The pharmaceutical temperature-controlled logistics market is of critical importance to Puerto Rico’s pharmaceutical stakeholders due to:

• The island’s sizable pharmaceutical industry contribution to its economy and exports. Puerto Rico is the United States’ largest exporter of biopharmaceuticals, $53B in total BioScience exports.
• The growing global pharmaceutical temperature-controlled market. Puerto Rico’s existing infrastructure makes the island a natural choice for expanded pharma and medical device logistics services.
• Reshoring efforts to mitigate supply chain risks during the COVID-19 pandemic and beyond. (Source: Michigan Ross School of Business)

Photo: Prime Air Corp’s cold storage warehouse at the World Cargo Center | Luis Muñoz Marín International Airport | Carolina, Puerto Rico

The United States Department of Transportation (USDOT) approved order 2020-4-1o, which presents a new waiver for air cargo and passenger transfer services at Puerto Rico’s international airports to any of their other aircrafts. The waiver gives Puerto Rico the perfect opportunity to leverage its logistics expertise and establish new international travel & commercial routes, while helping companies cut costs, reduce shipping times, and ensure top quality handling of any product.

• The option to combine airline networks creates new connection opportunities that extend each airline’s geographical reach. Airlines can now deliver cargo to places through a partner airline if their own network is limited. This lowers operational expenses, enhances services, and improves profitability.
• Transfer and consolidation scenarios mean fewer planes with higher cargo yields to arrive at various destinations. Air carriers can load cargo from many destinations onto the same incoming plane then consolidate and transfer outgoing cargo, according to country or airport.
• Instead of flying an empty leg, airlines can now stop in Puerto Rico to pick up cargo for their return flight. This improves aircraft utilization as well and increases earning potential, enabling better directional balance of cargo.
• A 1% increase in air cargo connectivity translates a 6.3% increase in total trade. Source: International Air Transport Association (IATA)

Puerto Rico offers a unique package of smart tax incentives designed to help your operation grow, innovate, take risks, and hire the best talent.

• 4% fixed income tax rate on eligible income
• 75% exemption on property taxes
• 50% exemption on municipal taxes
• 100% exemption on dividends or profit distributions to shareholders, partners, or members
• 100% exemption from property taxes on call centers, corporate headquarters, and distribution centers, for the five years of operations

Puerto Rico has the largest noncontiguous Foreign Trade Zone (FTZ) system in the U.S. The island’s FTZ system includes FTZ 7 (Puerto Rico Foreign Trade Zone), FTZ 61 (San Juan Foreign Trade Zone) located in the Guaynabo area, and FTZ 163 (managed by Zona Libre del Sur), located in Ponce. Approximately 98% of Puerto Rico has been designed as an Opportunity Zone, which creates an attractive investment alternative for U.S. investors. Benefits include:

• Deferment of federal customs duties and Puerto Rico excise taxes.
• 100% exemption on manufacturing lead time on exports outside of the U.S.
• 100% exemption on tangible property and equipment used.
• 60% exemption on the value of the property that is designated intangible.
• 100% exemption on exports from the zone and sub-zones.