Jamaica’s Logistics Hub Initiative: Airfreight – The sleeping Giant

April 25th, 2014

By: Ainsley Brown

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The Government of Jamaica (GOJ) is currently embarking on a massive undertaking to shift its economy to a logistics centered one. What Jamaica, lead by its Ministry of Industry, Investment and Commerce  recognizes is that:

“Improving logistics performance is at the core of the economic growth and competitiveness agenda. Policymakers globally recognize the logistics sector as one of their key pillars for development. Trade powerhouses in Europe like the Netherlands or in developing counties like Vietnam and Indonesia see seamless sustainable logistics as an engine of growth and of integration with global value chains.” 

The World Bank’s Logistics Performance Index 2014.

Air connectivity, particularly Sea to air connectivity, forms a central plank of Jamaica’s Initiative. The development country’s air cargo/airfreight capacity is therefore integral to the success of the Initiative. Dr. Eric Deans, the Chairman of the Logistics Hub Taskforce explains why:

 

 Airfreight – The sleeping Giant 

By: Dr. Eric DeansAir Cargo and Global Trade  stat

The development of Jamaica’s airfreight sector is indispensable and is a high priority for the Logistics Hub Initiative, even more so than its maritime counterpart. This is due to the fact that higher valued merchandise is usually transported by air and Jamaica’s air connectivity enhances our near shore advantage for goods destined to the Americas.  We face stiff competition from Miami and Panama. Miami is America’s second busiest international airport and number one international cargo airport.  It is American Airline’s bustling Latin American hub, and the DHL hub of the Americas. The fact that Miami International Airport is by far the most important U.S. gateway for U.S. and International goods bound for Latin America & Caribbean air cargo market will see Jamaica competing within the same market segment.

However, Jamaica’s Norman Manley International Airport (NMIA) accounted for 23,332 landings and departures of aircraft in 2010 which is relatively small compared with 376,208 for Miami International Airport.  To successfully implement Jamaica’s air cargo logistics hub involves attracting more airlines to use expanded and upgraded Jamaican airport facilities. It is  also important that the hub and spoke network concept corresponds to the future strategic planning of the airlines servicing the Latin American market. Boeing reports that approximately 72% of the total U.S. air trade with Latin America & Caribbean currently flows through Miami – 71% of U.S. air export volumes, and 73% of U.S. air import volumes.

Some of the major challenges facing the regional air cargo industry present an opportunity for a Jamaican hub. While the security regulations for air cargo are not quite as demanding as for passenger transport, the growing fear of terrorist attacks results in stricter controls, particularly for cargo entering or transiting U.S. territory.  Coupled with visa restrictions for passengers, these requirements can have debilitating effects on shipment transit time and efficiency. Consequently, routing options that avoid U.S. transfers can be beneficial for certain shipments.

As a premier tourist destination, there is underutilized space available in the belly hold of passenger aircraft departing to and arriving from numerous destinations that offer transshipment feed potential for air to air and sea to air movements. The potential capacity will increase further when more long haul services using wide body aircraft are utilized along with dedicated cargo freighters. The overwhelming majority of air freight is transported on scheduled (passenger and freight) services. Did You Know air cargo stat

The Hub will also facilitate more connections to a greater number of city pair combinations.  The Caymanas Economic Zone and the other logistics parks will provide value adding and buffer storage capacity that will allow consignments to be consolidated for more efficient dispatch via sea and air modes.  The clustering of large multinational companies in an economic zone environment will provide a strong “local” base that encourages carriers to establish hubs facilitating high utilization of their assets.  Noting that cargo operators typically require available warehouse facilities rather than undertaking the construction themselves, the Airports Authority of Jamaica is expanding cargo capacity at NMIA.’

 

Dr. Eric Deans is the Chairman of the Jamaica Logistics Hub Taskforce

Over thirty years professional experience in port, shipping and logistics in North America, Europe, Asia and the Caribbean. Most recently as Director of Shipping and Policy Research at the Maritime Authority of Jamaica and currently as Chairman, Jamaica Logistics Hub Task Force. 

