Jamaica is a logistics hub, it just doesn’t know it yet — Part II
Originally published on LinkedIn.
Jamaica is a logistics hub, it just doesn’t know it yet.
Jamaica as a logistics hub is a tale or more accurately tales, as will soon become evident, of the obvious and not so obvious. The latter being the dominant feature hence why:
Jamaica is a logistics hub, it just doesn’t know it yet!
The Government of Jamaica has embarked, since September 2012, on an ambitious, but very much achievable, initiative, to transform the Jamaica into a global logistics hub: Interconnecting the Americas to the world.
The Global Logistics Hub Initiative (GLHI) represents a total transformation of the Jamaican economy into a logistics centred one. Inspired by the success of Singapore, Dubai, Rotterdam, Jamaica’s GLHI, as I have said elsewhere is Jamaica’s response for building a resilient and sustainable nation in the Fourth Industrial Revolution.
The GHLI is not simply a break from Jamaica’s existing economic structure.
It is a reconstituting and restructuring of the entire Jamaican economy.
This reconstitution and restructuring calls for a re-imaging of the Jamaican economy. It calls for a recasting of what is possible for Jamaica.
What Jamaica — the Logistics Hub — is offering to local businesses (large and small), multinationals and the global trading system is a twin node of supply chain resilience and robustness.
Jamaica is a nearshore location in the 1-billion person Americas market for both manufacturing and services that adds further redundancy, stability, responsiveness to supply chains by acting as a platform to connect various production and services networks.
In Part 1 of this article I set the foundation for my argument that Jamaica is a logistics hub, it just doesn’t know it yet. The basis of my argument will become even more apparent as I provide further evidence to bolster my point.
The Covid-19 pandemic had tremendous impact on the Jamaican economy. And this putting it mildly.
Let’s take tourism.
What happened to tourism, our main industry, during the pandemic tells the tale of the entire Jamaican economy. According to the Inter-American Development Bank (IDB) fourteen of the 15 most tourism-dependent nations in the Americas are in the Caribbean and Jamaica is one of them. Along with representing 54% of Jamaica’s exports tourism represents 33.9% of Jamaica’s GDP, employed 120,000 people directly, and generated another 250,000 indirect jobs, making Jamaica one of the most tourism dependent nations in the world.
Now, in what seemed like a blink of an eye this key economic driver of the Jamaican economy went into lockdown as governments across the world, including the Jamaican Government and those from our main source markets for tourist, imposed travel restrictions.
Jamaica’s tourism, much like the overall Jamaican economy, was down but not out. We are now witnessing a resurgence in both tourism and the overall economy.
As odd as this may sound the pandemic wasn’t all negative for the Jamaican economy.
Before we go any further let me be clear the Covid-19 Pandemic was terrible. The loss of life, severe illness, negative psychological impacts, as well as the loss of livelihoods took an incalculable toll on individuals and humanity as a whole.
However, the pandemic did advance the transformation of Jamaica into a logistics hub and logistics centred economy in some very important ways. Just off the top of my head here are just a few examples:
- Logistics and supply chains became top of mind, not just in business but throughout the whole society. And this was no mean feat.
- Jamaica was able to capitalize on existing investments, especially in maritime related soft and hard infrastructure to turn pandemic induced challenges into opportunities.
- New business models emerged centred around the advancement of e-commerce.
- Jamaica attracted deeper investments and made further advancement as a logistics hub.
At this juncture there are two things I am certain of. The first, is that I am certain that I would get near universal agreement on the first of these four points. Therefore, I don’t believe I need to elaborate further. The second thing I am sure of is that I have more than piqued your curiosity about the other three points.
Pandemic induced opportunities
The United States by any measure is the largest markets for goods and services in the world. Shifts in the USA, be they in consumer tastes, spending patterns or levels, have world global implications. Therefore, an accelerated shift in the US from its West coast ports to its Eastern and Gulf of Mexico ports as the main entry and exit points for goods has great significance.
It means greater traffic passing through the Panama Canal and the Windward Passage, the preferred route of ships going to and coming from the Panama Canal.
It also means greater opportunities for Jamaica. But only if we have the capacity to respond.
And respond we did:
Some hub countries increased vessel capacity. Panama increased its deployed capacity by 0.9% and Jamaica by 13.5% as they gained from the capacity redeployment to the United States.
