Kingston Wharves ups Hub investment to US$100m

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Thursday, June 25, 2015

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Kingston Wharves Limited (KWL) upsized the limit of its expansion plans at the wharf from US$70 million to US$100 million, management explained at the annual general meeting (AGM) on Thursday.




The company said that increased demand for its services would drive the investment to the upper limit.




"Depending on when we implement the different phases, that will determine the amount of capital that we put in. We are looking anywhere from US$70 million to US$100 million," Grantley Stephenson, chief executive officer (CEO), said in response to a media query at the AGM at the Jamaica Conference Centre in downtown Kingston. "[So] some of this expansion will be demand-driven."




The CEO's report in the annual report described KWL as the only Jamaican company that has articulated its intent to undertake investments of approximately US$100 million in preparation for the Jamaica Logistics Hub Initiative. The hub is a lofty goal spearheaded by government to attract increased logistics investments.




KWL spent some US$7 million to US$8 million thus far on its expansion drive, and plans to ramp up spending in its ensuing financial year led by crane purchases. Stephenson declined to give a capital expenditure estimate for the 2015 financial year indicating that the type of cranes are yet to be determined which would affect costs.




Last year KWL announced expansion plans aimed at doubling its throughput to one million 20-foot container units (TEUs), while preparing the cargo handler for the expansion of the Panama Canal. At the time, management outlined three phases of the project aimed to take the wharf into modernity.




Phase one entails building a modern 24-hour logistics complex with modular warehouse space, the acquisition of gantry cranes, the closure of Third Street, the relocation of the berth 7 warehouse to a newly refurbished facility, the relocation of trans-shipment and domestic car parks, and the demolition of on-dock warehouse and operational buildings.




The second phase is aimed at handling larger post-Panamax vessels including extending the berth by 50 feet, dredging along the berth to over 15 metres, along with the installation of new cranes.




Phase three includes expanding the port and motor vehicle trans-shipment operations to drive TEU throughput.


KWL actually handled some 200,000 twenty-foot containers and 1.4 million tonnes domestic tonnage and 50,000 motor units, according to its 2014 annual report.




Stephenson addressed roughly 50 shareholders at the AGM held at the Jamaica Conference Centre in Kingston yesterday.




KWL is an established trans-shipment hub for leading regional feeder lines allowing for direct shipment to regional ports across the Americas. KWL is a regional specialist in global automobile trans-shipment.




Rival wharves across the region are also expanding to accommodate and profit from larger vessels traversing the Panama Canal currently under expansion.




The KWL development aims to ultimately raise the return on equity (ROE) which hit 7.15 per cent for its latest financial year ending 2014. Over a decade the ROE has hovered in the single-digit region at KWL which reflects the capital-intensive nature of the business.




For the first three months ending March 2015, KWL benefited from offering increased services at its port operation which led to $188 million in after tax net profit for its March 2015 quarter or 39 per cent higher year on year. The port wants to offer even more services and build specialised warehouse facilities in order to benefit from increased regional shipping activity.




KWL was awarded Free Trade Zone status last year.



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