Showing posts with label Caribbean. Show all posts
Showing posts with label Caribbean. Show all posts

Sunday, 19 April 2015

Divestment Of The Kingston Container Terminal

Government of Jamaica's push to divest the port of Kingston (Kingston container terminal) by way of concession is now complete. In a deal worth US $510 million, France-based CMA CGM shall operate the KCT for 30 years.

Kingston container terminal. Source of image: Timeforfamily

The divestment process was not all smooth sailing, initially, three bidders expressed interest in the port; PSA international out of Singapore, DP world out of the United Arab Emirates and CMA CGM out of France. However, DP world and PSA international pulled out, citing concerns regarding a possible rival container port to be built at the Goat Islands in St Catherine. This meant that CMA CGM was the lone bidder, and eventually got the go-ahead to operate the KCT on April 7, 2015.


CMA CGM was founded in Marseille, France in 1978. Internationally, CMA CGM is rated as the world's third largest shipping company, MSC and Maersk are ranked second and first respectively.

CMA CGM has in excess of 440 ships in operations, serving 400 of 521 global container ports. Additionally, CMA CGM handles 12.1 million twenty-foot equivalent units (TEUs), employing approximately 20 000 individuals. Furthermore, latest revenue data are relatively impressive; US $16.7 billion at the end of 2014. In June 2013, China merchants holding international (CMHI) acquired a 49 percent stake in the company. The figures and the ownership structure, suggests that CMA CGM has the financial capability and know how to operate the port of Kingston.

Kingston Container Terminal (KCT)

Located in the world's 7th largest natural harbour, KCT commenced operations in 1975 at port Bustamante. KCT has grown markedly in size over the years. It has a rated capacity of 2.8 million TEUs, making KCT among the largest regional port, and the largest container port in the Caribbean.

Under the concession agreement, It's envisaged that annual capacity of KCT shall increase to 3.6 million TEUs. Additionally, KCT shall become CMA CGM's regional hub, and foresees the aforementioned KCT becoming a top five port in the region.

To achieve their dreams, CMA CGM seeks to increase the draught at the terminal to 15.5m prior to the opening of the new locks at the expanded Panama canal. The Panama canal shall allow the passage of post-panamax ships to transit the canal, KCT and Caribbean ports are positioning themselves to become major beneficiaries of the expanded Panama canal.


Major ports, Port Authority of Jamaica.

General overview, KCT services LTD.

The CMA CGM Group obtains the Kingston Containers Terminal concession and makes Jamaica its hub in the Caribbean, CMA CGM.

Wednesday, 14 January 2015

Is Jamaica Prepared For A Major Earthquake?

Tuesday January 12, 2015, marked the 5 Th anniversary of the 2010 Haiti. The intensity was measured a remarkable 7.0. M on the Moment Magnitude Scale (MMS), a scale designated to measure the intensity of earthquakes. The MMS scale is preferred to the somewhat antiquated, Richter scale, that is said to underestimate higher magnitude earthquakes. However, the Richter scale is said to be a better measure of lower end earthquakes.

A fact to note is, to the eastern and southern end of the Island, Jamaica share the Enriquillo fault zone with Hispaniola. The Enriquillo fault zone is responsible for numerous earthquakes within the past 400 years. Including the aforementioned Haiti earthquake, the 1907 Kingston earthquake and the destructive 1692 earthquake that destroyed Port Royal. To the north and western end of Jamaica, lies the Walton fault zone. Both Walton and Enriquillo fault zones, separates the Gonave microplate from the Caribbean plate.

 Gonave And Caribbean plates. Source of images: UWI earthquake unit 

The 1907 Kingston earthquake was measured at 6.5. M on the Moment Magnitude Scale, not dissimilar to the 2010 Haiti earthquake. In technical terms, the 1907 earthquake was three times smaller in comparison to the 2010 Haitian earthquake, and released fewer than six times the energy of the 2010 Haitian earthquake. However, it is estimated that 1000 individuals were killed, with approximately 10 000 individuals left homeless.

The big daddy of the aforementioned earthquakes to affect Jamaica, was the disreputable 1692 Port Royal earthquake. It had an intensity of 7.5. M, a local tsunami was also triggered. It is estimated that 2000 individuals were killed. Additionally, approximately 66% of the Port Royal archipelago sank, destroying virtually everything. There were also numerous reports of landslides across Jamaica.

Is Jamaica Prepared For the Inevitable?

The Office of Disaster Preparedness and Emergency Management (ODPEM) designates the month of January as earthquake awareness month. Quoting from the earthquake unit at the University of the West Indies (UWI) "About 200 earthquakes are located in and around Jamaica per year most of which are minor, having magnitudes less than 4.0.". However, are we prepared for the next major earthquake?

