Puerto Rico pushes ahead with debated plans for new port

SAN JUAN, Puerto Rico -- If Puerto Rico's government has its way, giant cranes will rise along the island's south coast to load and unload cargo at a port that would be among the largest in the Americas.

Backers say the Port of the Americas could generate thousands of jobs. But it faces competition from ports in Jamaica, the Bahamas, Panama, Venezuela, Colombia and the Dominican Republic, and some experts warn that the $1 billion project is chancy.

Still, the Puerto Rico government is pushing ahead. Work on two deep-water terminals at the city of Ponce and nearby Guayanilla is to begin in two years, yielding 1.4 miles of piers by 2007.

The port is intended to tap the huge global market for transshipment ports -- major hubs that allow shippers to cut costs by moving cargo between vessels to link and combine routes.

"The fact that there are other ports doesn't diminish the potential of this project," said Hector Jimenez Juarbe, the government-appointed general manager. "Puerto Rico needs a deep-water port. If it doesn't have that, it will be left behind."

He said officials have contacted various overseas companies that administer ports in search of an operator, and hope to have one by the end of 2003.

The port's success depends in part on labor costs, which are usually higher in Puerto Rico, said Jan Hoffmann of the U.N. Economic Commission for Latin America and the Caribbean, based in Santiago, Chile.

He said it also depends on whether the U.S. territory can lobby Washington to change the Jones Act of 1917, which requires cargo between Puerto Rico and the mainland United States to be transported on U.S.-built, American-operated ships, which generally are more expensive.

"If the Jones Act were not changed, then at least I personally wouldn't put my money into a transshipment business," Hoffmann said.

The London-based shipping line P&O Nedlloyd said that with the Jones Act governing Puerto Rico "there is so far no real incentive for non-USA flag operators to call there."

However, a study commissioned by Puerto Rico forecasts increasing demand and says the port would be "highly competitive" in spite of the Jones Act.

Puerto Rico's government has set aside $49 million for studies and infrastructure improvements. The government would invest $150 million to $200 million and expects the private operator to pick up the remaining $800 million $850 million.

The island would need solid commitments before proceeding -- a tall order when such a large investment is required, said professor Asaf Ashar of the University of New Orleans National Ports and Waterways Institute in Arlington, Va.

Unlike ports that handle cargo in and out of a locale, transshipment ports can be built in any area where ships need to transfer cargo.