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Cuba: Preparing for Trade

transportfolio-Cuba-BlogPost

A colleague and I traveled to Cuba in March as part of a trade delegation with Transportation Intermediaries Association. I’m excited about the potential business opportunities there, but there are issues to resolve before trade with that country can begin in earnest.

I enjoyed the Cuban people. While we were walking, a group of Cuban people at a bus stop yelled, “Americans, we can now be friends!” That was typical of the friendly, outgoing people, with their love of colorful art, their amazingly well-preserved antique cars, and their coffee-loving culture. Cubans prefer taking the time to sit down and enjoy a cup, even if only for five minutes. It’s a slower pace that I found refreshing.

Yet, it’s clear that there has been an embargo for 50 years. Some examples:

  • Airplanes depart and land seemingly at will. Flight schedules are more like targets that move, depending on what is happening at the airport.
  • Our hotel—a five-star in its day—was built in the 1950s. Only some of what remains works well. There were power outages, broken elevators, room doors that didn’t lock, and no hot water.
  • U.S. credit cards don’t work in Cuba, and there are no ATMs. All transactions are made in cash. Locals deal with the CUP (Cuban peso); foreigners convert U.S. dollars to CUC (Cuban Convertible).
  • U.S. cell phones do not work, and there are only a few WiFi hotspots in downtown Havana. The hotel WiFi service was slow, with frequent service break downs.

As long as visitors are patient and flexible, there’s a lot of reason for hope in the country, both personally and business-wise. Change is key. Yet, while most Cubans I met seemed to want to have the barriers lifted, they also want to preserve the Cuba that exists today. That’s not very likely, especially if you consider that only 55,000 Americans visited Cuba in 2014, and 135,000 last year. If sanctions are lifted, it’s expected that 1 million U.S. citizens will visit in the first year. Cuba’s aged infrastructure—airports, roads, hotels—isn’t prepared for that level of activity.

Likewise, while the Cuban government seems to want businesses to come there, they want it to be on their own terms. Cuba remains a communist country. Companies that want to open in Cuba must make a full business proposal to the government, including financials, formulas, production schedules, etc. The Cuban government can allow the company to open as a minority partner (49%), keeping the majority stake for themselves. Or, they can take the information and open the business, keeping 100%.

In spite of this, there are reasons for hope. The government has established a free trade zone in the port of Mariel. If the government approves a company’s plan, the business can lease land and manufacture there. A lot of questions remain about how this will work, but it is an idea that holds a great deal of promise.

Preserving the Cuban way of life while allowing in new businesses will require a balance, but it can be done. Meanwhile, we are committed to learning about the opportunities for business—both within Cuba and shipping to Cuba—and developing the appropriate logistics services as conditions evolve.

Related content: U.S. Customs Compliance Your guide to “reasonable care”