 Senior management experience at the largest transshipment port in the Caribbean, the Port of Kingston. 

 A graduate of the University of Delaware with a (Ph.D.) in Marine Policy, the University of Wales with a (M.Sc.) in Maritime Studies and the University of the West Indies with a (B.Sc) in Chemistry. 

 A member of the Chartered Institute of Transport, U.K., Connecticut Maritime Association and American Association of Port Authorities. 

 A member of the Kingston Free Zone Board and Client Service Committee; Montego Bay Free Zone Board and Finance Committee; Kingston Container Terminal Privatization Enterprise Team; and Advisory Board for the Jamaica Customs Agency.

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Air connectivity: taking Jamaica to the world and the world to Jamaica

March 25th, 2014

By: Ainsley Brown

Air hubA nation’s development and prosperity are increasingly joined to its connectedness to the rest of the world. The Global Logistics Hub Initiative has the goal of integrating and expanding Jamaica’s role in the global supply and value production system. The Initiative is the government’s response, in the form of a growth and development strategy, to the challenges and opportunities of globalization. A critical plank of this strategy is the nation’s air connectivity.

In today’s world of globalization it is not sufficient to simply have market access, the ability to turn that access into market presence is a necessity. Air connectivity or air logistics, is basically the ability of the nation to link with the rest of the world by way of airline services, and along with trade agreements are a critical link between market access and market presence. According to the World Bank “…logistics services has become critical for competitiveness. Better logistics performance is strongly associated with trade expansion, export diversification, ability to attract foreign direct investment and economic growth.”

Air connectivity is not a new concept to Jamaica as it is often discussed in relation to our tourism product and the expansion of our air lift capacity by way of increased tourist numbers. This would necessitate accommodating larger and larger aircraft from increasingly longer distances. The Global Logistics Hub Initiative represents an expansion and enhancement of this.

Sea to air connectivity a critical plank in Jamaica's global hub strategy

Sea to air connectivity a critical plank in Jamaica’s global hub strategy

However, it goes much further to link the slower but cheaper maritime transportation of intermediate (semi-finished) goods to the more expensive but faster air transport. In order for Jamaica to reap the greatest benefit from this sea to air connectivity it cannot and will not exist in isolation. But be linked to local value added production, centered largely but not exclusively around special economic zones.

Air transport while occupying a smaller portion of the international freight space – some 0.5% of global trade tonnage – none the less has higher margins – about 34% of global trade tonnage value-    and has greater value added than does shipping. What this translates to is greater opportunities for investment and jobs. Moreover, the aviation sector is set for expansion in Jamaica due to several factors. The government for its part has been perusing for several years a liberal or what is called an Open Skies Policy making it easier for Jamaica to connect to the world. The signing of an air service agreement with Singapore late last year was a great advancement in this policy.

Global factors are also shaping the expansion of this sector. There is a general expansion of aviation globally but regionally the FIFA World Cup this year and the Olympics in 2016 both to be hosted in Brazil are anticipated to drive up growth. Jamaica stands to benefit greatly from these trends in both increased air passenger and cargo flow by being an open and friendly destination.

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Jamaica’s Global Logistics Hub: So Much More Than Ports

October 20th, 2013

By: Ainsley Brown

Jamaica’s Global Logistics Hub, ports and so much more

What is the role for ports and airports vs the role for Special Economic Zones (SEZ) in Jamaica’s Global Logistics Hub Initiative?

Special Economic Zones (SEZ)

The simplest answer is that ports and airports, while very important, in the main facilitate trade and economic activity while the SEZs are the drivers of economic activity, economic development and wealth creation for the people of Jamaica.

‘Provide a reason and they will come’

Ships and planes need a reason to stop in Jamaica; it is not simply case of ‘build it and they will come.’ No! The proper way of thinking and developing industry, investment and commerce in Jamaica is to provide a reason and only then  will they come.

Jamaica needs to provide that reason or better yet reasons beyond what it currently offers; largely through  transshipment and tourist visits. If Jamaica is to develop/grow its economy and provide prosperity for its people  it needs to enhance its existing offerings but more importantly it needs to move beyond them and provide a suite of SEZ clusters  through which cargo, people and data can flow seamlessly.

