By TBY | Jamaica | May 18, 2018
A historical maritime player, Jamaica is seeking to extract value from its ideal location by developing a logistics hub integrated with local industry.
Competing with Panama and the Dominican Republic, Jamaica benefits from being located on the sea route from Panama to the US and Canada, and boasts a more stable political and economic environment than neighboring Cuba and Haiti. Thanks to its dynamic tourism industry, Jamaica is connected to main air gateways across the world through international airports at Kingston and Montego Bay. Other competitive advantages include a cost-competitive workforce, reliable telecoms infrastructure, and a modernized road network.
In a speech during budget debates in April 2017, Prime Minister Andrew Holness declared that the long-announced Global Logistics Hub Initiative (GLHI) was “a national project that will be realized during my administration’s time in office.” A statement backed by Horace Chang, Minister without Portfolio with responsibility for Water, Works, and Housing: “The concept of a logistics hub operating out of the port of Kingston is certainly a game changer in terms of the economy of the country, both in the medium and long term.”
GLHI is a multifaceted project that includes the expansion of air and seaport infrastructure, the creation of special economic zones (SEZs), and the development of a favorable business and regulatory environment. The objective is to move beyond being only a transshipment point to adding substantial value locally, customizing products before their final destination.
An emblematic development of the hub is Kingston Freeport Terminal Limited (KFTL), a special purpose company belonging to French shipping company CMA CGM and benefiting from a 30-year concession to operate the Kingston Container Terminal. The company is investing USD510 million to boost container capacity and increase the maximum boat size with access to the port. The objective is to turn the terminal into the top-ranking hub of the region and to accommodate the Post-Panamax vessels of 14,000 TEUs, the largest ships crossing the expanded Panama Canal. According to Olivier Tretout, CEO of KFTL, 87% of the cargo volume at the port is used for transshipment, and at least 60% of total products are unfinished products to be further processed before commercialization.
The development of the maritime industry is also supported by the expansion of the Caribbean Maritime University (CMU), which officially received university status in a ceremony held on September 28, 2017. During the event, Andrew Wheatley, Minister of Science, Energy, and Technology noted that CMU offers “quality training in areas such as logistics, freight forwarding, and immigration and border security programs” in order to take advantage of the growing needs stemming from the expansion of the Panama Canal. According to Fritz Pinnock, Executive Director of CMU, the University plans to grow from 5,000 to 15,000 students in the next five years and to leverage its international partnerships to be recognized as a center of maritime excellence.
Sangster International Airport, the airport serving Montego Bay, divested in 2003, and the Kingston Freeport Terminal at Kingston’s Norman Manley International Airport, is also being privatized. Eight bidders have been pre-qualified, and the winning bid should be announced in December 2017. This new private-public partnership is expected to strengthen the multimodality of the logistics hub, increasing opportunities for air cargo shipping, especially to North America.
Developing an international hub also enables local manufacturers to source raw materials from a wider range of origins and at more competitive prices. The Special Economic Zones Act, which came into effect on August 1, 2016, established an authority and the granting of incentives to attract investments in six designated areas; it is a development hailed by Metry Seaga, President of the Jamaica Manufacturers’ Association. Seaga was also part of a study visit led by Minister Daryl Vaz in Singapore in June 2017 following the signature of an MoU between the Jamaica Special Economic Zone Authority and the Singapore Cooperation Enterprise in December 2016. Jamaica will certainly benefit from Singapore’s experience in its journey toward becoming an international logistics hub.