CPA mulls dry-docking project

In another move to soften the blow of a possible garment industry pullout from the Northern Marianas, the Commonwealth Ports Authority is exploring the possibility of establishing its own dry-docking facility on Saipan to expand its non-tariff revenue sources.

Commonwealth Ports Authority executive director Carlos H. Salas disclosed that the agency is now working on its Request For Proposal for a multi-million dry-docking facility that would be constructed at the Saipan harbor. Salas said technical aspects are now being discussed to ensure the success of the proposal.

“This would definitely enhance the Port of Saipan’s services and vendors at the port would greatly benefit from this. This would be cost-effective and surely, with our own dry-docking facility, there is no need to go somewhere else in the region for this services,” said the executive director in an interview.

The dry-dock project hopes expand the CPA’s non-tariff revenue sources by providing additional services to small to medium-sized sea vessels like tug boats, smaller cruise liners, and other small water-borne vessels.

Salas said having a dry-dock facility on Saipan would enable boat owners to save time, convenience and money for maintenance, and would be better than going to Guam or the Philippines for dry-docking procedures.

“This is one of our sound business plans and we hope to issue the RFP in the next few days to solicit proposals from prospective contractors,” the executive director added.

Aside from this proposal, CPA has been exploring other ways to increase its non-harbor facility revenues in anticipation of declining profits once the garment industry in the CNMI face stiffer global competition when the tariff restrictions are lifted in 2005.

On May 2004, CPA reported zero growth in terms of revenue tonnage for the first seven months of fiscal year 2004 due to slowdown in seaport activities brought on by less garment export activities.

The CPA-seaport division’s revenue tonnage is only 17 percent of last year’s record and posted zero increase due to slow garment activities at the Saipan harbor.

Salas said the rate is alarming and the trend has been continuing for several months now beginning last year when garment industry noted increased competition from other countries.

The executive director explained that this would continue and the CPA should now explore other possible revenue sources, including non-harbor activities, to augment losses in the seaport revenue.

Further, a possible garment pullout will affect the shipping industry in the CNMI considering that 50 percent of CPA port fees come from the garment sector. The apparel sector also contributes 37 percent of incoming revenue tonnage; 95 percent of outbound revenue tonnage; 65 percent on incoming sea freight; and 99 percent of outbound apparel cargo.

The CNMI garment industry has been paying an estimated $900,000 in port fees while indirect revenues to the CNMI has been recorded to reach $47.3 million, which include $16.6 million in gas purchases, $6.8 million in freight and transportation; $4.7 million in house rentals; $3.0 million in education; $2.9 million in insurance; $1.8 million in land leases, among others.

Also, cargo traffic at the Saipan International Harbor is anticipated to drop by 20 percent, as a result of the expected slowdown in garment manufacturing-related activities on the island in 2005.