Profile: Eduardo Pagán

Driving forward while giving back

Born and bred in Puerto Rico, Eduardo Pagán is, perhaps, just the kind of person the shipping industry needs more of. That is a seasoned business executive who has finely honed his skills outside the maritime industry, yet in later life brings some fresh thinking to our industry based upon a font of knowledge and know-how accumulated from elsewhere. TOTE Maritime, a major player in the mainland US-Puerto Rico trade, has been the chief beneficiary of Eduardo’s vast experience but so have very many charities and institutions in the Commonwealth. Here, Eduardo speaks to Caribbean Maritime about his life in business and beyond, and his current role with TOTE Maritime.

Q. Where were you born and where did you grow up?
A. I was born in the centre of the island of Puerto Rico in a mountain town named Barranquitas (little hills). Due to the altitude and low temperatures (average 60°F/15°C) this place was a favourite venue for many European settlers looking for some ‘cool’ weather following the discovery of the island. Three years after my birth, we relocated to the San Juan metro area.

Q. How big an influence were your parents on your early life?
A. My parents were instrumental in my development. The values and principles they taught me, and particularly my mother’s push to pursue a professional career while making sure I became a good citizen was always the aim. My father, as an executive for Ford Motor Company, was a great example and model of business ethics and discipline.

Q. Where did you go to school and then to university? In which subject(s) did you graduate?
A. I went to school in the public educational system, a primary school in the San Juan metro area, and secondary school in a town in the south east of the island. I was admitted to the University of Puerto Rico at the age of 16 years to pursue my degree in industrial engineering (BSIE). At that time it was the only engineering school located in the west side of the island and rated among the top 20 engineering universities in the US. After completing my bachelor’s degree in engineering, I completed an MBA with a concentration in industrial management. I did the MBA during night studies since I got a job immediately after completing my degree in engineering.

Q. What was your first job on leaving full-time education?
A. My first job was as a manufacturing engineer with an electronic manufacturing company (LH Research – headquartered in southern California,) making switcher power supply units in two sites – one in Puerto Rico and the other in Port-au-Prince, Haïti. After one year, I received a generous offer to work for Chesebrough-Ponds (a US Conglomerate, including health and beauty products). Two years later this company was acquired by the UK’s Unilever. I spent 21 great years working for this wonderful corporation.

Q. Before joining TOTE Maritime, you spent time living and working outside the Caribbean. Where did you work, for whom did you work and what did you learn from your various experiences overseas?
A. As mentioned earlier, I worked with Unilever, and after four years, they offered me a job in the UK in charge of its Latin America supply chain sourcing strategy for its Personal Products Division. It was a great two-year assignment that allowed me to see the business in a holistic way, enabling and enriching my general management skills and competencies in all business aspects and disciplines, including sales and marketing which were not derived from my educational background as an engineer. Upon completion of my assignment, I came back to work in the US, but took upon a sales/marketing senior role for US-made goods destined for Latin America, emerging European and Middle East markets. After Unilever, I joined a medical device manufacturing company as general manager for three years and retired to work on my own consultancy firm.

Q. When did you join TOTE Maritime and why?
A. I joined TOTE Maritime (formerly Sea Star Line) in November 2010 as General Manager and Vice President of the Caribbean based in Puerto Rico with responsibilities for our business in the US Virgin Islands as well as some of the British Virgin Islands. The invitation to join TOTE was very appealing for a number of reasons. The company was looking for a native executive, and someone coming from the customer side rather than the tradition of the industry to recruit senior executives within the sector. No less important was the challenge of leading an organization that was in a very difficult financial situation. These factors were key for me to leave my own business, take full control of my destiny and venture into something very challenging.

Q. TOTE Maritime is part of a larger group so how does it benefit from being in the Saltchuk family of companies?
A. Saltchuk’s creation was pivoted in the acquisition of the TOTE Alaska company (formerly known as Totem Ocean Trailer Express) and eventual growth by mostly buying other transportation companies, including the acquisition of the assets of the former sea barge operations serving the Puerto Rico market. Saltchuk is a values-driven organization that puts safety first, takes care of customers and conducts business with a strong commitment in terms of reliability, honesty, and integrity. It’s also highly committed to protect our environment, and to contribute to our communities. The company’s principle is to reinvest over 80% of its profits in further enhancing its asset base and value-added acquisitions have been a fundamental criterion for the growth, strength, and brand expansion of its companies.

Q. TOTE Maritime operates within the “protection” of the Jones Act (both to and from Puerto Rico and Alaska). The Jones Act has its critics – especially in Puerto Rico. How does TOTE Maritime answer these critics who claim that the Act increases freight rates to and from the continental United States and, as a consequence to the prices Puerto Ricans have to pay for a range of goods?
A. The Jones Act subject had been politicized through decades of misinformation and philosophical arguments that lack any empirical base. Many times, the Jones Act is used as a ‘scapegoat’ by a few detractors and these arguments lack the simplest understanding of the maritime industry costs and of market dynamics.