These SEZs clusters, be they supporting maritime, aviation or industrial activities will provide the  impetus for the ships and planes to stop in Jamaica. The SEZ clusters will provide a ’one stop shop’ environment  that will incentivize the many ships and planes that currently pass through our waters or airspace and do not stop to make Jamaica a port of call. What is more, the SEZs will act as a diver for those  that current don’t ply our waters or fly in our airspace to adjust their business models to meet the cargo, people and data flows from Jamaica’s Global Logistics Hub.

The Hub will make Jamaica the location of choice for  a ship or a plane to get repaired , re-fueled, re-crewed, re-provisioned but more importantly to pick up and drop off more than just transshipped cargo but cargo coming in as domestic inputs for production and cargo leaving as Jamaican made or assembled products.

Special Economic Zones: the heart of Jamaica’s Global Logistics Hub

Special Economic Zones, are therefore the primary economic drivers and job creators within the Jamaican Global Logistics Hub.

SEZs create value the world over; its Jamaica's turn.

SEZs create value the world over; its Jamaica’s turn.

They are geared towards value added activities, such as light manufacturing,ship/aircraft maintenance and repair,  business processing outsourcing, warehousing, production planning, (re)labeling, to name a few, and will take Jamaica beyond simply being a regional transshipment hub to a value added center – a Global Logistics Hub. Jamaica’s ports and airport will serve as facilitation mechanisms for cargo and people flows coming in and out of the SEZs.

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“Playing” with a bank in Russia

August 12th, 2013

By: Rechtsanwalt (Attorney) Carsten Lexa, LL.M.

A 42-year-old Russian man won an interesting case against a Russian bank. This man received an unsolicited credit card offer from online bank Tinkoff Credit Systems. Unhappy with the credit card terms, the man scanned the term sheet, wrote in some new terms of his own, signed the document and send it back. The bank approved the contract without reading the new terms (this fact was only found out in court after the bank sued the customer). Funny: the interest rate for the card was o %, credit was unlimited and fees were “0″. In addition, there was a stipulation that the bank pays fines for changing or canceling the contract.

The man used the card for about 2 years. Then the bank canceled the card and sued because of outstanding fees, interest  and late-payment fees. However, the man won gainst the bank! Now he sues the bank for $ 727.000,00 for not honoring the contract terms (the new ones written by himself, regading the stipulation that the bank has to pay a fine for canceling the contract). Let´s see what the result will be….

For inquiries please contact the author: kontakt@kanzlei-lexa.de (www.kanzlei-lexa.de)

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The reform of the Rechtsanwaltsvergütungsgesetz has been put into force on August 1st, 2013

August 2nd, 2013

By: Rechtsanwalt (Attorney) Carsten Lexa, LL.M.

On August 1st, 2013, the RVG (“Rechtsanwaltsvergütungsgesetz” = German Attorney Remuneration Law) has been put into force. The RVG exists since July 1st, 2004 and superseded the Bundesrechtsanwaltgebührenordnung (German Federal Code of Lawyers’ Fees = BRAGO). Most attorneys do their statement of fees on the basis of the regulations of the RVG. Every activity of an attorney is subject to the RVG unless there are other agreements concluded between the attorney and the client (such agreements are the standard for the Rechtsanwaltskanzlei Lexa which does not charge their clients on the basis of the RVG).

It is interesting to know that the fees of German attorneys haven’t been raised since 1994 (!) (nor by introducing the RVG in 2004) which has been led to a real loss of income because of the inflation in Germany. By reforming the RVG the charges has been raised by 7 to 14%. But this can’t compensate the currency devaluation during the last 20 years.

The increase of fees of the attorneys is accompanied by other fee increases, for example regarding the fees of notaries, because the legislator is carrying out a reform of the 2nd Kostenrechtmodernisierungsgesetz (German Refurbishment of the whole Laws of Costs = KostRMoG) (BT.-Drucks. 17/11471). Simultaneously the Prozesskosten- and Verfahrenskostenhilfe (German egal aid = PKH) has been renewed by changing the Prozesskostenhilferecht (German Legal Aid Law) and the Beratungshilferecht (German Legal Advice Law).

