Source: Logistics Business Magazine
The island of Jamaica is making an ambitious effort to become one of the great logistics hubs of the world. David Priestman reports exclusively and in-depth on the breadth of the substantial investment opportunities there.
Every logistician knows that there are 3 giant ‘nodes’ of the global supply chain: Rotterdam, Dubai and Singapore – the great port hubs. But in the western hemisphere there is not, as yet, a dominant hub. Miami and Panama can certainly stake a claim.
Now, the Jamaican government, via a core implementation team, has set its sights on a meteoric rise to achieve this position for the Americas. Government advisor Bindley Sangster told me: “We have embraced a logistics hub initiative and are co-ordinating and integrating the components with a multi-platform approach. We have the experience, the expertise and the funding. It’s a holistic approach, as we are focused too on the provision of communications, financial services and a skilled workforce.” Jamaica is the top English-speaking Caribbean country in which to do business (World Bank Doing Business Report 2019).
The major new component is the ‘Aerotropolis’ at Vernam Field, 40 miles west of the capital, Kingston. A former US airbase, it is being transformed into a long-haul airport by the Airports Authority of Jamaica (AAJ), JAMPRO investment agency and Special Economic Zone Authority (JSEZA). Neither Kingston Norman Manley International Airport, nor Sangster Airport in Montego Bay have much room for expansion or can handle the largest planes and freighters, such as Antonovs or the A380. But this new airport can, with an existing 2000m runway (see image below) plus a new 4000m runway to be constructed.
Following advice from consultants, the government selected Vernam Field to be the primary logistics hub with good multimodal connectivity to the ports and both the east-west and northsouth highways. “Without a long-haul runway Jamaica is effectively off-limits for certain routes, such as China, so we can’t efficiently handle cargo or passengers further than Europe and the Americas,” Sangster explained. One-day airfreight of sensitive and perishable goods long-haul to distant markets will be possible and demand for this traffic is already there in Asia and the Middle East. The goal is to offer value-added services, such as final assembly and packaging, for goods transhipped here.
The Aerotropolis will be operational in 2021 but is not intended to replace Kingston airport. As a regional gateway 90% of its cargo capacity will be for in-transit goods. A ‘7 freedom cargo’ policy enables operators to have the rights they need regarding routes, cargo moved, bonded warehousing and more, with the site being in a special economic zone. A lead developer is currently being sought for a joint-venture between AAJ and a private operator to work as a consortium, with an initial investment of $2-3bn (US) and a total build-out of $28bn over 20 years. Having signed the ‘belt and road’ agreement with China and with several major Chinese investments already, Jamaica is well positioned for all interested parties.
Kingston’s Freeport Terminal (KFTL) is operated by CMA CGM on a 30- year agreement signed in 2015. The French shipping line has a mandate to expand and improve the facility, invest in new cranes and equipment and upgrade the terminal operating system. Current annual capacity is 3.2m TEU. Operations Improvement Manager Diego Garcia is enthusiastic about the progress that is being made. The U-shaped terminal has north, west and south berths for a maximum of 7 ships. It is utilised not just by CMA CGM, with 46% of the volume, but also by ZIM of Israel (41%) and others, for both domestic (4% currently) and transhipment cargo.
KFTL is an impressive, well-managed port offering the full range of services, including stevedoring, container receipt and delivery, cargo inspection and reefer repair. It has 29 straddle carriers and 16 gantry cranes. You can clearly see the shipping lane from the causeway that runs from the port to the airport and Port Royal. The new south berth, completed last year, is 1218m long and can accommodate 14,000 TEU vessels (see the 115,000t San Felipe, pictured). “Jamaica’s ready for post-Panamax ships,” Garcia stated. There is a strong emphasis on training. “Our staff level has risen from 900 to over 1200,” Garcia added, “safety is paramount as ports can be very dangerous.” KFTL also pride themselves on being green, with a commitment to recycling. JAMPRO’s head of logistics investment, Don Gittens noted, “CMA took two years to decide which hub in the region to use. Jamaica kept coming-up as number one.”
The Port Authority of Jamaica owns and leases land in the vicinity of Kingston port, with over 200 acres currently unused. Vice President Ed Marsh said that new distribution centres will be built to cater for demand, to add to the 18,000sq.m existing on-port warehouse, creating the Kingston Logistics Park. “When it’s all developed then we’ll utilise the Caymanas special economic zone land,” the experienced Marsh informed me. “We were an operator and regulator but now we’re a hybrid, becoming more than just a landowner, encouraging development and leveraging investment to make the transition from a transhipment hub to a global logistics centre.”
