Kingston Wharves banks on expanded Panama Canal
With the opening of the expanded Panama Canal, Kingston Wharves hopes to improve prospects for its port in handling growing supplies of manufactured goods shipped from Asia, the world's largest continent.
"This is one of the reasons that we think it's very strategic to focus on the development of our logistics business, because we expect that with the opening of the Panama Canal and the biggest ships moving through the region, to be able to benefit from increased trans-shipment volumes," said Grantley Stephenson, chief executive officer of Kingston Wharves Limited.
Still, it is unclear how soon Jamaica will be in a position to take advantage of Panama's upgrade, given that dredging of the Kingston Harbour to accommodate Post-Panamax vessels is yet to get off the ground.
Likewise in the United States, fresh reports this week indicate that the East Coast's busiest port will also not be ready for the supersize container ships.
In an online article on Wednesday, The Wall Street Journal reported that the project to raise the Bayonne Bridge, an 83-year-old arch that spans the channel between Bayonne, New Jersey, and New York's Staten Island, would be delayed until the end of 2017 because of engineering miscalculations and construction work slowed by inclement weather.
Until the project is completed, larger ships passing through the Panama Canal will be unable to visit the three largest terminals at the Port of New York and New Jersey, located beyond the bridge in Newark and Elizabeth, New Jersey, it said.
Stephenson, in his outlook for Kingston Wharves, said the port company is directly affected by the level of trade between Jamaica and its partners and, for the trans-shipment business, by the level of regional and global trade.
It was announced in May that the first ship to transit the expanded canal will be a Chinese vessel called Andronikos with 9,400-container capacity.
The upgraded Panama Canal is to commissioned this Sunday (See related story on Page 12).
"We hope it will improve the prospects for our port in handling the still-growing supply of manufactured goods from Asia to the West," Stephenson said at the company's annual general meeting on Thursday.
He said Kingston Wharves has embraced the national initiatives to improve the ease of doing business by creating a portfolio of new or remodelled high-quality warehousing, office, production and open-storage space that can allow businesses to immediately benefit from the special economic zone legislation.
The company has also directly supported the introduction of the automated system for customs data and has developed its security services in a manner that assists national efforts at border control.
"These initiatives are directly in line with our logistics strategy and will continue," Stephenson said.
Kingston Wharves has strategically organised its business activities into port operations and logistics services.
Such arrangements "more accurately reflect what the company is doing now and where we are going for the future. We are investing heavily in logistics. We expect that to be a substantial earner going forward," Stephenson told the Financial Gleaner after the meeting.
"So we see that being addressed separately from the terminal operations. It's a different type of operation and it has tremendous prospects. The terminal operation is now the largest segment of our business. Logistics is something that is emerging, but already the prospects are very good," he added.
Construction of a new warehouse complex as part of the logistics business is to be completed in May 2017, Stephenson said. The logistics-service projects range from straight warehouse rental arrangements to full-service picking, packing, inventory control and distribution for local and international clients, he added.
Stephenson said challenges and uncertainties loom in the short term, but that "on balance, over the long term, the outlook for each of these factors favours Kingston Wharves".