Maximising shipping expansion opportunities

Excerpt from a presentation by Noel Hylton, OJ, president and CEO, the Port Authority of Jamaica, to the Caribbean Shipping Association conference in Barbados on October 10.

As we examine the myriad of implications for regional shipping, brought into sharp focus as a result of the impending Panama Canal Expansion, our successful implementation of a Regional Integrated Maritime Strategy must be based on a fundamental philosophical outlook - the advancement of Caribbean shipping dominance and creating a competitive global position through regional cooperation and mutually beneficial solutions.

In 2003, Noel Hylton, president and CEO, Port Authority of Jamaica, made a presentation in a similar forum, which emphasised the need for the Caribbean Shipping Association to become proactive in pursuit of regional integration. In foresight, he further hinted at the ascension of five or six major hub ports dominating world trade, with all other ports operating as feeder ports.

In 2011, the message is the same: the achievement of strong regional shipping competitiveness resides with the Caribbean Shipping Association. The association must move to harmonise the Caribbean shipping industry into one consolidated community.

It is universally accepted that 2009 witnessed the worst global recession in over 70 years, as we experienced the sharpest decline in the volume of the global merchandise trade, and the most adverse downturn in global output since the 1930s.

It is estimated that by the end of 2009, developing countries suffered an income loss of at least $750 billion. However, in the September 2011 World Economic Outlook publication, the International Monetary Fund projections indicated that global growth will be moderate, achieving about four per cent in 2011 through to 2012, down from approximately five per cent in 2010.

PANAMA CANAL

Outside of a healthy global economic recovery, the greatest positive impact to come to world trade and world shipping is the essentially three-fold expansion of the capacity of the Panama Canal.

We in the Caribbean region are strategically positioned to take advantage of this development. But our excellent position is not sufficient.

What is necessary are the required infrastructural and logistical components essential to capitalise on this strategic advantage. Some key development trends that, along with the Panama Canal expansion, are shaping the future of our industry are the emergence of ultra large container ships, declining freight rates, overcapacity in the global shipping industry, and carrier consolidations.

These trends will have tremendous impact on the industry going forward. In the short- to medium-term, the global economic climate remains highly volatile and uncertain.

According to the Panama Canal Authority, the containership segment constitutes the main driving force of Canal traffic growth. Trade between North East Asia and the US East Coast reflects the highest Canal transit growth rate and will become a key Canal growth driver.

Impact of expansion

The Canal expansion will impact the regional industry in the following key areas:

Growth in the size of ships traversing the Canal, as evidenced in the order book;

A need to cascade the existing European ships of the 8,000-12,000 TEU range into the Asia Pacific Trade, including the US East Coast via the Panama Canal, as long as these ports can handle them;

Ships in the 4,000 to 8,000 TEU range will be cascaded into the North/South trade routes with increasing vessel sharing agreements formu-lated to pull service volumes together.

The Kingston Container Terminal is now ahead of its Caribbean neighbours in many important parameters, such as terminal area, berthing and ship-to-shore gantry cranes, and is, therefore, also well poised for further growth.

Within the Latin American and Caribbean region, only the facilities in the Panama Zone and Santos in Brazil are ahead of Kingston in world-port rankings.

Looking ahead, the recent US$100m investment in the Kingston Container Terminal by the French line, CMA CGM, is indicative of the attractiveness of the region to global carriers.

This investment is only the beginning and will see the following taking place:

1. At Fort Augusta - construction of two berths and 200 acres of storage area,

2. Dredging of the channel and berths to 17 metres,

3. Expansion of the West Terminal with the addition of 50 acres, at a cost of US$30 million, and

4. Purchase of four Super-Post-Panamax cranes, 37 additional straddle carriers, and other related handling equipment.

In addition, we will also be upgrading the technological infrastructure and developing 200 acres for logistics, IT, Business Process Outsourcing - linked directly to the port for secure and rapid access.

All the necessary arrangements are either in place or being finalised for these developments to be completed or well advanced by 2014. It is proposed to be funded by a public-private-partnership arrangement.

Additionally, we are looking at other value-added logistics capabilities by utilising near-port facilities. For instance, the development of a multimodal infrastructure, along with other enterprise/industrial development parks in proximity to the Port of Kingston. One such facility is Vernamfield, which is to be developed as an air-cargo transhipment hub along with aircraft maintenance and repair, with facilities for manufacturing and assembling. Together with the port, these facilities will enable Jamaica to provide a full supply-chain solution to its clients.