A February 7, 2014 story in the Jamaica Gleaner, suggests that approximately 70% of designed buildings, are done without the input of building professionals. See the Jamaica Gleaner story for additional information: Jamaica's New Building Code Imminent.

Giddy House in Port Royal, Kingston. A region that is prone to liquefaction. Source of Image: Clarmo

A worrying statistic. But a study commissioned by NEM insurance company, implies that Jamaica should fare better Haiti, in the event of a 7.0. M earthquake. The study was carried out by the Mona Geoinformatics Institute and the earthquake unit at the University of the West Indies (UWI). The study suggests that eastern parishes should fare the worst. This attributable to the geology of the area, an area that is prone to landslides and liquefaction.

Despite being relatively prepared for a major earthquake, steps should be taken to improve our preparation for the inevitable. This includes proclamation of a new building code, providing required funding to the essential services and educating the public on what should be done in the event of a major earthquake. We cannot prevent earthquakes, but the aforementioned steps should go a far way in reducing property loss and loss of life.


Wednesday, 7 January 2015

America To Normalize Relations With Cuba; What are the implications to Jamaica?

The Five decades long embargo against Cuba is still in place, it came about following the Cuban missile crisis in 1962. However, somewhat surprising news came last December; the US announced the initiation of steps to normalize relations with Cuba. The announcement is generally seen as a positive development, but apprehension is also perceptible, especially within the Caribbean region. I'll explore whether the fear of US-Cuba diplomatic normalization is justified.

Plaza Vieja, Havana. Source of Image: Brian Snelson on Flickr.

A myriad of changes were contained in President Obama's announcement regarding US-Cuba relations, the aim of these changes are to take a flexible approach to diplomacy, as was done with China. The changes include relaxation on US-Cuban travel, though a ban on direct tourism travel remains. Plus, an increase in the sum that can be remitted to Cuba. Additional changes in the flow of information and commerce are expected.

What are the implications to Jamaica

On the positive side, benefits of the move will not be immediate, similarly, negative implications are not expected in the short term. The biggest worry is Cuba being a threat to the regional tourism industry, to be specific, the tourism industry here in Jamaica.

But with an Embargo in place, and the continued ban on tourist travel, Jamaica will maintain Its presence as a major player in regional tourism. Plus, it is said that tourist visits Jamaica because of our culture and strong brand, a trend that is likely to continue. However, this threat should not be taken likely, I urge stakeholders to implement measures to improve competitiveness to limit possible fallout, knowing that removal of the embargo is inevitable. Additionally, the ministry of  tourism must increase airlift and diversify tourism offerings.

Cuba's tourism industry wouldn't be considered nascent. In fact, their room stock consists of approximately 30 000, with at estimated 3 million tourists. A breakdown of the figure indicates that Canada is their primary source market. With diplomatic normalization, a gradual increase in American travelers are expected. However, removal of the embargo should allow for an exponential growth in the aforementioned travelers, possibly at a lost their neighbours.

On the economic side, an increase in remittance will have a positive on Cuban spending. However, removal of the embargo should provide an astronomical boost to the Cuban economy. Namely in areas such as telecommunications, construction, manufacturing and tourism.

In such a situation, Cuba's regional neighbours may see a reduction in foreign direct investment. Despite the possible negatives, opportunities for Jamaican and Caribbean business would be numerous. Plus, with over 11 million people, Cuba would be the largest Caribbean market. In other words, with time, Cuba may become a major consumer of regional goods.

I implore on the Jamaican government, private sector and individuals to improve their competiveness; while awaiting US-Cuba normalization, and the inevitable removal of the 5 decades long embargo. Doing otherwise may be fatal, economically speaking. However, be it cliche, let's see what pans out with time.

Saturday, 19 July 2014

Regional Drought

Jamaica, as is the case for much of the region, is now experiencing drought conditions. Wildfires are burning, vegetation is drying up and water storage levels are currently approaching crisis levels. Take Jamaica, for example, a recent news report suggests that water resources in the Kingston Metropolitan are on the brink of being depleted. To be specific, the report suggests that only One month's supply of water in Corporate Area is available. Except for may be Cuba and the Bahamas, the rest of the Caribbean is experiencing below normal rainfall, and drought conditions could get worse if conditions continue as is.

Figure 1: Dry vegetation in central Jamaica. Source of image: Personal photo

What's causing the drought?

