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As Cuba's Port of Mariel Becomes Major Hub, Will U.S. Miss Out on Trade Opportunities?

I was privileged to accompany the 2001 U.S. Logistics Leaders delegation to Cuba, and ended up being the expedition's recording secretary. The trip diary outlined our activities and contacts, and plunged into observations about supply chain and logistics conditions in the island nation, an inescapable force in the Caribbean Basin, a significant presence among islands it dwarfed, and with a population of some thirteen million. The trip record was published in The Journal of Business Logistics later that year.

As Cuba's Port of Mariel Becomes Major Hub, Will U.S. Miss Out on Trade Opportunities?

For the moment, let's skip over the overall state of the local economy as observed then.  Shortages of everything.  Food, paper, consumer goods, jobs.  Wages somewhere between $16 and $20 a month, which is why lawyers turned to waiting tables, doctors became tour guides, and young village girls became financial powerhouses, supporting vast extended families with the proceeds of various unseemly occupations.

In short, the supply chain situation was not all that good.  The academicians, educated by Eastern Bloc advisors, talked the talk but could scarcely take a single step in the walk.  The national commercial vehicle fleet was dominated by pickups and dump trucks; the rail system was deteriorating before our eyes.  The power grid was a joke, and not a good one.  The nation had only one main road, and that was perhaps less than half completed when the Soviets abandoned the country in 1991.  On the private front, the vaunted classic American autos were in fact a cosmetic image, with the vehicles actually being cobbled together from the parts of many makes that had come to the end of their roads - much like the mixed breed offspring of a Great Dane and a Corgi.  There were, it seemed, more Ladas than U.S. classics, and they managed to give the Yugo a good name.

Ports were a fairly sad collection, with only two or three with genuine deep water capacity.  Apologists disagree, on a basis that has never been determined; my notion is that fishing boats do not command the same level of attention and classification as ocean-going cargo vessels.  The operation at La Habana was a sad affair, with some cargo and some cruise ship traffic.  Not that there was enough traffic to make the insufficiency a real problem.

Despite all, we encountered many, many caring, concerned, and committed individuals.  Not so much to the revolution, but more to doing a good job, doing the best they could with what they had.  They were, and I believe still are, bright, industrious, and full of life.

It is difficult to answer the apparently delicate question of what the U.S. trade embargo really accomplishes, of who it is punishing, and with what intended outcome.  I get that Che Guevara was a Communist.  I get that Fidel Castro, whether he jumped or was pushed, was also in that camp.  I do wonder if he always was.  And, I know that the U.S. botched the Bay of Pigs debacle, operationally, and PR-wise beyond any hope of recovery.

The regime, with Raul trying to prove the he is a badder man than Fidel ever was, is a police state.  Even though the informers are abuelitas upstairs or across the street, one dare not run afoul of the government.  But, they can be quietly cynical, especially when the cheering mobs gather for a demonstration, and the government has to pay them to do so.

After 55 years, it ought to be obvious to the brilliant strategists in Foggy Bottom that depriving the people of food, medicine and hope is not going to culminate in a spontaneous overthrow of the repressive regime.  Hey, it controls food, housing, jobs, and free expression - and has all the guns.

So, one might ask, is the hard opposition in Miami still adamant in its stance against anything humane, or is it softening in light of humane, family, and economic opportunity considerations?  Whether or not, is an embargo that satisfies one faction a sufficient offset to the opposition it generates in another interest group?

Is there a bottom line to this? Ummm, yes.  What trade there was brought benefit to Canada, Spain, Germany, actually, Latin America, Western Europe, Eastern Europe, and Canada in that order.  Which natural trading partner is missing?  One with a long history of economic exchange?  Right.  Us.  And, impoverished as Cuba was, there had been growth since the worst of times, and the future promised continuing development - development that we would not be a part of.

Fast forward to today. Comes now the news of a new Mariel - not a repeat of the export of criminals, mentally ill, and other undesirable or socially useless persons - but of a major port a mere 25 miles west of Havana.  Recent news has heralded the opening of a new port there at a cost of nearly a billion dollars, $800m of which is to come from Brasil.  Dredged to a 60-foot depth, and designed for super-panamax vessels, with an attached container terminal, the new operation is a quantum leap in capacity and capability for Cuba.  It can handle two sizable container ships simultaneously, and all manner of future expansion is envisioned.

My earlier report, in 2001, had called out Cuba as a natural hub location for the region.  Today, competing Caribbean ports with container capacity (and U.S. cargo destinations) include: Bahamas, Jamaica, Dominican Republic, Trinidad and Tobago, and Panama.  Despite those, Mariel could, especially given access to U.S. cargo destinations, become the Caribbean hub location in short order.

With continued economic development, Cuba could grow as a consuming and producing location, as well as a transfer point.  The new Mariel port is dredged to a depth two-thirds greater than Havana's and is designed to handle nearly three times the container volume.

Here's the core question.  Is now the time to get into the game?  Should we open up trade either with or through Cuba?  Does it make sense to let our neighbors to the North and the South, and both Old and New Europe, be the beneficiaries of this new alternative in the great game of global supply chain management?

Perhaps the answers are not as easy as I might hope.  Maybe there are security issues.  Maybe the geopolitics is too Byzantine for my simple mind to sort through.

Someone else will have to make those calls; bureaucratic delay is only a more painful way of saying "no".  In the meantime, which I hope is not a long time, consider the amazing placement of Cuba as a regional hub location.  And, do keep in mind that the near-shoring phenomenon is placing more manufacturing and assembly in the Caribbean Basin than we might have seen a dozen years ago.

Source: van Bodegraven Associates

Keywords: Cuban embargo, Cuban logistics, supply chain management, Port of Mariel, ocean cargo, transportation management

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