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Demystifying the logistics hub
Published: Wednesday | April 17, 2013 3 Comments
Minister of industry, investment and commerce, Anthony Hylton, at his offices in New Kingston on April 12, 2013. - Rudolph Brown/Photographer
McPherse Thompson, Assistant Editor - Business
Minister of industry, investment and commerce, Anthony Hylton has shrugged off sceptics of the much-touted logistics hub, saying there are investors willing to pump huge sums into the US$8 billion project.
"The reality is that there are people at the table prepared to and are making multi-billion dollar investments in the logistics hub," he said.
In an interview with Wednesday Business last Friday, both Hylton and chairman of the logistics hub taskforce, Dr Eric Deans, explained that the infrastructure development that comes as part of the initiative was just a minor part of the project.
Rather, said Deans, "it's a support service for logistics."
Hylton believes that there is currently a lot of confusion in the public's mind about the project.
"The logistics hub or logistics in general is not simply about ports, airports or seaports. It's about what happens behind the ports. So that, while the ports are important, it is what happens in the economic zones" where goods are processed, assembled and otherwise manufactured.
"That's where the real jobs on a sustained basis are to be created," he explained. "The population at large now think the hub is about building the Kingston port, including dredging the harbour. Those are just critical activities. While it a meaningful activity we now want to deepen that activity along the value chain to take it into the economic zones," he added.
Hylton said the opening of the Panama Canal within the next two years provides a hard timeline for Jamaica to complete three core elements of the logistics hub.
"We don't believe all the projects we have enumerated will be finished, nor is it necessary that all of them be finished" at that time, the minister said. However, he said it was necessary that a core element be finished and that core element included the dredging of the Kingston harbour, the expansion and modernisation of the port facilities and the build out of the Caymanas economic zone in St Catherine.
"Those are three critical elements that will signal to the world that we are preparing ourselves to seize this opportunity," the minister said.
Other aspects of the project will be undertaken in the ensuing years.
The quest to establish a logistics hub comes against the background of what Hylton explained was the shift in global trade, the creation of a global supply chain and the progress in the march of transportation technology with the creation of bigger ships and aeroplanes to deal with national, regional and global trade.
The whole economics of transportation then surround the issue of larger vessels making fewer stops and needing to find hubs particularly in the major centres, Hylton explained.
He cited for example ships travelling from China, offloading its cargo at the hub in Jamaica from where smaller vessels and planes transport it to the various destinations.
Deans said the intention is to make Jamaica the fourth node in the global logistics business, but to put the project in context one has to compare it with the three other hubs in Singapore, Dubai in the United Arab Emirates and Rotterdam, Netherlands.
Citing some data, he noted that Singapore, an island state about the size of Hanover with a population of five million, handles some 60 million passengers at its airport, its container terminal handles 32 million twenty-foot equivalent unit containers, and handles about three million tons of air cargo annually.
Comparatively, Jamaica handles 1.8 million TEUs - just about 10,000 tonnes of air cargo, he said.
Dubai's airport handles almost 60 million passengers annually. Its free zone has 7,000 large multi-national companies, employing 120,000 people directly and about 300,000 indirectly. Dubai only has a population of 2.5 million people, less than Jamaica's populace of 2.7 million.
Rotterdam has the largest commodity port in the world, handling almost 600 million tonnes of cargo annually.
"So when we talk about becoming the fourth node it's of that scale that we are talking about," said Deans. "That is the level of investment that we are seeking to attract," he said. "The same investors that built those three hubs are seeking to direct their investments to Jamaica."
Deans said the big manufacturers are located in the Asia-Pacific region and are looking to push their goods in Latin America, their fastest growing market. Shipping goods from that distance can take up to four weeks from China.
Given that they are competing against manufacturers in the United States and other regions, they are trying to ensure their supplies get the goods to market in the shortest possible time, he said.
"So that is why they position distribution centres strategically in regions. And that is why the Chinese have been looking so aggressively at Jamaica to position their distribution centres to supply the Latin America and North American markets," Dr. Deans added.
"From Jamaica, using either our air capacity or maritime capacity, they can get goods to market either within four hours by air or within one to two days by sea. And that is the advantage that Jamaica offers," he said.
The establishment of Jamaica's logistics hub will involve upgrading existing airports and seaports, existing industrial infrastructure as well as building new infrastructure.
It is being designed, according to the industry ministry, to put potential investors in striking distance of a market of 800 million people, including the world's largest consumer markets in North America and the South American powerhouse, Brazil.
PRIVATE-SECTOR FUNDING
Jamaica anticipates that the project will be funded entirely by the private sector and, according to Hylton, discussions with both local and international investors in that regard are advanced.
A critical component of the hub is the government's attempt to attract global third party logistics providers by getting regional companies to establish their headquarters in Jamaica by incentivising them with tax breaks.
The issue is to be covered in a master plan being developed by Hylton's ministry, which will integrate all the components of the logistics hub initiative.
"While we are moving with alacrity to get the master plan in place ... we don't have to wait to build out the three core elements" of the project, Hylton said.
mcpherse.thompson@gleanerjm.com
Budget Debate schedule of presentations
April 18: Dr Peter Phillips, minister of finance, planning and the public service
April 23: Audley Shaw, opposition spokesman on finance
April 24: Phillip Paulwell, minister of science, technology, energy and mining; Edmund Bartlett, opposition spokesman on tourism and travel service development
April 25: Andrew Holness, opposition leader
April 30: Prime Minister Portia Simpson Miller
May 1: Phillips closes the debate
Published: Wednesday | April 17, 2013 3 Comments
Minister of industry, investment and commerce, Anthony Hylton, at his offices in New Kingston on April 12, 2013. - Rudolph Brown/Photographer
McPherse Thompson, Assistant Editor - Business
Minister of industry, investment and commerce, Anthony Hylton has shrugged off sceptics of the much-touted logistics hub, saying there are investors willing to pump huge sums into the US$8 billion project.