This increase traffic positioned and continues to position Jamaica to capture a greater share of this traffic. Jamaica, the logistics hub, that just doesn’t know it yet, provided logistics hub services of a maritime nature and benefited economically from, these and other commercial activities:
- Transshipment — to pick up or drop off cargo that did not originate in Jamaica that is destined for another location but used Jamaica as an exchange point. And this included the transshipment of shipping containers mainly through Kingston Free Port Terminal Limited (KFTL) and cars largely through Kingston Wharves Limited (KWL).
- Bunkering — the refueling of ships.
- Ship repairs — specially wet repairs that take place while the ship is on water, typically docked.
- Crew changes — a location where one crew of ship leaves the ship and returns home and are replaced by a new crew. We will go into greater depth below.
- Exports — moving cargo of Jamaican origin going to overseas markets.
The port of Kingston, comprising mainly KFTL and KWL, in 2020 during the pandemic performed remarkably well relative to other port cities in the Latin America and the Caribbean (LAC) region.
According to data from regional UN Economic Commission for Latin America and the Caribbean (ECLAC) Kingston was ranked as eighth largest in the region among 47 port cities in terms of cargo volume.
Crew change
This is an area that needs special mention for two main reasons. The first, is that what Jamaica did was nothing short of extraordinary.
The second, is that this this an area for which not enough attention and credit has gone. With this second point firmly in mind please indulge me as I use this part of the article to laud well deserved praise on the Maritime Authority of Jamaica (MAJ) in a very Jamaican way:
Big up MAJ. Respect!!
The reason for this praise is that during the pandemic crew changes for seafarers went into crisis with crews finding themselves literally stranded at sea being unable to either dock and or to disembark and return home.
This was a humanitarian and labour crisis triggered by the pandemic. The scale and scope of this crisis could not be downplayed, as
more than 300,000 seafarers cannot be repatriated, and an equal number of unemployed seafarers ashore cannot work, because they are unable to board ships.
Urgent and persistent calls went out for an immediate resolution to the issue from many Interntional bodies including the:
- International Maritime Organization (IMO)
- International Labour Organization (ILO)
- International Civil Aviation Organization (ICAO)
- United Nations High Commissioner for Human Rights (OHCHR)
Jamaica answered the call. Specifically,
In response to this request, Jamaica, in June of 2020, passed the relevant Disaster Risk Management Order that designated seafarers as essential workers and created a regime to facilitate approved personnel transiting Jamaica for the purpose of joining a ship or leaving a ship for the purposes of repatriation.
Again, I say: Big up MAJ. Respect!
As laudable as it was for Jamaica to step up in a time of global crisis and pitch in and play her part, there is more to the story. Jamaica was only able to do this because it is a logistics hub. It had the capability and capacity. It had the maritime, aviation, hospitality infrastructure, commercial activity and workforce to be able to safely receive, provide hotel accommodation and then repatriate over 3,700 seafarers.
Before the pandemic Jamaica was routinely used as a location for change of ships’ crews. However, the pandemic gave Jamaica an opportunity to take this to another level and has concretized Jamaica as a hub for crew changes. The ‘business’ of crew changes has brought real economic benefits to Jamaica. The economic benefits to the Jamaican maritime, aviation, ground transport, restaurant and hotel sectors, just to name a few, are very much real.
The great thing about crew changes is that crews rarely arrive in Jamaica or other location and leave the same day. And this is where the major opportunities are.
Crews may be early and have to stay in a hotel while they wait for the ship to arrive, or they may have left the ship but have to stay in a hotel for a day or two to catch the next available flight. They may go sightseeing or eat at a restaurant or they may go shopping. I think you get the point.
New business models
New business models with logistics at its centred have not only emerged in Jamaica they appear to be thriving as welcomed new revenue streams.
Jamaica has seen an explosion of apps from well-established companies pivoting online to start-ups offering a wide variety of services from anything from farm to table delivery, to grocery delivery, to running daily errands, to telemedicine.
This has been particularly true in the e-commerce space.
Ecommerce is defined by Shopify as:
Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.
Let’s take a quick glance at the Jamaican e-commerce market. According to Statista the Jamaican e-commerce market is expected to generate:
- Projected revenues of USD$655.20m in 2023.
- The compound annual growth rate of revenues between 2023–2027 is expected to be 12.81%.
- The resulting growth is expected to result in a projected market volume of US$1,061.00m by 2027.
