Cuba aims to knock it out of the port

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.

Cuba Nueva

Greetings from Havana! Global Immersion Cuba is on. In our first couple of days here in sunny and warm Havana, our group of 40 students has attended thought-provoking presentations covering the Cuban economy, international trade, the financial and banking system, famed Cuban cigars, the rich historical heritage of Havana, and attended an energetic (to say the least!) baseball game.

We have more questions than answers. Every answer leads to more questions. This is Cuba in 2015. We cannot escape discussion of the embargo or the recent decisions made by the Obama administration to loosen restrictions and seek to restore ties between the United States and Cuba. The United States looms large in the Cuban psyche; it’s obvious from every presentation, our interactions with local people on the streets, and signs are everywhere.

It’s hard to understand how it works here. And by it, I mean, everything. Cuban socialism is its own system, that affects everything about the economy to personal values and priorities. Cuban socialism has qualities of the Soviet system, but at the same time feels like a small island culture. As capitalists from an American business school, it’s hard to think without reference to a “market” because we are so accustomed to concepts of “profit” and “ownership” but in reality those concepts are more complex than the words imply when used here in Cuba.

You also can’t escape the charm. The classic cars, national pride and the sense of the former wealth of Havana. It’s a beautiful city filled with polite and welcoming people.

There’s a lot to see and do, and so much to learn! This is Cuba in 2015, and the beginning of a new chapter in Cuban history. #cubanueva


A Winter Thaw

Adam Justin ’15

Wednesday’s surprise announcement by the Obama Administration and Cuban President Raul Castro caused quite the stir, in Miami, in American politics, and right here at Columbia Business School. Forty of us, one TA and our professor, have been preparing to visit Cuba for the past six weeks. We’ve been preparing ourselves to survey a country that time passed by, a country where credit cards don’t work, and exploring what it would mean if relations between Cuba and the United States were ever to thaw. And then, Wednesday, the headline broke, ‘Cuba and the United States to normalize relations!’ Here we are, in the middle of this development, where conjecture is becoming reality.

Havanna HP 1

Our class studied the Cuban economic system, and how industries work in comparison to the capitalist system in which we all live and work. We have formed groups, and are diving deep into a dozen industries, to learn how these sectors work in Cuba, and how the industry will change as the country enters the global community in new ways. In our last classroom session, we discussed these projects. One that I’ll highlight was a group’s research on professional baseball in Cuba. In the United States, the most successful athletes become fabulously wealthy, reaching celebrity status, collecting cars, homes, boats, and more. Not so in Cuba. And the same is true in many industries. The economy, and really the society, was built differently than here in the United States. When we’re young, we dream of being lawyers, business people, and yes athletes, often paired with dreams of being rich. What do young Cubans dream of? What does this week’s announcement from our government’s mean for our southern neighbors’ dreams for their futures? Are Cuban baseball players headed to the MLB?

It is a exciting time to be headed to Havana. And yes, I will be bringing back Cuban cigars, thanks to this winter thaw.

Vignales HP 3