SXMElections.com

A scene outside the airport cargo facility shows the congested area.

~ Huge investments in jeopardy due to lack of decision-making ~

AIRPORT--Safe Cargo Services has broken its silence about Princess Juliana International Airport SXM’s new cargo facility. In a statement to The Daily Herald on Wednesday, the company said the management of the airport has been “moving the goal post” with regard to negotiations to arrive at a mutually acceptable rental fee at the new cargo facility currently under construction at the airport.

  According to Safe Cargo, the airport management also has been “dragging its feet” in terms of decision-making, putting potential large investments in jeopardy. Safe Cargo has been contemplating upgrading its services with a view to increasing its market share.

  “Two years ago, SXM proposed an increase in rent per square metre as well as an air cargo tonnage fee of four cents per kilo. The proposal used the methodology of revenue-ton-kilometres which no other airport in the region uses. The airport expects tenants in the new cargo facility to pay two fees for the same space they are leasing. This is totally illogical,” the release continued.

  Noting that the air cargo industry is becoming quite competitive, the release pointed to the fact that FedEx, DHL and UPS are facing competition and decreasing yields in express markets and considering the limited growth in international small package now carry standard air freight as “fillers,” but do not rent space at the airport. This means there is no level playing field at the airport in terms of air cargo fees, according to Safe Cargo.

  Safe Cargo has been operating at the airport for more than 30 years. It is the largest operator, with more than 40 employees, and a vast knowledge of the cargo industry and market.

  It often had pointed out the unacceptable and inefficient conditions at the previous cargo facility to the airport management to no avail. There was an overall facility shortage and inadequate supply of staging and storage areas, and the general hygienic and safety and security conditions were substandard. The airport, as the facility operator, was very late in meeting the air cargo infrastructure and facility demand, and in addressing current standards and upgrading the facility.

  Air cargo yields continue to decline slowly, consistent with persisting weakness in load factors, keeping downward pressure on cargo business financial performance. Air cargo load factors on average are showing a weak 45 per cent; therefore, aircraft utilisation rates will continue to be challenged by ever-increasing capacity.

  According to the most recent figures available, the airport handled 5,314 tonnes of cargo in 2014. Some 83 per cent of the air cargo in that year was inbound, while the remaining 17 per cent was outbound. This means that imports outpaced exports by a ratio of about 5 to 1. Ten airlines provided air cargo services to the airport in 2014.

  The proposed tonnage, throughput or concession fees will affect the various sectors and ultimately the consumers. In other words, the public can expect an increase in the prices of goods imported by air cargo if the airport insists on these fees.

  Additional tariffs will curtail demand and result in airlines focusing on increasing cost, Safe Cargo warns. This will make air cargo fail to deliver fully on its promise and lead to a possible exit of the company from the airport and possibly even from the country. This, of course, is far from desirable given the important role Safe Cargo and air cargo in general play, especially in emergencies. During disasters such as Hurricane Luis, Safe Cargo played a key role in the delivery of urgently needed assistance.

  Safe Cargo enabled St. Maarten/St. Martin and the surrounding islands to connect efficiently to distant markets and global supply chains in a speedy and reliable manner. The company attracted a 767 aircraft to the island, thereby enhancing the airport’s competitive position in the region.

  The air cargo infrastructure development at the airport is not integrated with the process of attracting and retaining air cargo carriers. The lack of dialogue with stakeholders, a lack of information concerning the completion of the Cargo Terminal Building and the applicable standards and services, and the constant change in policies by the airport management team all combine to place the further sustainability and growth of the cargo market on the island at risk.

  This invariably will have a negative impact on the airport itself and the economies of St. Maarten/St. Martin and of the hub islands, concluded the press statement from Safe Cargo’s management.