Jamaica’s Logistics Hub: reshaping ourselves to reshape global trade, Part I

Jamaica’s progress towards being a Global Logistics Hub might appear to be slow, especially when compared to what Panama appears to be doing but Jamaica’s progress is real and it is meaningful. Three point need to be emphasized here:

  1. What Jamaica is developing and what Panama is developing are different.
  2. Jamaica’s Logistics hub is not solely dependent on the expanded Canal.
  3. Jamaica and Panama are not starting from the same position.

logitics_hub globleWhat Jamaica is developing, yes developing, because we have move well past mere plans, and what Panama is developing while connected, are different. The Panama Canal serves as a very important transit point and not a Hub in the sense that we are talking about in Jamaica.

With the current Canal expansion exercise taking place in Panama there has been a strong emphasis on the Maritime component of the Logistics Hub Initiative. This is understandable since 90% of all goods are carried by ships and the Canal currently handles over 5% of global trade. However, this emphasis has unfortunately been to the detriment, well as far as public focus is concerned, to the other elements of the Initiative such as the role of creating an enabling business environment and its importance for attracting investments, economic growth, growing our exports, increasing social and economic inclusion and job creation. Jamaica’s Hub it cannot be overemphasized, is about much more than just ports; our hub also has the following components: Aviation, ICT/Data, Financial Services, Production/Manufacturing (within and outside of Special Economic Zones), and Internal logistics (road, rail, fiber optics, etc.).

Creating an enabling business environment is a must if our people – entrepreneurs, students or job seekers – are to chart and travel the road to prosperity. If we don’t get our house in order and provide an enabling business environment all the infrastructure in the world will not matter as we will not be able to function in an efficient manner which is what companies are looking for to enhance their global value chains. This why you have the Shipping Association of Jamaica (SAJ) and veteran businessmen, like Charles ‘Charlie’ Johnston calling for trade facilitation reforms to the Customs Act that is currently before a Joint Select Committee of Parliament. Two such reforms, for example, are including the definition of transshipment in the Act and expanding it to include cargo coming from one port and leaving from another rather than how its currently defined in Regulation as cargo coming in from a port and leaving from the same port.  The second reform is allowing for vanning/devanning of containers.

136_1949The first reform would allow for greater movement of cargo from port to port resulting in greater opportunities for the trucking sector for example but more importantly it is a needed reform to expand the benefits of our cruise shipping industry. This is especially true as we move into homeporting. Jamaica has a great opportunity in the cruise shipping industry, which is already being exploited but could be greatly expanded especially with homeporting. Some of these opportunities are in supplying the cruise shipping lines with such things as spare parts, food and lube oil. This activity – chandlery – is one that creates great opportunity for entrepreneurs, especially small businesses, and job seekers in both logistics itself and manufacturing.

The vanning/devanning of containers, is the process of stuffing and unsnuffing of a shipping container. It is a value added and cost savings logistics activity that takes place on or near the port that enhances transshipment. Jamaica already serves as a transshipment hub in the region; however, to move to a Logistics Hub, namely on the scale stated by Minister Hylton (Ministry of Industry, Investment and Commerce), “as a global asset and the fourth node in the global trading system along with Singapore, Dubai and Rotterdam,” vanning/devanning is a basic activity in achieving our vision. Large retailers such as Walmart and Macy’s, which source goods from all over the world, find vanning/devanning an invaluable cost savings logistics exercise. Companies like these regularly pack, unpack, rearrange and consolidate cargo from different containers to maximize container use and space. For example, clothes that come from Vietnam in two containers and shoes that come from China in one container can be sent to Jamaica where the containers can be rearranged to have a mix of clothes and shoes for the Miami and New York markets. By vanning/devanning in Jamaica, one container can be eliminated saving transportation cost to Miami and New York. Vanning/devanning, it must be emphasized, is a low hanging fruit that can utilize our port infrastructure, as is, and due to its labour intensive nature creates great job opportunities.

Let me be clear about the effects of this reform. Vanning/devanning will not suddenly become an exclusive activity only carried out in Jamaica. No! Such activities are currently being carried out in Panama and other parts of the region and this will continue to be the case. However, what the reform offers Jamaica is an opportunity to use its existing port infrastructure, as is, to offer a much needed service. What Jamaica can offer the market, among other things, is a centralized location in the Caribbean that is closer to the US Eastern seaborne markets relative to that of Panama.

These reforms, along with others, are enabling the further build out of a logistics centered economy. What the SAJ, Mr. Johnston and many others know, among other things, is that with our current port infrastructure Jamaica has great scale and scope for expanding its throughput by simply fixing our inefficiencies. Put another way, by improving the business environment, in this case on the port, we can increase economic activity, grow our exports and jobs with our ports, as is. Now just imagine when we also expanded the ports and other connected infrastructure, like the Special Economic Zones, what would be possible?

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