May, generally marks the commencement of the Caribbean's secondary wet season. But seasonal rainfall has been below normal since then. Why, you may ask? The most likely reason would be El Nino, though climate change may exacerbate these conditions, the evidence to support this theory is inconclusive. El Nino has not been declared, but sea surface temperature anomalies have been at or close to the 0.5 Celsius threshold since mid April. The southern oscillation index was out of sync with warming equatorial Pacific sea surface temperatures, but recent downward spikes in the index suggests that the official declaration may be on the horizon.

Figure 2: Sea surface temperature (SST) anomalies, note the warmer than average SSTs across the equatorial and northern Pacific. Source of image: Tropical Tidbits

The subtropical jet is further south in El Nino/warm ENSO years, this will generally increase the upper level winds across the Caribbean and the tropical Atlantic, which enhances vertical wind shear across the aforementioned area. These conditions tend to suppress tropical cyclone development, with accompanying dryer than normal conditions in the main development region.

Figure 3: El Nino effects during June through August. Source of image: National Weather Service

The forecast suggests that drought conditions will persist up to September, so I would urge my fellow islanders conserve water, as it seems as if conditions will get worse before they get better.

Saturday, 31 May 2014

The 2014 Hurricane Season and Jamaica

Yet another hurricane season is upon us, with the 2014 Atlantic hurricane season being under an hour away. The Atlantic hurricane season extends from June 1st to November 30th of each year. So what about the prognosis? NOAA's (National Oceanic and Atmospheric Administration) Forecast is for an average to below average to below average hurricane season, NOAA predicts near-normal or below-normal 2014 Atlantic hurricane season. The 2014 outlook is very much the same when we look at the numbers from CSU (Colorado State University) and UKMET (United Kingdom Meteorology office model), their forecasts are below the average of 12 named storms. These predictions are largely founded on a highly probable El Nino.

Figure 1: Chart showing NOAA's 2014 Atlantic hurricane season forecast. Source of image: National Oceanic and Atmospheric Administration (NOAA).

Average to below average 2014 hurricane season for the Atlantic?

As stated above, the 2014 hurricane season outlook suggests that an average to below average 2014 hurricane season is likely, especially with an impending El Nino. El Nino is characterized by anomalously warm Sea Surface Temperatures (SSTs) along the central and eastern equatorial pacific, the threshold is +0.5 degree Celsius.

In Terms of the Atlantic, upper level winds increase across the tropical Atlantic in an El Nino year. Furthermore, strong upper level winds will increase wind shear across the tropical Atlantic. This will generally limit tropical cyclone formation in the aforementioned area.

Figure 2: Expected Atlantic conditions under an El Nino during the hurricane season. Source of image: Accuweather.

If SSTs in the equatorial Pacific persists at +0.5 degree Celsius for three months or more, then an El Nino may be classified. The Oceanic Nino Index  (ONI) is used for this classification, the current ONI value is at -0.5 degree Celsius for the period February through March 2014. Despite the negative value, a significant pool of abnormally warm SSTs is sitting below the surface, this is hinting at the possibility of further warming. Hence the chance of the ONI surpassing the El Nino threshold of +0.5 degree Celsius will increase greatly.

Figure 3: SST anomalies across the Pacific as of the May 29, 2014; the positive SSTs (yellow to red) along the equatorial Pacific are notably evident. Source of image: NOAA.

On the other hand, the Southern Oscillation Index (SOI) values have been positive in recent weeks, Latest Southern Oscillation Index values. This suggests that if an El Nino does develop, then it should be weak to moderate for 2014/2015, of which the 2014 Atlantic hurricane season falls within. The SOI is calculated using pressure fluctuations between Tahiti and Darwin. Persistent +6 SOI values indicate the possibility of a developing El Nino. While persistent values below -6 indicate the possibility of a developing La Nina (opposite of an El Nino). Though an El Nino is very likely, a persistently positive SOI value could inhibit such a development.

Figure 4: Sub-Surface sea temperatures. Source of image: National Climatic Data Center.

What should Jamaica expect for the 2014 hurricane season?

Jamaica is located within the hurricane belt; the hurricane belt is a region of the Atlantic that is prone to tropical cyclone formation and impacts. Jamaica should be prepared for the inevitable, despite the outlook showing suppressed tropical activity across the Atlantic. Remember, it only takes one storm to create severe damages and loss of lives. There is also very little correlation between the number of storms and direct impacts. Plus, 2013 showed how difficult these long term outlooks are, it should have been an active hurricane season. But the aforementioned forecast didn't pan out.

The most destructive tropical cyclone to have affected Jamaica was hurricane Gilbert in 1989. Total damages were estimated at over US$ 2 billion, in excess of 45 people lost their lives. Hurricane Gilbert was a painful reminder of how powerful and destructive hurricanes can be, especially for small island states such as Jamaica.

Tuesday, 27 May 2014

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.