Business

Time to split KCT?

BY PAUL RODGERS Business Editor rodgersp@jamaicaobserver.com

Wednesday, September 26, 2012    

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THE Kingston Container Terminal should be split up and auctioned off to major shipping lines, says Dr Eric Deans of the Maritime Authority of Jamaica.

Such a move would tie shippers into using the port ahead of the Panama Canal expansion, due to open in early 2015.

Kingston is unusual among international trans-shipment ports in having a single, publicly owned, multi-user facility instead of several private terminals, Deans said.

Asked if Jamaica should adopt the international model, he said: "That would be my recommendation."

The Commonwealth Secretariat put a similar proposal to the Government in a report last year, he said.

"The big advantage is we would no longer have to be the ones to provide capital equipment."

In addition, privatising the terminal would raise some US$2 billion ($180 billion) for the Government, he said.

Some 100 companies operate container lines globally, but 15 of them control most of the business, said Deans, the director of shipping policy and research at the authority.

Neither the Shipping Association of Jamaica nor the Caribbean Shipping Association had anyone available to comment on the proposal yesterday.

The Kingston Container Terminal, owned by the Government, currently serves 14 lines and handles 1.7 million TEUs (twenty-foot equivalent units — a standard-sized container) a year.

The Government has made creating a logistics hub the centrepiece of its economic growth strategy.

Deans briefed journalists on the project's progress yesterday at a meeting hosted by Anthony Hylton, the minister of industry, investment and commerce.

The island has long been at a crossroads of international traffic, Hylton said, noting that even "the pirates took advantage of it".

The hub could add 17 per cent to GDP over six to eight years, he said.

The goal would be to make Kingston the fourth global logistics hub after Rotterdam, Singapore and Dubai.

Cabinet signed off on the proposal at its meeting last Tuesday, he said. It also approved the use of public-private partnerships (PPP) to finance much of the work.

Under PPP deals, which have been used extensively in Britain, private companies invest in public infrastructure, often taking on risk in return for a share of future revenues.

The US$8- to US$10-billion project would involve the dredging of the harbour and the installation of new cranes and warehouses.

Cabinet has also approved the building of a dry dock and other maintenance and overhaul facilities so that ships don't have to be sent, empty, to distant ports to be serviced.

The hub would integrate the handling of goods moving by air and sea and on the ground, as well as the data that is critical to managing modern cargo centres.

While many of the elements of the hub already exist, the Government intends to add the Caymanas economic zone, the Vernamfield air-cargo facility and a commodity port for bulk fuel and grain storage.

Kingston is already the main trans-shipment hub for the region, but its geography means it could be much more, said Deans.

The expansion of the Panama Canal will allow ships to pass from the Pacific with up to 14,000 TEUs, compared to 4,400 today.

"Trade opportunities are due to burst wide open with the expansion of the Panama Canal," Deans said. Some 800 million customers in North and South America could theoretically be supplied from the island.

However, the country has a lot of work to do between now and the opening of the expanded canal. The World Bank's Logistic Performance Index ranks Jamaica 124th out of 155 countries. Singapore is first, the Netherlands (Rotterdam's country) is 5th, and the United Arab Emirates (Dubai) is 17th.

Jamaica is not the only country aiming to take advantage of the canal expansion. Costa Rica is proceeding with a US$1-billion port and Cuba is pumping US$800-million into Mariel, 40km west of Havana.

Singapore, Dubai and Rotterdam are each on course to add a terminal the size of the Kingston Container Terminal each year.

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