Caribbean Logistics: Ports Poised for Growth
As the Caribbean islands cruise toward CSME implementation, and the new free flow of trade it brings, ports in the region are investing in new facilities, services, and security.
Caribbean ports are gearing up for increased levels of activity, and availing themselves of investments from around the world, as they await full implementation of the Caribbean Community (CARICOM) Single Market and Economy slated for the end of 2008.
The regional initiative will facilitate the free flow of labor, goods, and capital among participating CARICOM states by lifting legal and administrative restrictions affecting trade, labor, and technology within the region.
While trade development is not necessarily a primary objective of the CARICOM Single Market and Economy (CSME), ports are expected to be among its beneficiaries, notes Kurt Allahar, chairman of the Caribbean delegation of the American Association of Port Authorities (AAPA).
CSME will have a positive impact on ports, agrees Lori A. Baer, executive director of South Florida’s Port of Palm Beach, a hub for container shipping throughout the Caribbean islands.
“The CSME is patterned on a concept with a history of success in generating intra-regional trade volumes and enhancing the economic postures of member nations,” she says.
Baer, who serves AAPA as a U.S. liaison for the Caribbean delegation, points to the development of the Association of Southeast Asian Nations (ASEAN), led by Singapore, 25 years ago. “CSME bodes to be just as successful for the Caribbean region as the ASEAN initiative has proven to be for its region,” she notes.
Like other ports with interests in the Caribbean, the Port of Palm Beach has, for the past 18 months, conducted fruitful trade missions to the port cities of Trinidad & Tobago, Barbados, the Dominican Republic, and the Bahamas, eyeing opportunities to expand horizons for maritime commerce.
Trinidad, in particular, expects the CSME to help bring in labor to work in rapidly growing industries that, in turn, produce goods that move through the country’s seaport facilities. Unlike most Caribbean nations that rely heavily on tourism for economic strength, Trinidad & Tobago benefits from Trinidad’s solid industrial base.
“CSME will bring great opportunities to Trinidad,” says Allahar.
The initiative provides for free movement of people throughout the Caribbean region. That will bolster a work force that already helps make Trinidad the world’s leading exporter of ammonia and methanol, a major exporter of liquefied natural gas, and a significant producer of steel, Allahar adds.
Facility upgrades at the Port Point Lisas Industrial Development Corp. in Trinidad include a new berth for handling containerized cargo, with plans for an additional cargo berth. At the same time, with investments coming from as far away as China, Point Lisas is adding new steel production and aluminum smelting facilities.
This year, cargo handling management for the Port of Port-of-Spain, Trinidad & Tobago’s (T&T) other significant port, was assigned by a three-year, $30-million government contract to Portia Management Services Ltd., the international arm of The Mersey Docks and Harbour Co., U.K.
Portia Management Services will deliver efficiencies and production results, predicts Sonja Voisin-Tom, outgoing president of the Shipping Association of Trinidad & Tobago.
“Port costs ripple through national economies, especially those of island states such as T&T,” she says. “In fact, port costs affect the price of goods and services in nearly every sector of the economy. In this regard, the people of T&T have a right to a modern, well-managed, cost-effective port system.”
In the western Caribbean, Denmark-based global container-carrying giant Maersk Line has begun calls, under a five-year, $210-million contract, at the expanding Kingston Container Terminal in Jamaica.
The terminal’s $213-million, fifth-phase expansion aims to more than double annual capacity to 3.2 million twenty-foot-long-equivalent container units (TEUs) from its current 1.5 million TEUs.
The fifth phase includes procurement of six ship-to-shore gantry cranes, and 24 straddle carriers capable of stacking containers up to four levels high.
While Kingston is touted as the leading transshipment port in Latin America and the Caribbean by Jamaican officials including Prime Minister P.J. Patterson, it faces some competition:
- A unit of Hong Kong-based Hutchison Whampoa has, over the past decade, developed an impressive transshipment hub at Freeport on Grand Bahama Island.