As a matter of fact, in the container shipping business, many of the cost elements for the carriers are unaffected by flag registry. Fuel expenses, the cost of loading and unloading containers, trucking and inland transportation expenses, container equipment costs, sales, and administrative expenses, among others, are the same whether it’s a US or foreign-flag vessel. The principal costs that would be affected, including crew and vessel capital, could come down to less than 10% of the total costs. These costs are completely offset by the other supply chain costs that are gained by customers enjoying a steady/reliable ‘point-to-point’ service such as 98% on-time vessel calls measured within two hours from scheduled (no port calls in between), a 2.5-day transit time, 53 foot containers (42% more cube capacity versus 40 foot standard), ‘Best in Class’ control and tracking of reefer containers that are critical for the cool supply chain for perishable goods and bio sciences commodities imported and exported from the island, and port and terminal ‘world class investments’. In times of emergency, Jones Act liners have also proven to be the right solution to deploy additional tonnage needed to service the needs of the island.

The Jones Act delivers a strong positive ‘Just in Time’ case study for an island receiving goods from a distance of 1,500 nautical miles, and that results in great benefits for shippers in many areas such as: lower inventories and spoiled/obsolete goods, lower inventories tax payments, saved warehouse space/utilities/labour, etc… “The Jones Act has helped to ensure reliable, regular service between the US and Puerto Rico, service that is important to the Puerto Rican Economy”

Q. What volume of freight each year does Tote Maritime carry on the Jacksonville-San Juan-Jacksonville route?
A. We are the number one company transporting containers and reefers from US to Puerto Rico.

Q. In addition to Puerto Rico, how does TOTE Maritime serve both St Croix and St Thomas in the USVI and how important is this trade to the company?
A. The USVI are a critical extension of our business service and value proposition to our sister islands. We service with feeders departing from San Juan twice a week into the islands.

Q. TOTE Maritime has proved a pioneering organization, being the first to introduce LNG-powered vessels into the Caribbean and the US. It must have been a difficult decision to make at the time, but six years on from the initial deployment of these Marlin-class vessels, was LNG the right move and at the right time?
A. Without any doubt it was the right move and timing, and one of the cleverest endeavours of our organization. For the record, TOTE Maritime was the first in the world to introduce LNG-powered containerships, not just in the Caribbean region and the US. Being the first involved in a technological breakthrough is normally difficult and for several factors, but the value promise with this change was worth pursuing, and it was done with a high sense of validation in many elements and the build up on redundancy where it could be needed.

Q. Any idea what propulsion TOTE Maritime might use for its next generation of vessels? Is the company happy to stay with LNG or is it too early to say?
A. We are very delighted with the use of LNG as a propulsion. Since the announcement of our Marlin Class Vessels and to date, we pride ourselves in running the most eco-friendly containerships, and testament of that is the significant number of other carriers that have chosen to follow our path in regard to their next tonnage generation.
The evolution of future generation vessels and type of propulsion is something that we will continue to address; taking into consideration the benefits to our ecosystems and the ‘edge’ to be provided to our organization.

Q. You are currently a member of the board of directors, and an immediate past president, of the Puerto Rico Shipping Association (PRSA). What were your main achievements as president and what is your role within the Association now that your term has expired?
A. My biggest mission in leading the PRSA was to gain both private sector and government acknowledgment and respect of the critical contribution of our industry as a lifeline for the people of the island, and the imperative participation in the island’s economic ‘path to growth’ strategy and initiatives. We accomplished critical roles and participation in the island’s recovery efforts from recent natural disasters, pandemic management, future economic development initiatives and more. As a leader of the Transportation Sector (maritime, air, inland) at the Puerto Rico Business Emergency Operations Centre, and as Leader of the Economy Growth Strategic for the post-Covid pandemic in the island, we ensured a great ‘pedestal’ for our industry’s position in our society.

Q. TOTE Maritime was again a major sponsor of the Puerto Rico Open – a PGA Tour golf event held this year in February – and The Players Championship in Sawgrass, Florida. What’s the strategy behind TOTE Maritime’s golf sponsorship and what value does the company get from these events?
A. Our participation at the PR Open is one of many initiatives in our Corporate Social Responsibility Program. We are very proud to support more than 20 organizations around the island, with a significant focus towards youth development and entrepreneurship. Among these are: Boys & Girls Club of Puerto Rico, Enactus, Grupo Guayacan, Make-a-Wish Foundation, and PECES. Besides a significant monetary contribution to these organizations, we have a 75%-plus employee participation in assisting many activities in these organizations and many staff members serve on the board of directors, including myself as the President of the Board of Directors for Boys & Girls Club of Puerto Rico.

Q. Outside of work you are known as a keen and widely travelled golfer. If you had to choose three golf courses to play which would they be?
A. Wow… this is very good question. Firstly, I would love to play again St. Andrews in Scotland (the last time I played was in 1991), Playa Grande, in Dominican Republic, is a hidden jewel of a course with a good number of holes resembling those at Pebble Beach in California; and lastly Royal Isabela on my own beautiful island.

Q. Finally, can we ask you something about your personal life beyond TOTE Maritime? What are your main interests outside of work (apart from golf that is)?
A. I really enjoy working with organizations that are involved in youth development. I’m convinced that supporting them will lead the island to create a new generation of artists (poets, writers, singers, etc..), athletes, professionals, thinkers, and great citizens in general. I follow a tradition of many proud Puerto Ricans who enjoy people excelling in everything they do.