Jamaica's Logistics Hub

Within the last two years, much has been said about the much touted "Logistics Hub." For this reason, I want to take this opportunity to join in on the discussion. So what is logistics? Logistics is defined as the movement of Commodities and services from  point A to point B in a timely efficient and cost effective manner.

For a more sophisticated definition, here is a quote from David Andries, Vice president of UPS customer solutions: "implementing efficiencies across a business's entire supply chain to help them achieve their strategic goals." Supply chain involves the production and / or management of goods / services from producer to the supplier. The definition suggests that logistics is important for efficient operation of businesses.

Jamaica's push towards a logistics hub / logistics centered economy

Jamaica has always been an ideal location for trade. Port Royal was once known as the shipping hub of the Caribbean sea, at least until the 1692 earthquake. Fast forward to 2014, Jamaica is still considered as the transshipment hub of the Caribbean. This is largely facilitated by the largest container port in the Caribbean, the port of Kingston, as well as our location along major shipping lanes.

Figure 1: Major shipping lanes and transshipment traffic in the Americas. Source of image: American Association of Port Authorities.

However, stand alone transshipment can be time consuming and rather costly. Plus, most of Jamaica's outbound containers are empty, this is largely due to our limited export capacity and trade imbalances with our major trading partners. These negatives limit the amount of value that adds to our economy. 

It is in this respect as well as the ongoing Panama canal expansion, that the government of Jamaica is looking to achieve this astronomical dream of becoming a global logistics hub. A third set of locks is being added to double its existing capacity. The Panama canal is currently limited to Panamax ships, but expansion will allow easy access to Post-Panamax ships. Panamax ships can carry up to 5000 twenty foot containers. While Post-Panamax ships can carry in excess of 12 000 twenty foot containers. The original completion date should have been  late 2014 into early 2015, but recent delays suggest that this timeline is now questionable. 

Dr Eric Deans, chairman of the Jamaica logistics task force, opine that Jamaica sits in the middle of an 800 million person market. He pointed out that this market is easily accessible from Jamaica.

Estimates from the Planning Institute of Jamaica (PIOJ), suggest that the economic impact from the hub would be very significant if it was implemented. Here's a quote from Minster, Hon. Anthony Hylton: The Global Logistics Hub could add 17 per cent growth to Jamaica's Gross Domestic Product (GDP) over six to eight years.

What does the Logistics Hub entail?

The logistics hub is a highly ambitious undertaking, it is a multifaceted initiative, so I'll have a look at some of these aspects. Some of these projects are, but not limited to: Expansion of the port of Kingston, build out of the Caymanas Economic Zone (CEZ), a dry dock facility in Jackson bay, Vernamfield Aerodrome and a commodity port in Cow Bay.

The dry dock, Aerodrome and commodity port are said to be long term projects. While the expansion of the port of Kingston, establishment of a port community system and build out of the Caymanas economic zone are said to be short to mid term projects. 

Video 1: The video shows likely implementable logistics hub projects.

Expansion of the port of Kingston

The port of Kingston is among the largest container terminals with the region. Its capacity is rated at 2.8 million TEUs (Twenty foot Equivalent Units), and a draft of 13 Metres. Current draft limit at the port of Kingston will inhibit the docking of Post-Panamax ships (Draft can exceed 15 Metres). This limitation has spurred the government of Jamaica into action.

Figure 2: Expansion plans at the port of Kingston. Source of image: Port Authority of Jamaica

Plans are apace to privatize and dredge the Kingston harbour to accommodate Post-Panamax ships.Three of the largest port operators are looking to take control of the port. These operators are Dubai Ports World, Port of Singapore and Terminal Link Consortium. A recent article suggests than privatization may be completed by the end of 2014, New Deadline for Kingston Container Terminal Privatisation bid. It is hoped that that privatization and modernization will allow the Port of Kingston to benefit from the Panama canal expansion.

Caymanas Economic Zone

Much has been said about the Caymanas Economic Zone, but there has been nothing tangible to show. The initial aim is to develop 200 acres to specialize in Information Communications Technology (ICT), Light Manufacturing, Assembly, etc. It is envisaged that the development of the Caymanas Economic Zone will facilitate growth at the port of Kingston and economic diversity.

The Goat Islands Project

The announcement was made in August of 2013, that China Harbour Engineering Company (CHEC) intends to use the Goat islands as a location to make gantry cranes. This has been met with vehement opposition as the Goat islands is location in The Portland Bight Protected Area. Members of the public along with Environmentalist, are looking to prevent the development from happening at this location. Environmentalist has made it clear that they are not against development, but would prefer to have the development in an alternate location.

On the Other side of the coin. The Minister of Transport Works and Housing, Dr Omar Davis Said that his administration wants the project to happen. Here's a quote from Dr. Davis: "The administration does not pretend that it is ambivalent about the project. We want to implement it." With recent pronouncements from various quarters, it is clear that we'll hear a lot more about this project

It seems as if investor interest is increasing as evident from this recent article: Multi-continental group expresses strong interest in Logistics Hub. While this is good, a significant amount of work is left to be done, especially if we're looking to capitalize from the Panama Canal Expansion ahead of our competitors. Namely, Panama, The Bahamas, Cuba and Dominican Republic.