Op-Ed: The Logistics Hub Project and Jamaica’s Development

By Paul Hay
Op-Ed Contributor

ONE LINE of the Jamaican National Anthem reads: “Give us vision lest we perish.”  Vision 2030 Jamaica provides a national development plan for making “Jamaica, the place of choice to live, work, raise families, and do business.” Michael Porter, of the Institute of Strategy and Competitiveness, Harvard Business School, states that competitive advantage of nations accrues from distinguishing itself from competing nations and developing on differences in history, infrastructure, institutions, culture and factors involved in the ways people live and do business.

Porter’s framework for achieving this strategic advantage requires government to play a purely facilitative role.  But, Dr Densil Williams, co-author of Competitiveness of Small Nations: What Matters? disagrees: stating that government needs to play a pivotal role in small developing nations, like Jamaica.

This needs to be clarified if Jamaica is to achieve its Vision 2030 objectives: especially since “transformational leadership” is one of the guiding principles on which Vision 2030 is based.  I would recommend that the government seek the path of partnership, which happens to be another of Vision 2030’s guiding principles: partnership internationally, regionally, and locally: as well as inter-ministerial collaboration.

Jamaica needs these guiding principles in operation right now to achieve Vision 2030.

As an illustration, I will now refer to Jamaica’s proposed logistics hub, which promises to be the logistics hub of the Latin America and Caribbean [LAC] Region, as well as the U.S. Gulf and East Coasts.  When complete, it will be the fourth global transhipment logistics hub: the others being located in Singapore, Dubai, and Rotterdam.  Dr Williams’ book presents the performances of Singapore, Jamaica, Barbados, Trinidad and Tobago as recorded in “The Global Competitiveness Report” over the last five (5) years and he concurs that Jamaica seems to have a competitive advantage in port infrastructure.

An ideal location midway between North and South America, in close proximity to the Panama Canal contributes to this advantage.  The Panama Canal will be widened by 2015 to accommodate wider ships and Jamaica hopes to capitalise on this by expanding its port facility and affiliated infrastructure spread over four south coast parishes: namely Kingston, St Catherine, Clarendon and St Thomas.

An IDB (2010) study on the productivity of the LAC region concluded that “ports and airports are grossly inefficient.  Dr Williams’ book also points out weaknesses in Jamaica’s current port infrastructure that needs to be addressed by the Ministry of Industry, Investment, and Commerce [MIIC] and the Port Authority.  He states that it takes twice as long to export a shipment from Jamaica compared to Singapore; and it costs four (4) times more.  Bear in mind that Singapore is the reputed leader in port infrastructure since 2003, and its scale of operations is significantly larger.  But, this indicates partnership with international expertise should be explored to correct these weaknesses: be it inter-governmental or with the foreign private sector.

To MIIC’s credit, it has recognised that the logistics hub will generate 10,000 jobs and has formed a human resource working group with stakeholders the Ministry of Education in its logistics task force;  this group being headed by Dr Fritz Pinnock – Executive Director of the Caribbean Maritime Institute.

Speaking at the recently concluded stakeholders-consultation at the Shipping Association of Jamaica, Industry Minister Anthony Hylton emphasized that Seventy percent (70 percent) of employees at the Dubai logistics hub are foreigners, but “we want to train our people to fill the jobs and vacancies that are here.”  However, two (2) years is not enough time to train the amount of people needed.  Even though this is an example of inter-ministerial collaboration, regional and international assistance is required.

The previously mentioned IDB study pointed out that the poor performance of LAC ports and airports was partly to blame on inadequate physical infrastructure but, more importantly, on support activities involving the movement of cargo and inefficiencies due to inadequate regulations, lack of competition for services, and deficient operation procedures and information systems.

Furthermore, Dr Williams states that “high transportation cost for moving goods in Caribbean countries has been cited as one of the major drivers of low levels of productivity.”

This begs the intervention of the Ministry of Transport and Works.  Jamaica also has no railway network, and this could be helpful in connecting the four parishes over which the logistics hub is spread.  Possibly partnership with regional concerns could also prove beneficial.

Dr Williams also notes that “Jamaica is highly uncompetitive in the supply of electricity.”  This needs to be addressed by the Ministry of Science, Technology, Energy and Mining, electricity providers, and the Port Authority themselves.

No single ministry can accomplish all that is required and, with limited resources available, partnerships with other governments and the private sector is inevitable.

The World Bank Group has already endorsed the establishment of the logistics hub and has “pledged to help find funding.”  The Industry Minister has also been to Europe, Asia and Panama to promote the logistics hub, as well as the Jamaican Chamber of Commerce.  Nevertheless, Porter instructs that everything is important for competitiveness, and Dr Williams states that countries with a colonial past that have achieved high levels of productivity have adopted not only their political, but also their legal and economic institutions to the reality of their environments.

So, much more remains to be done.

Paul Hay is the founder and manager of Paul Hay Capital Projects.

Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal.