Logistics Hub Initiative gets support from World Bank
Through a well-conceived and forward-looking national commitment and with help from international investors and planners, including the World Bank and its funding affiliates, Jamaica has been quietly working to turn the seaport on its south shore into the global shipping logistics center of the 21st century.
“This effort will bring good jobs and more prosperity to a country that has struggled for both,” Jamaican Prime Minister Portia Simpson Miller says. But the path toward that end means spending millions to create deep enough shipping channels, multi-modal transport alternatives (including air cargo) and the complex bureaucracy and brain power needed to maneuver today’s international import-export realities.
It’s a big job – with risks – but it could produce a giant payback.
Role of the Panama Canal
A decade-long project aims to double the capacity of the Panama Canal by 2016, opening even greater trade opportunities between Asia and the Atlantic Ocean side of the Americas, including the Caribbean – and even in Western Europe.
As the huge dredge-and-build project inches and rumbles through the narrow Central-American isthmus, it has set off a fierce competition that ranges from major import-export centers all along the U.S. coast to the Bahamas and southwest to Cuba.
Each deep-water facility aims to become a leader in the lucrative, job-producing role of best transfer point and top shipping logistics center for getting billions of dollars worth of cargo en route to and from the vast economic generators of the Atlantic with those on the Asian side of the Pacific rim.
At one point, a Cayman developer envisioned a deepwater port off Grand Cayman’s East End. The project, spearheaded by Joe Imparato in 2010, proposed to create a 516-acre commercial seaport with five different uses, including a cargo port with transshipment facilities. It was ultimately withdrawn in the face of overwhelming political and popular opposition.
According to many insiders who have been watching the current scramble, one unexpected shipping center has garnered especially favorable attention – the Port of Kingston, Jamaica.
“The goal is to position Jamaica as a fourth node in the global logistics network to complement Singapore, Dubai and Rotterdam,” according to the Caribbean Shipping Association. Anthony Hylton, a member of Jamaica’s parliament and Minister of Industry, Investment and Commerce, calls the effort “the most transformative economic activity that we will undertake as a government.” Hylton has been a champion for expansion and refinement of the Kingston port for years and is credited with helping to pull together many of the disparate pieces that could make the port a big winner.
Here’s some of what that entails:
Expansion of the Port of Kingston so that it can welcome and dock the vast new vessels – called post-Panamax ships – that could carry more than double the cargo of those currently moving through the existing Panama Canal
- Construction of a major dry dock
- Installation of bunkering facilities for storing liquified natural gas
- Construction of a cargo and maintenance, repair and operations facility
- Refinement of connections between the seaport and a nearby international airport to allow easy transfer of cargo from ships to air carriers
- And, a key element that could facilitate better-paid manufacturing and assembly job growth in Jamaica – the development of an economic zone easily accessible to the Port of Kingston.
- The World Bank has played a key role in fulfilling the vision Minister Hylton has had for Jamaica’s role in global shipping.
- In March 2013, the World Bank committed to providing technical and other assistance for specific aspects of the proposed global Logistics Hub Initiative, according to published reports.
“The LHI [Logistics Hub Initiative] has already managed to win over the hearts and minds of public and private entities to inject the necessary large sums of for upgraded ports, airports and other infrastructure. If the country manages to connect this logistical capacity with the development of productive activities, the initiative has the potential to generate unprecedented growth in the island,” the World Bank notes in an article on its website.
The Port of Kingston is optimally situated between the Canal and the Americas’ first mega-market, Miami and South Florida. Plus, “Jamaica has the eighth-deepest natural harbor in the world,” said Thomas Vis, World Bank senior private sector development specialist. “Kingston has a good proximity to the Panama Canal and has an opportunity to take advantage of the expected higher volume of East-West trade expected post-Panamex.”
The capacity of the canal’s expansion, expected to cost more than $5 billion, will deepen and widen the waterway, opening the gates to freighters that will hold more than double the current cargo.
The current Canal permits ships that hold a maximum of 5,000 standard containers to motor from the Pacific Ocean to the Caribbean Sea. Once expansion is complete, vessels that load 12,000 containers will have safe passage through the locks, lowering the cost of shipping tens of thousands of microwave ovens between, say, Shanghai and Baltimore by a considerable margin.
The Panama Canal Authority estimates a 35 percent increase in cargo volume through 2025 over what would be possible through the canal currently – and on much bigger vessels, giving deepwater ports like Kingston’s an advantage over many of its competitors.
The promise of all this shipping expansion has made Jamaica’s competitors hungry for their share of business too. They include Miami, which is beginning a $2 billion dredging program to deepen and expand its port. The city hopes to capture more super-ship business that way. Freeport, Bahamas and Mariel, the Cuban port west of Havana, have the same dream.
If President Barack Obama’s recently proposed cessation of the American trade embargo of Cuba comes to fruition, the socialist nation might have a great future as an important stepping stone in the shipping path between East and West. A Brazilian corporation is partnering with the Cuban government to develop Mariel’s shipping capacity. Jamaica is watching closely.
The island nation is even attending with care to what happens on its own Goat Island, less than 20 miles west of Kingston, where the Chinese government and private investors hope to develop an advanced shipping and logistics hub. In short, Kingston’s potential competitors are not sitting still while huge earth movers reshape a slender waterway through Central America.
Focus on Kingston
The focus of Jamaica’s government, though, along with its investment partners, is primarily on Kingston. Minister Hylton said in published statements, “My vision is that we can construct a new Jamaican economy upon a platform of this Jamaican Logistics Hub Initiative.” And no amount of Chinese investment in other seaports there have shaken his resolve.
Hylton’s computations in recent week suggest that the starting point for financing the Logistics Hub Initiative – along with some of its ancillary features – will be about $5 billion to $7 billion. Some estimates for the whole package Hylton and others envision have suggested it could end up costing between $10 billion and $15 billion. But believers hope the investment will result in a lasting, positive change in Jamaica over time.
Many involved in planning the post-Panamax era say the Caribbean region will undergo important economic changes – most of them good. In its publication “Caribbean Maritime,” the Caribbean Shipping Association recently opined in an article about Jamaica that the new, big canal “will change the region.”
It pointed out that “the Dominican Republic, the Bahamas and Cuba are all implementing smaller plans to take advantage of the Post Panamax Era” and that “Caribbean shipping will never be the same.”