Businessman Tony Pellegrino said any economic growth the CNMI undertakes is being strangled by the high cost of exporting anything.
“Unless we correct this problem, our economy will continue to shrink. We must be able to export because this is the only way our economy will grow and benefit us all,” Pellegrino said.
Motivating local producers
Having a sure market to sell their products can motivate fruit and vegetable growers, Pellegrino said.
“We cannot grow without the ability to transport products raised on our farms, caught in our oceans or manufactured here. These products must be taken to a market, but without the convenience and ability to transport our locally produced goods at competitive prices and quickly, there is no incentive to produce,” he said. This results in a more stagnant economy and more people getting depressed.
Citing as an example, Pellegrino said he produces over 10,000 pounds of shrimp in his farms but only sells about 3,000 pounds locally each month.
“If I cannot export my shrimp, what will I do with the remaining 7,000 pounds each month? I must sell them on Guam or give the business up,” he said.
He said the infrequency of ship movements, requirements and costs related to ocean freight makes ship transport costly and is not a good solution.
“By creating an air bridge between the islands we will be able to transport goods quickly, frequently and inexpensively,” he said.
“We definitely feel that an ‘air bridge’ that connects the islands will stimulate economic activity by motivating local farmers to grow more fruits and vegetables outside of the local market. It will also give them a reason to produce more value added products,” he added.
Currently, only two air carriers are servicing air cargo freight between Saipan and Guam, but these carriers are concentrating on transporting passengers, not cargo. Pellegrino said Tinian and Rota have almost no cargo flights, and when it is available to and from Saipan, the freight cost can be as much as $1.49 per pound.
“This makes our products such as fish, fruits and vegetables uncompetitive for sale to Guam, Tinian or Rota,” he said.
Pellegrino said he used to sell locally grown shrimp to the military commissary but he had to stop after several months because it cost him $1.25 per pound freight, plus ground handling charges on Guam.
He also shipped two 40-foot containers filled with drinking water to Guam, but future orders were cancelled because of the high freight cost.
“Over the past two years, we have made over 15 shipments to Guam to test the market, successfully selling vegetables, fruits, fish and shrimp to various hotels and restaurants but without making any profit because of the high cost of shipping.
He said the island’s sweet potatoes which can be bought for 70 cents per pound can be sold at the military commissary on Guam for $1.72 per pound, but the shipping cost of sweet potatoes is $1.02 per pound. If not for the high cost of shipping, he said that CNMI’s sweet potatoes would sell quickly because of its good quality compared to any from the U.S.
Guam as viable market
Pellegrino said Guam, with a population of over 180,000, over a million tourists a year and an increasing military population, is a viable market to export local products.
“Guam is currently importing over $53,300,000 of fruits and vegetables from the U.S. and elsewhere every year, or an average of $4,441,000 monthly, and imports over $32,000 a year for fresh flowers,” he said.
With the operation of a new cargo bridge airline, Pellegrino estimates the shipping cost to Guam will be about $.50 to .60 per pound, saving over 50 percent per pound.
Cargo Air Bridge or CAB will start with transporting agricultural produce then move on to carrying other stuff such as mail, hazardous materials such as fertilizers, fire extinguishers and others.
“We will be carrying cargoes only, no passengers so we will not be a competition to the existing airlines. We will be expanding our services as we move on,” he said.
The creation of new jobs on Saipan, Tinian and Rota will be another benefit of the “air bridge.”
“One of the greatest problems facing the CNMI today is lack of jobs, but an air cargo bridge will put people to work. It will create promises of a better future because we will be building it with our hands,” he said.
Pellegrino said that the company Arctic Air Circle which will be changed to Cargo Air Bridge will start with two sturdy Short Sherpa cargo planes that will transport local produce between the four islands.
They are expecting the aircrafts to arrive on Saipan by September, and the inaugural flights are expected sometime in October. CAB will service the four islands initially two times a week—Mondays and Thursdays but more flights will be added as the need increases.
“I welcome any potential investors. This is a community project full of hope and great promise but its success will depend on how we cooperate and are willing to take risks involved. We can and must help ourselves to economic prosperity,” Pellegrino said.
Working with Pellegrino in this new venture are Paul Zak, marketing and sales manager, and James Parrish, chief pilot of over 30 years experience, who will also be the company’s operations manager.
