Business

Panama: Will we be ready?

Window closes on port expansion

CAMILO THAME Business Co-ordinator thamec@jamaicaobserver.com

Friday, August 31, 2012    

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THE window for Jamaica to take advantage of the expanded Panama Canal is closing fast.

The waterway, which will allow cargo ships with three times the container capacity currently passing through the locks, should be finished in the first half of 2015.

What's more, earlier this month, a court cleared the way for a US$1-billion port facility in Costa Rica, while Cuba, not wanting to wait on political change, is embarking on a US$800-million port in Mariel.

"When Costa Rica is finished it is going to be a threat to all of us in the Caribbean and Panama," said Carlos Urriola, the head of the Caribbean Shipping Association. "The only port that can compete directly with Jamaica is Cuba — Caucedo (Dominican Republic) is already full to capacity."

By his reckoning, any port that wants to benefit from the canal expansion needs to start implementing its plan before the project is completed.

"What cannot happen is that in two years (Jamaica) is talking about the same things we are talking about now," he said. "The shipping community wants to know that you will be an alternative... but if you can't say when, you are not going to be a part of the decision making."

Beijing's China Communications Construction Company signed a two-year agreement with the Government this month that would allow direct Chinese investment in selected infrastructure projects, including the port.

A plan of action has not yet been presented.

On the other hand, Kingston Wharves Limited raised $1.8 billion from Jamaica Producers Group (JP) to undertake its expansion.

Meanwhile, the Cuban expansion, which will lift Mariel's capacity from 350,000 twenty-foot-container equivalents (TEUs) per annum to one million, is expected to come on stream in 2014.

Costa Rica's two-million-TEU-a-year facility located in Moin is scheduled for completion in three to five years, but it puts the new container terminal (described as a new island to be built) closer to the largest market in Latin America — Brazil.

"Population growth shows were the cargo is going," said Urriola.

Brazil's population is expected to grow by 18 per cent to 251 million people (of the 700 million in all of Latin America) by 2030.

But size and location aren't everything.

Trans-shipment centres can compete on price, but without value being added to the cargo, shipping lines will move on to other locations.

Manzanillo in Panama, the biggest regional competitor, moving seven million TEUs last year compared to Jamaica's 1.7 million, has an entire logistic centre planned out.

It includes a large commercial freezone, highway, railway, airport and banking within the same area.

The terminal is targeting 12.4 million TEUs by 2020.

Along with larger container ships — the canal will be able to accommodate vessels carrying 13,000 to 14,000 TEUs, up from 4,400 — there are expected to be greater opportunities for dry bulk, such as grain.

"We are building facilities for commodities," said Urriola, who is also executive vice-president of Manzanillo International Terminal.

He figures container terminals have a maximum of three years to set their marks.

"The Government, private sector and labour need to get together. It will not work with only one part of it," he said.

The Government, as a regulator, should focus on accommodating faster- moving trade.

"Let's not do a nice port that can load a lot of containers but it takes three days to get the container out of the gate," he said.

Productivity needs to be increased significantly, and container movement targets should be lifted from 30 moves per hour to 50, he said.

At Kingston Container Terminal, the average move per hour using Gantry cranes was 19.8 TEUs in 2008, while the facility focused on trans-shipment hit its highest productivity (36 moves per hour) on any vessel docked at its port in 2010.

Kingston Wharves Limited had lower average in 2008, but the it uses smaller, cranes.

The Centre for International Governance Innovation (CIGI) suggests other indicators such as the Liner Shipping Connectivity Index (LCSI) be used to gauge a port's competitiveness.

Jamaica was number one in the Caribbean, and number 32 in the World in 2010, when the deployment of container ships; TEU capacity; the number of liner shipping companies; the number of services; and the maximum ship size, were looked at together.

CIGI estimates that annual Caribbean port investment needs roughly US$300 million. The challenge is where this investment will come from.

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