Port activity and warehousing demand on the rise
Cargo shipping and logistics activities are on the rise and with it the demand for warehousing space. Port Authority of Jamaica President...
Cargo shipping and logistics activities are on the rise and with it the demand for warehousing space.
Port Authority of Jamaica President & CEO Professor Gordon Shirley says that in the first nine months of the year, the port of Kingston processed 1.73 million TEUs, up from 1.62 million TEUs at a similar point in 2022.
Cargo volumes, meanwhile, have increased by seven per cent in the same period.
“The growth in volumes is being driven by increased activity at the KFTL with average monthly visits of 134 when compared to 114 in 2022,” said Shirley, referring to ship calls at the Kingston Freeport Terminal Limited.
Currently, due to the additional activity at the ports in the run-up to the Christmas shopping season, the Port Authority says it is making efforts to reduce the “dwell time” for ships and containers to reduce the need for cargo storage on-island, especially for companies in the transshipment sector.
The port of Kingston is mainly made up of two operators – that is, Kingston Freeport, which is foreign controlled by French company CMA CGM; and Kingston Wharves Limited, which is locally controlled by Pan Jamaica Group.
Realtor Paul Morrison of Keller Williams Jamaica says demand for warehousing in Kingston has been climbing this year, and while the preference generally is for locations that are in the proximity of the port, the level of demand has seen businesses taking up storage space further inland.
“Rental amounts have gone to as high as US $30,000 monthly, and [sale prices] as high as US$20 million,” he said.
The size of the overarching demand for warehousing space and the portion that is unfilled are unknown. However, the consistent investment by companies for their own use, and by commercial real estate developers in greenfield projects for lease or sale, indicates that it is sizeable, and according to one developer, it’s also on the rise.
“We have seen more requests for warehouse or mixed-use space when compared to other subcategories,” said CEO of Kingston Properties Limited Kevin Richards.
“The same is true in the Cayman Islands, and it may be a function of the growth in commerce in general. The delays that have been taking place in the logistics sector are forcing more businesses to move away from just-in-time inventory management and are more inclined to stockpile inventory for longer periods,” he said.
Since the pandemic, which wreaked havoc on global supply chains and timely shipments due to a shortage of cargo containers, companies responded by switching inventory systems to what became known as ‘just-in-case’ orders under which they stockpiled more goods than usual to avoid stockouts.
Companies like Kingston Properties and Proven began investing more in commercial real estate to cash in.
Kingston Properties warehouse assets also include a block of small storage units developed two years ago at Cross Roads, an area outside of the industrial belt on the waterfront.
Factories Corporation of Jamaica, a state company with the remit to provide commercial and industrial space at affordable cost to private enterprise, says that of the 465,200 square feet of space it currently has in operation, 75 per cent is in demand for warehousing. In terms of the number of buildings in its asset portfolio, FCJ says 58 of its 168 structures are utilised as warehouses.
“Kingston and St Andrew, St Catherine, as well as Clarendon are the parishes registering the highest demand for warehousing spaces,” the agency said.
Morrison said the demand for warehousing mainly comes from manufacturing and logistics/distribution companies, including large corporations.
“They are seeking warehousing more than they are looking for offices. They are buying and looking for more,” he said, noting that the preferential locations are those with proximity to ports.
Cargo volumes processed in Kingston last year totalled 2.17 million TEUs, representing an eight per cent increase in container volume over 2021 when volumes amounted to 2.0 million TEUs. A TEU is the standard description of a twenty-foot cargo container that can hold between nine and 11 pallets; however, goods are also shipped in 40-foot units.
As a result of the spike in activity, the Port of Kingston rose from 93rd to 85th on the Lloyd’s List of Top 100 Ports.
“Currently, the port of Kingston is on course to outperform its 2022 results based on year-to-date activity levels,” Shirley said.