Jamaica: Taking flight

Foreign Direct Investment
| The European | 12th October 2018
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Jamaica’s historic location has always made the island a prime destination for overseas interest and investment. From Port Royal’s glory days as the vibrant centre of the Caribbean, to Jamaica’s rise as a tourism staple for the North American market, the country has capitalised on its central location close to major markets and continents.

With all of its history and access to major shipping lanes and air routes, the country is yet to execute an aggressive strategy to fully leverage its natural resources and realise its potential in the logistics sector – until now.

To position Jamaica as the fourth global logistics connecting point, comparable to Singapore, Dubai and Rotterdam, and to create a logistics-based economy that will propel economic growth and jobs, Jamaica is moving forward with the Global Logistics Hub Initiative (GLHI). The initiative is a development strategy that will boost the sector’s performance, through an enhancement of Jamaica’s activities in the global logistics sphere.

The Jamaican government has proposed that through the development of Jamaica as a logistics hub, the country will have greater opportunity to handle increased volumes of transhipment cargo. Jamaica will also be perfectly positioned to receive Post-Panamax ships travelling from the Asia-Pacific region, as these vessels will now have a direct shipping lane from the Pacific Ocean to the Atlantic Ocean (Eastern Seaboard and South Atlantic).

In addition, with the implementation of Special Economic Zones (SEZs) in proximity to major ports and airports, there is an excellent opportunity for companies interested in the country’s manufacturing sector to benefit from the island state’s connectivity.

All components for the Hub will be synergised to present seamless logistics services to the international trading community. A critical component of the GLHI is the broadening of bilateral collaborations with Jamaica’s global partners, and the encouragement of private sector investment and financing through public-private partnerships (PPPs). The initiative will provide a mix of opportunities for global and domestic commercial and industry interests.

This initiative and further development of the logistics sector means companies and individuals that invest in Jamaica will find themselves within striking distance of a market of 800 million people across the Western Hemisphere. The development of the Hub and the SEZs represents a significant opportunity for companies in manufacturing, outsourcing, supply chain management, and other segments in the logistics sector.

The plan has resulted in logistics making compelling moves for the Jamaican economy; the sector has seen significant investment over the past two years, and with the divestment of Kingston Container Terminal in 2016 to CMA-CGM, the third-largest shipping line in the world, the Port of Kingston has seen upgrades to the tune of approximately $400m.
This includes the upgrade of the physical and technological infrastructure, dredging of the harbour to facilitate Post-Panamax vessels, and overall redevelopment of the port berths. This investment contributed to the improved efficiency of the port, enabling its capacity to increase to approximately 3.4 million TEUs (twenty-foot equivalent units) per year.

Modernise and expand

Kingston Wharves Limited (KWL), which is dubbed the leading multipurpose terminal operator in the Caribbean, also announced that it would take its investment in Jamaica’s logistics sector further. The company’s CEO, Grantley Stephenson, said that the port terminal and logistics provider would be expanding its near-port logistics facilities in Jamaica’s capital Kingston by developing a new 14-acre modular warehousing complex. The investment is valued at $30m. This is the latest initiative in a $180m expansion programme by the company, having previously rolled out its 160,000-sq-foot (14,864-sq-metre) Total Logistics Facility, a Global Auto Logistics Centre, and significant investments in port terminal improvements.

Birdview KingstonPort - Jamaica: Taking flight

Mr Stephenson said that Kingston Wharves was focused on its “Next Step Logistics” strategy, which aims to modernise and expand Jamaica’s logistics sector. He said the company has identified multiple opportunities in logistics, building on Jamaica’s advantageous location in the Western Hemisphere and proximity to major shipping lanes and logistics centres like the Panama Canal, along with hundreds of millions of consumers.

These companies represent just a few of Jamaica’s success stories in logistics, with the sector representing a contribution of $728m to the country’s GDP, and according to Jamaica’s trade and investment promotions agency, JAMPRO, investment in the sector is growing. JAMPRO is currently working with other arms of the government to lead the transformation of the Jamaican landscape into an efficient and lucrative logistics-centred economy, with infrastructure playing a strategic role.

Diane Edwards, President of JAMPRO, said: “We are seeing the growth in logistics investments coming to Jamaica as more enterprises realise that there are untapped possibilities available. The numbers are telling us that this sector is poised for excellent advancement in the next few years.”

Ms Edwards described Jamaica as an excellent opportunity for logistics, as the country has unique advantages when compared to the Caribbean. “Jamaica has the location, the talent, the infrastructure and, most importantly, the support from both the public and private sector to prepare for the sector’s growth,” she said.

“It is really no wonder that in the 2017-2018 financial year, JAMPRO facilitated $315,000,000 in capital expenditure spend in Jamaica, an increase from the $58,000,000 in the 2016-2017 financial year; the numbers tell the story and we are focused on improving that performance in the next year.”

 

Achieving goals

To ensure that Jamaica continues on this course and exceeds its expectations for logistics, the Jamaican government launched the Logistics Hub Master Plan in 2018. The plan includes the development of approximately 3,900 hectares across the island, with a total investment cost of over $28bn.

This will also expand the numerous investment opportunities available in logistics and infrastructure. Existing opportunities include: the development of the railway, with its first phase running from tourism capital Montego Bay to south-western Jamaica; developing the Kingston Logistics Park, which encompasses a significant tract of land around the Port of Kingston; and the Caymanas Economic Zone, which will facilitate investment in light manufacturing, software development, financial services, distribution, and value-added logistics. Caymanas is also located close to the English-speaking Caribbean’s largest dormitory community, Portmore, which will provide an educated and skilled talent pool.
Ms Edwards said that by capitalising on these opportunities and more, Jamaica will see the dream of making the country a logistics hub become a reality: “We have a goal of making Jamaica the place to live, work and do business by the year 2030, and the logistics hub is a significant part of this. We are confident that the Logistics Hub Initiative will be realised, and that Jamaica’s logistics sector will truly take flight.”

 

Further information

www.dobusinessjamaica.com

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