Our visits with company and government officials have progressed over the past few days in Cuba with a range of opinions from a variety of industries, perhaps most intriguingly, from management at the new port at Mariel and officials from the Cuban baseball federation.
While the intricacies of shipping containerization are not my expertise, our host, the British-born port GM employed by a Singaporean company that manages the port, shared both the fundamentals of the industry as well as why he believes Cuba’s Mariel is well-positioned to be a tremendous player in global shipping. As a quick overview: a soon-to-be completed updating of the Panama Canal will allow for larger ships to pass through the canal bound for various ports in the Southeastern U.S. and Eastern Seaboard, some of which cannot accommodate the largest modern container ships. Positioned essentially along the way to the U.S. from Panama, Mariel seeks to become a hub and spoke of sorts for receiving these ships and transferring to smaller vessels to maximize time and fuel efficiencies.
The port is glistening and modern, with plenty of excess capacity for growth and tremendously ample room to expand if and when the embargo is lifted. Yet with an embargo restriction called the Toricelli Act preventing ships that dock in Cuba from visiting the United States for six months, the payoff of this investment ultimately lies with embargo repeal. This port has been a major investment for the government and carries a potentially high payoff, but until trade with the U.S. normalizes, it quite a risky upfront capital investment.
Cuban baseball, meanwhile, faces vastly different challenges from the embargo. The island is baseball crazy, and due in part to its well-organized federation produces a wealth of talent worthy of handsome sums of money from American Major League Baseball teams (Google Yoenis Cespedes cars if you don’t believe me). Yet, due to embargo restrictions, Cuban players must defect and establish residence in a third country before being eligible to sign in the United States. This has led players to seek help from questionable sources to smuggle themselves out the country. A lifted embargo would allow a structured system to be put in place, perhaps like the posting system used by Japanese baseball. Yet there are also fears that a proud Cuban baseball league might become little more than a farm system for Major League Baseball, though many would argue defections have made that the case already.
The embargo remains the primary lens through which business is seen in this country. As our trip winds down, the remaining views will undoubtedly reflect similar challenges.