constantly, we can tell the Government that when they build a highway, links with the port must be paramount, because we need free access, which facilitates the flow of logistics. We are going to drive this. We are focusing on promotion and increasing awareness in this area.


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