For inquiries please contact the author: kontakt@kanzlei-lexa.de (www.kanzlei-lexa.de)

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Jamaica Logistics Hub: Investment Opportunities

May 14th, 2013

By: Ainsley Brown

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“Leveraging the Power of Speed and Connectivity.”

 

With strategic investment and global partnerships, the Jamaica Logistics Hub will include but are not limited to:


• Maritime and air cargo logistics hubs

• Strategic storage, handling and processing points for bulk commodities

• Expansive special economic zones facilitating assembly, warehousing, sorting, distribution and other value-added services, particularly for industries catering to time sensitive and high-value cargo

• Aviation-related maintenance repair and overhaul and ship repair and dry docking

• A robust digital network to support efficient global value chain tracking and tracing, as well as e-commerce operations

Logistics Hub fullfilled demand

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Jamaica Logistics Hub: Leveraging the Power of Speed and Connectivity

May 8th, 2013

 

By: Ainsley Brown

With a geo-strategic location, English speaking population, natural maritime endowments and robust digital infrastructure Jamaica is ideally suited as a global logistics hub.

Situated, as it is, at the center of the Western Hemisphere, as the closest English speaking country to the Panama Canal, and being traversed by several air and sea trading routes, Jamaica is well placed in the Hemisphere to offer a speedy north-south-east-west connectivity to access the global supply/value system. Coupled with its readily trainable populous, many deep water harbors, aviation and digital infrastructure; Jamaica stands ready to leverage the power of speed and connectivity.

 

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Internet is “essential” for modern life, according to a German court

January 28th, 2013

By: Rechtsanwalt (Attorney) Carsten Lexa, LL.M.

The Internet is an “essential” part of life, the Federal Court of Justice in Karlsruhe (Germany) ruled on Thursday, January 24th 2013. As a result, people have the right to claim compensation from service providers if their Internet access is disrupted.

The case was brought to the court by a man who was unable to use his DSL connection, which also offered a telephone and fax line, for two months from late 2008 to early 2009.

The man had already received compensation for the cost of having to use a mobile phone. But he also wanted to be compensated for not being able to use the Internet. According to him, he suffered from the loss of something “essential”, and that “something essential” was the ability to use the internet as such. Under German law the loss of use of essential material items can be compensated.

“The Internet plays a very important role today and affects the private life of an individual in very decisive ways.” a court spokeswoman told Germany’s ARD television. According to the court, the loss of use of the Internet is comparable to the loss of use of a car.

But high sums cannot be expected as compensation based on this ruling. For example if a car is damaged und must be repaired in a garage, the car owner can demand from the liable party approximately 40% of the cost for a rental car for the time period of the downtime. According to the court, such percentage of the monthly cost for the Internet connection must be taken as a basis for compensation if the Internet access is disrupted.

For inquiries please contact the author: kontakt@kanzlei-lexa.de

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China Makes Changes To Its Dividends Tax

November 19th, 2012

By: Ainsley Brown

As of the 1st of January 2013 the rate of withholding tax on dividends will vary depending on the length of time the stock is held by the investor.

In a move to further encourage the development of China’s stock markets and long term investment, the government in this move is trying to discouraging something that has plagued western markets –   short term speculation.

China’s Ministry of Finance, after approval from the State Council, has announced that as of next year investors will pay less tax on dividends the longer they hold on to their stock. The withholding tax on dividends on shares held for more than one year will be 5%; those held for one month to a year at 10% and those held for less than one month shall attract a tax rate of 20%.

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Why don´t you “like” Commercial Law International?

November 7th, 2012

You read the articles here and you like them? In fact, you like “Commercial Law International”, the blog with information about what happened in commercial law around the world, and you want to be informed quickly about new content here? Then why don´t you like us on Facebook?

Go to our Facebook fan page and click the “like” button: www.facebook.com/commerciallawinternational

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