Montego Bay Port, on the north west coast, is the country’s second largest. It is multi-purpose, serving the cruise ship and cargo markets. The Port Authority of Jamaica owns the port but private companies operate here too. The busy season is November-March when about seven cruise ships a week arrive and depart. There are 6 berths, including a 340m one. Both ro-ro and lo-lo container ships call at Montego Bay, including Seaboard Marine and CMA CGM vessels. Manager David Martin pointed out that much of the freight has been routed on from Kingston, but home-porting of just-in-time supplies for cruises originating from the port and for the many resort hotels in the area is a major activity. “Some, like TUI, start their routes in Montego Bay, with passengers flying into Sangster next door. We also resupply other cruise ships when they are in dock.”
The port has 50 reefer stations for plug-in charging, with a slip dock, floating pontoon and two reach stackers. It was dredged to create a 10m deep channel and the turning area in the bay is 400m. A pilot boat meets every ship and escorts it to the dock. A new warehouse will be built here soon. Marine police and fire station are present with the coastguard coming shortly. Berth one is dedicated to cargo, accommodating ships up to 180m in length. LNG, LPG and oil are imported here, with PetroJam tankers visiting. Next to the port is an LNG plant and a cement factory. 7500 tonnes of cement a month arrive here, for the explosion of development in the north and west of Jamaica. “Exports are very small now but there’s huge potential and we need our own set of services here, including logistics,” Martin concluded.
Port logistics example
Whilst at the port it was interesting to visit an independent third party, multi-purpose logistics provider. Kingston Wharves are the largest 3PL in the near-port area and one of the largest in Jamaica. The company’s biggest vertical markets are in automotive and lubricants, with customers including Total and ExxonMobil. Kingston Wharves imports cars for the Caribbean market, such as BMW, Mini and Kia, as well as used cars. From the large car parking areas many vehicles are trans-shipped to 30 nearby ports using shortsea operators like Hoegh Autoliners. “We hold cars on a needs basis until local dealers require them,” Simone Murdock, Marketing Manager said. A modular 160,000 sq.ft distribution centre was opened last year and is the biggest in Kingston. With both ambient and temperature-controlled zones it has 23 dock bays. With a 1655m continuous quay and 9 deep-water berths Kingston Wharves is well-positioned to take advantage of new business in Jamaica as a result of the logistics hub initiative. www.kingstonwharves.com.jm
Air cargo potential
AAJ own 3 airports in Jamaica: Norman Manley International Airport (NMIA) in the capital, Sangster International Airport in Montego Bay and Ian Fleming International Airport (IFIA) in the north east. NMIA is both a cargo and business passenger airport which is about to be handed-over to a private operator, Grupo Aeroportuario del Pacifico, on a 25-year minimum contract. NMIA has a cargo and logistics centre of 49,000 square feet, with an additional 20,000 sq. ft. planned. Adjacent to this is the Ministry of Agriculture’s fumigation facility, which has cold storage and facilitates the export of agricultural products. Export preparation of food and flowers includes US FDA pre-approval, as well as customs. There is also a 44,000 sq. ft cargo terminal. Couriers such as DHL and FedEx use NMIA.
AAJ Senior Director Alfred McDonald told me that the island’s import-export imbalance is a challenge. “Jamaica no longer has a national airline carrier, which restricts cargo options. But it is a mini-hub for regional airfreight. NMIA processes over 13 million kgs of freight a year. The new operator is very interested in cargo though and should invest in logistics facilities at NMIA and maybe establish a special economic zone here. Either we ‘build it and they will come’, or we go and get the business in the market first. Origin and destination cargo alone are insufficient for high growth. Only transhipment can achieve that.”
Sangster airport was divested 17 years ago on a 30-year agreement to a Mexican-Canadian consortium called MBJ. It is mainly for tourists (70% American) but with those flights comes belly cargo capacity. MBJ has developed Sangster, with a new terminal, a rise in passengers to over 4 million per year and commencement on a runway extension to 2800m. CEO Dr Rafael Echevarne is keen to increase airfreight and logistics. The old terminal is now a cargo facility with cold storage. “We can land more wide-bodied planes, such as 767 freighters, here than the rest of the Caribbean, excluding Cancun,” he stated. Virgin fly three times a week with a 747-400, FedEx weekdays from Miami. Exports include fruits, sugar, ginger, coffee (to Japan), cocoa, with the potential for bamboo and fish. Live lobster is flown to Hong Kong via Canada. Imports include hotel supplies for the growing number of resorts in the north.