"The reality is that there are people at the table prepared to and are making multi-billion dollar investments in the logistics hub," he said.
In an interview with Wednesday Business last Friday, both Hylton and chairman of the logistics hub taskforce, Dr Eric Deans, explained that the infrastructure development that comes as part of the initiative was just a minor part of the project.
Rather, said Deans, "it's a support service for logistics."
Hylton believes that there is currently a lot of confusion in the public's mind about the project.
"The logistics hub or logistics in general is not simply about ports, airports or seaports. It's about what happens behind the ports. So that, while the ports are important, it is what happens in the economic zones" where goods are processed, assembled and otherwise manufactured.
"That's where the real jobs on a sustained basis are to be created," he explained. "The population at large now think the hub is about building the Kingston port, including dredging the harbour. Those are just critical activities. While it a meaningful activity we now want to deepen that activity along the value chain to take it into the economic zones," he added.
Hylton said the opening of the Panama Canal within the next two years provides a hard timeline for Jamaica to complete three core elements of the logistics hub.
"We don't believe all the projects we have enumerated will be finished, nor is it necessary that all of them be finished" at that time, the minister said. However, he said it was necessary that a core element be finished and that core element included the dredging of the Kingston harbour, the expansion and modernisation of the port facilities and the build out of the Caymanas economic zone in St Catherine.
"Those are three critical elements that will signal to the world that we are preparing ourselves to seize this opportunity," the minister said.
Other aspects of the project will be undertaken in the ensuing years.
The quest to establish a logistics hub comes against the background of what Hylton explained was the shift in global trade, the creation of a global supply chain and the progress in the march of transportation technology with the creation of bigger ships and aeroplanes to deal with national, regional and global trade.
The whole economics of transportation then surround the issue of larger vessels making fewer stops and needing to find hubs particularly in the major centres, Hylton explained.
He cited for example ships travelling from China, offloading its cargo at the hub in Jamaica from where smaller vessels and planes transport it to the various destinations.
Deans said the intention is to make Jamaica the fourth node in the global logistics business, but to put the project in context one has to compare it with the three other hubs in Singapore, Dubai in the United Arab Emirates and Rotterdam, Netherlands.
Citing some data, he noted that Singapore, an island state about the size of Hanover with a population of five million, handles some 60 million passengers at its airport, its container terminal handles 32 million twenty-foot equivalent unit containers, and handles about three million tons of air cargo annually.
Comparatively, Jamaica handles 1.8 million TEUs - just about 10,000 tonnes of air cargo, he said.
Dubai's airport handles almost 60 million passengers annually. Its free zone has 7,000 large multi-national companies, employing 120,000 people directly and about 300,000 indirectly. Dubai only has a population of 2.5 million people, less than Jamaica's populace of 2.7 million.
Rotterdam has the largest commodity port in the world, handling almost 600 million tonnes of cargo annually.
"So when we talk about becoming the fourth node it's of that scale that we are talking about," said Deans. "That is the level of investment that we are seeking to attract," he said. "The same investors that built those three hubs are seeking to direct their investments to Jamaica."
Deans said the big manufacturers are located in the Asia-Pacific region and are looking to push their goods in Latin America, their fastest growing market. Shipping goods from that distance can take up to four weeks from China.
Given that they are competing against manufacturers in the United States and other regions, they are trying to ensure their supplies get the goods to market in the shortest possible time, he said.
"So that is why they position distribution centres strategically in regions. And that is why the Chinese have been looking so aggressively at Jamaica to position their distribution centres to supply the Latin America and North American markets," Dr. Deans added.
"From Jamaica, using either our air capacity or maritime capacity, they can get goods to market either within four hours by air or within one to two days by sea. And that is the advantage that Jamaica offers," he said.
The establishment of Jamaica's logistics hub will involve upgrading existing airports and seaports, existing industrial infrastructure as well as building new infrastructure.
It is being designed, according to the industry ministry, to put potential investors in striking distance of a market of 800 million people, including the world's largest consumer markets in North America and the South American powerhouse, Brazil.
PRIVATE-SECTOR FUNDING
Jamaica anticipates that the project will be funded entirely by the private sector and, according to Hylton, discussions with both local and international investors in that regard are advanced.
A critical component of the hub is the government's attempt to attract global third party logistics providers by getting regional companies to establish their headquarters in Jamaica by incentivising them with tax breaks.
The issue is to be covered in a master plan being developed by Hylton's ministry, which will integrate all the components of the logistics hub initiative.
"While we are moving with alacrity to get the master plan in place ... we don't have to wait to build out the three core elements" of the project, Hylton said.
mcpherse.thompson@gleanerjm.com
Budget Debate schedule of presentations
April 18: Dr Peter Phillips, minister of finance, planning and the public service
April 23: Audley Shaw, opposition spokesman on finance
April 24: Phillip Paulwell, minister of science, technology, energy and mining; Edmund Bartlett, opposition spokesman on tourism and travel service development
April 25: Andrew Holness, opposition leader
April 30: Prime Minister Portia Simpson Miller
May 1: Phillips closes the debate