Increase in seaport revenues seen

Consistent growth in Saipan’s apparel manufacturing industry is expected to give the revenue-generating capabilities of the Commonwealth Ports Authority’s harbor operations a major push, according to financial experts.

Studies commissioned by the ports authority in efforts to secure seaport bond rating projected consistent increase in the marine division’s revenue until 2002.

The increase in the seaport operating revenues, expected to hit over $5 million in 2002, will be fueled by development in the local garment manufacturing industry.

This figure is nearly 25 percent higher than the FY 1998 tally of $4.3 million.

However, seaport operating revenues may collapse beyond the year 2002 due to the anticipated pull out of the garment manufacturing industry in seven years when the agreement which created the World Trade Organization takes into effect.

A kin to this, the United States will have to phase out its garment quota system by 2005. This and the resulting reductions in tariffs will virtually eliminate the competitive advantage of garment manufacturing industry on Saipan.

Seaport revenues are projected to fall from $5.7 million in FY 2002 to $3.2 million in FY 2007. Slow growth is also expected thereafter from the Commonwealth’s largest revenue-generating tourism industry.

The CNMI seaport is bent at losing about 6,000 inbound and 5,000 outbound containers annually with the pending pullout of garment manufacturing industry from Saipan.

With the pullout of the garment industry, which makes up 58 percent of the container movement activities at the seaport, CPA seaport division revenues are bound to decrease dramatically.

The eventual pull out of the garment industry from Saipan is also expected to drag consumer prices up, since the apparel manufacturing sector virtually supports the Commonwealth’s cargo segments.

With the exception of garment exports, the seaport primarily, or at least 83 percent, handles imported commodities like petroleum products, container cargo and construction materials.

Saipan’s container traffic is heavily imbalance with nearly three times as many loads bound for the island than originating in the island during the last fiscal year. The net result of these inefficiencies and lack of scale is a higher cost to carriers.

Because 90 percent of inbound but only 20 percent of outbound — mostly garment — traffic is loaded with cargo, carriers are faced with costly container repositioning charges. In fact, Sea-Land’s current ocean freight rate for grocery items to Saipan from the US West Coast is over 30 percent higher than to Guam.

This, even as the CNMI’s garment industry comprise close to 20 percent of the outbound traffic. Analysts are wary that prices of imports will shoot up when ships start leaving the Commonwealth practically empty due to the garment sector’s pending pull out.