- Dubai-based DP World, several months prior to the controversy over its intent to acquire certain U.S. port terminal operations, began greatly enhancing efficiencies at Punta Caucedo in the Dominican Republic since taking over that container port from a CSX Corp. unit.
- Also in the Dominican Republic, Santo Domingo’s port began a $400-million revitalization project last year.
Small Regions, Big Plans
Port development is by no means limited to the Caribbean region’s most populous islands, nor is it restricted to huge purchases of cargo-handling equipment.
Port of Palm Beach-based Tropical Shipping, for example, has teamed up with Washington-based Caribbean Central American Action for a pilot project with customs officials and the Dominica Port Authority. The project’s goal is to implement electronic data exchange technologies and processes to improve cargo movement through the port of Roseau, capital city of the 70,000-resident island of Dominica.
Cargo Cruises Through
Another example involves officials of the Port Authority of the Cayman Islands, in the capital city of George Town. They have tackled increasing cargo and cruise activity volumes by instituting a program to separate the two functions by hour of day and key location.
By limiting on-port cargo moves to evening and early-morning hours, and by using an inland site one mile from the port for cargo container collection at other times, cargo moves more efficiently while avoiding conflicts with cruise passengers.
Through its Seaports of the Hemisphere Allied in Relationships for Excellence initiative, AAPA is helping Caribbean ports benefit from the experiences of those at other facilities who have successfully implemented programs to enhance efficiency as well as security. Security remains a major concern in the post-Sept. 11 environment.
The shipping industry recognizes that the inability to comply with international security standards leads to serious implications, including the possibility that ships are not permitted to enter destination ports. That risk has port officials of St. Vincent and the Grenadines considering investing more than half the port’s entire budget on security.
Because the Caribbean islands tend not to produce goods, relying instead on tourism, the impact of CSME in terms of additional cargo freely moving between islands may not be tremendous. The development of a uniform tax for goods outside the region, and implementation of a region-wide currency, however, are among CSME facets that will ease the movement of goods to and from the Caribbean islands.
CSME is “one giant step for Caribbean mankind,” says Jerry Narace, head of Trinidad’s CSME unit. But he also acknowledges that it “will present certain economic challenges to our member states.”
Thus, the Caribbean Court of Justice has been established to address disputes, while a development fund is intended to provide relief to member states or sectors disadvantaged by economic dislocations arising from CSME.
Trinidad & Tobago has pledged $10 million toward startup of such a fund; Barbados Prime Minister Owen Arthur followed up with a $2-million pledge on behalf of his government.
As CSME moves toward implementation, groups including the AAPA and its members throughout the Western Hemisphere say they will work with Caribbean port leadership to ensure significant and widespread benefits.
— Paul Scott Abbott is editor of AAPA Seaports, a publication of the American Association of Port Authorities.
Cooperation Key to Caribbean Trade
Port operations in the Caribbean region have grown more efficient in recent years, but much work remains to be done, says Fernando Rivera, recently elected president of the Caribbean Shipping Association, which serves as a forum for carriers, port management, and the private sector to work together to facilitate and expand trade.
“Economic realities have prevented us from doing as much as we want to do,” he says.
Sea ports in the Caribbean, for example, were forced to comply with stringent and costly port security regulations following the Sept. 11 terrorist attacks in the United States.
Compliance was achieved “at tremendous expense in order to continue doing business with the United States,” Rivera says. “These poor, debt-ridden countries, however, had little or no significant support from the real beneficiaries of these security measures—the more developed countries.
“While these small territories struggle with the tremendous cost of developing efficient and dependable port operations, and have to purchase expensive security technologies from developed countries, we are faced with the damaging effects of overweight containers landing on our wharves,” he adds.
Overweight containers not only damage the ports that the region has only recently spent large sums building, “but they do untold damage to our countries’ road network—the same roads we must use to get our exports to the ports,” Rivera says.
He calls on the shipping lines to “understand the great social and economic problems that this causes.”
To continue developing trade in the Caribbean, “it is imperative that there is total cooperation among all the stakeholders—not just the port owners and operators in the Caribbean, but the carriers that serve the ports, and the exporters and importers using the ports,” Rivera says.