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The Caribbean’s Share in the Global Cargo Industry Is Growing Rapidly

Posted by: investoradmin
Category: Logistics

The widening of the Panama Canal in 2016 had a profound effect on the Caribbean cargo shipping industry, placing it at a strategic crossroads to better serve North America, impacting container trade flows and imports and putting an imperative on the region to maintain its global competitiveness as one of the major waterways in the world.

The Caribbean’s dense network of global linkages, fostered by its advantageous location at the crossroads of East-West and North-South maritime routes, has presented the region with numerous opportunities, particularly as a transhipment hub. Jamaica’s Kingston Container Terminal and Bahamas’ Free Port are both global hub port terminals, serviced by global container lines connecting three or more continents. Kingston Wharves, Jamaica and Point Lisas in Port of Spain, Trinidad are leaders of the regional hub ports, serving as gateways to the Eastern and Southern Caribbean and the Caribbean rim of South America, connecting it to North, Central and South America, the Far East and Europe

The Bahamas is the third leading flag state in the world, with a total value of $79,551 million in registered vessels in 2018— higher than Norway or the United States. As a motion of confidence in the Bahamas, the Freeport Container Port has to date received approximately $3 billion from Chinese backers who expect to benefit from heightened shipping through the region as well as an overall boost in trade between China and the Caribbean due to the expansion of the canal.

According to a report produced by the U.S.-China Economic and Security Review Commission, China “views the Caribbean as strategically important by virtue of its proximity to the United States and major maritime trade routes and infrastructure, such as the Panama Canal and the region’s many ports.”

In 2016, Jamaica received a comparable nod of confidence from the CMA CGM Group, one of the world’s leading container transportation and shipping companies, when it developed its hub in Kingston. CMA CGM joined partners such as Zim Integrated Shipping, Seaboard Marine and Maersk Line, among many others.

As a gateway to one of the world’s primary maritime routes, and with the continued development of technology and infrastructure, the region is expected to play an increasingly important role in global logistics— the planning, organizing, management, and implementation of cargo and supply in shipping.

Having opened a Global Auto Logistics Centre in 2017 and a Total Logistics Facility in 2018, Jamaica has been making progress in establishing itself as a major logistics hub. According to the Jamaica Information Service, “The Government’s logistics project aims to position Jamaica as the fourth global logistics connecting point, comparable to Singapore, Dubai and Rotterdam, to help transform the economy and create jobs.”

Kingston Wharves Limited recently collaborated with the Caribbean Maritime University to further its logistics capabilities, a development that promises to increase the port’s annual traffic and give it a larger share in the global logistics trade, which is projected to be worth more than $16,400 billion by 2026.

Stakeholders are also making efforts to overcome market inefficiencies bred by limited economies of scale, such as port dues, tariffs, insurance premiums and other over-inflated expenses that are a function of small size and lack of decision-making power.

Grenadian, Roland Malins-Smith, Founder of Seafreight Line Ltd. (acquired by Crowley in 2015) indicates that the region needs to be more involved in the industry from a decision-making capacity.

“We cannot rely fully on outside interests, particularly from an intraregional perspective. We have both the means and the capacity— we need to be more self-sufficient,” Malins-Smith advises, drawing on nearly fifty years of experience in the regional shipping industry.

President and executive director of the American Caribbean Maritime Foundation, Geneive Brown-Metzger, echoes the need to “develop a cadre of maritime professionals and workers in port management, logistics, engineering, and other maritime service areas,” in order to overcome stumbling blocks that often result in the outsourcing of management and decision making to outside interests.

“The old proverb, ‘Give a man a fish and you feed him for a day; teach him to fish and you feed him for a lifetime,’ cannot be more profound than in the Caribbean where its waterways are at the centre of the global economy and on which the economic growth of the Caribbean and livelihoods of a large number of its people potentially rest. Too often mega industries in the region are controlled by foreigners because, quite frankly, we don’t have enough trained and skilled folks to work in the sector,” she explains.

Ports must also overcome time and structural inefficiencies resulting from sharing limited water space with the cruise industry. Given the region’s reliance on tourism, cruise ships are typically prioritized over cargo vessels for limited berthing space. This has caused cargo vessels to perform load and discharge operations after regular working hours, resulting in delays and added overtime costs, which are then passed on to local consumers.

The Cargo Shipping Industry serves a vital economic function— an estimated 90% of the world’s trade is carried by sea, and the volume of overseas trade is projected to increase to 19 billion tons by 2030. The Caribbean is at the ideal juncture to benefit from this growth.

According to an article in The Journal of Transport Geography, the Caribbean region has yet to capitalize on the full economic potential of the New Panamax Era—growth in Caribbean transhipment is expected to pick up between 2020 and 2025 when larger ships, which cannot be efficiently handled by US East Coast ports, will be deployed.

With 351 ports, 16 oil refineries, 51 tanker terminals and over 15 different types of ships transiting, the Caribbean is a marine area that is growing in global relevance and is in a convenient position to capitalize on economic and trade expansion as well as steep increases in both maritime and inland waterway transport volumes.

Author: investoradmin