Kingston Wharves acquires third stevedoring business
Kingston Wharves Limited (KWL) has acquired the stevedoring business of A.E. Parnell & Company last Wednesday.
The acquisition, which carries a maximum price tag of US$300,000 (J$36 million) payable over a three-year period, is the third such purchase made by the cargo handler in as many years.
The company paid US$2.95 million for Allied Trucking & Maritime's stevedoring business last year. In 2013, it bought Shipping Services (Stevedoring) Limited for an undisclosed sum, although the purchase price was reportedly equivalent to less than one per cent of KWL's $12-billion asset base at the time.
Certain terms and conditions of the sale still have to be met for the full price of the latest purchase to be effected, but Kingston Wharves said the acquisition is expected to "further expand and improve the range of services it offers to shipping lines that call at the port of Kingston".
KWL's terminal operations saw its terminal operations revenue grow from $3.06 billion in 2012 to $3.6 billion for the year ending December 31, 2013. However, it declined to $3.3 billion the following year due to an overall reduction in business volumes handled by the port.
In 2014, domestic container volumes declined by 23 per cent from the year before. Trans-shipment volumes fell by 39 per cent.
"Terminal performance during the year reflect 2014 market conditions, which also saw the Jamaican economy recording contractions in the two final quarters of the year," said KWL in its 2014 annual report.
Since the company secured a new service agreement with a major international shipping line, that would result in increase vessels calls from Asia via the Panama Canal.
Consequently, terminal operation revenue climbed from $1.5 billion for the first six months of 2014 to $1.9 billion in the first half of this year. Both domestic and trans-shipment container volumes increased by 20 per cent.
The cargo handler's performance somewhat reflects its strategic positioning as a regional centre for seaport, logistics and value-added services.
Already the company has demolished one of three on-dock warehouses to facilitate improved productivity and increased revenue-generating capacity for stevedoring and container storage.
Construction of the 160,000-square-foot total logistics complex has commenced. Next year, the new logistics information system is expected to be deployed and the container yard will be reconfigured. Harbour dredging along the berth ways to enable docking of Post-Panamax ships should run into 2017. The modular warehouse, which will be sized at 10,000 square feet for each unit and which are targeted at manufacturers, distributors and logistics service providers, should begin by 2018. Then the demand-driven expansion will commence.
Importantly, Kingston Wharves wants to be able to handle a million twenty-foot container equivalent units (TEUs) by 2019. It currently is capable of handling 450,000 TEUs, but it will have to drum up more business to fully utilise the capacity it has now, given that it handled around 200,000 TEUs last year.