- The number of users is projected to be 1.2m by 2027.
E-commerce has clearing taken off in Jamaica and has a lot more room to grow.
One segment of the e-commerce market set for tremendous growth is in remittance in the form of grocery and other supplies which believe it or not is estimated to be a USD $2.3 billion market.
Research done by Franz Weathers founder and CEO of Upercart, the author of LinkedIn Newsletter Ecommerce Insider and ecommerce expert indicates that:
Jamaica is the second largest remittance earner in the Caribbean (behind Haiti) at US$3.3 Billion in 2021, representing about 25% of Jamaica’s GDP. It is estimated that about 70% of this is spent on food and personal care items, i.e. Groceries…It is estimated that over 70% of remittance earnings in Jamaica or US$2.3 billion is spent on food and personal care items, ie groceries. This means, by allowing senders to be able to pay directly for grocery deliveries for the recipients, solves quite a few problems.
Another company in the rising ecommerce grocery remittance space, GroceryListJamaica explains on its website how its sevice works. They explain that:
GroceryListJamaica is an all-in-one, on-demand, online grocery ordering system that allows customers within the diaspora i.e. Canada, USA, and the UK to shop for food, household, and personal items online for their loved ones back home in Jamaica. Our website sends these customer orders to personal shoppers that are stationed in our partner supermarket(s) in Jamaica who fulfills/complete orders for local in-store pickup and delivery. Our platform operates in real-time and facilitates same-day shopping deliveries for our users under a shared economy model.
And not to be left out of the space is Mailpac Group.
Listed on the on Jamaica’s Junior Stock Exchange this e-commerce and logistics company with its eleven (11) locations island-wide has been on an expansion drive ever since it raised $495 million in its December 2019 from an Initial Public Offering (IPO).
The Jamaica’s grocery remittance market, estimated to be US$2.3 billion is firmly in its crosshairs.
Further investments and advancement
In 2022 Jamaica has witnessed some significant investments and advancements by both the private and public sectors in its never ending but always progressing journey as a logistics hub and logistics centred economy.
Here are just a few highlights:
Prime Minister, the Most Hon. Andrew Holness:
“The opening of the KLP is a big deal… . It demonstrates us, as a people, leveraging our God-given ideal location and using our natural assets to create prosperity for our people. This development means more foreign exchange earnings and higher quality jobs.
President and Chief Executive Officer of the Port Authority of Jamaica (PAJ), Professor Gordon Shirley:
Not only have transhipment volumes been increasing but with a newly dredged channel, larger vessels are now being deployed to Kingston in growing numbers by the shipping lines.”
Chairman of interCaribbean Airways, Lyndon Gardiner:
We will now have the ability to bring people from across the Caribbean, whether it be for business, pleasure, or furthering multi-destination vacations, by offering Boscobel residents and visitors direct service across the Caribbean and vice versa
CEO, Kingston Wharves Limited (KWL), Mark Williams:
We’ve been in there before, what we’re doing now is to have 300,000 sq ft of additional warehouse space. We’ll be doing order fulfilment which we weren’t doing before. So, we’re going into the full suite of logistics and this will be a global business for us.
CEO Seprod Limited, Richard Pandohie:
A lot of companies that, before, would not have looked in our direction are now looking here because of quicker lead time and lower shipping costs.
CEO of JFP, Metry Seaga:
Our strategy for growth is compelling, and we are seeing the results of all the work our team has put in place. We made commitments to our shareholders earlier this year to deepen our footprint across the region and United States, and we are doing just that.
CEO Kingston Freeport Terminal Limited (KFTL), Captain Jedrzej Mierzewski:
Transport and logistics are critical to the growth of the local economy…Our main goal is to keep Kingston at the forefront of trade in the region.
Conclusion
I conclude where I started and repeat:
Jamaica is a logistics hub, it just doesn’t know it yet!
However, as I hope I have demonstrated Jamaica’s transformational journey is not only well underway but is having a real impact. Second, I hope that in sharing these few thoughts a few lightbulbs would have switched on, along with a few pennies dropping from knowing that Jamaica is a logistics hub. Even the fact that many do not yet recognize it is of commercial value.
I hope that fog has cleared, at least for some, and they see current and future investment, trade, commercial and job opportunities in Jamaica, a global logistics hub: Interconnecting the Americas to the world.
However, the journey continues.
