In Asia, a market primarily served by ocean vessels and large aircraft (road and rail are problematic), several island locations work well as strategic logistics locations. Most predominant are Taiwan and Sri Lanka.
Although always under threat of a possible political face-off with China, Taiwan has become its own economic powerhouse by developing a thriving high-tech manufacturing base. These manufacturers, in turn, help fill both air and sea containers to balance the goods coming in via Taiwan’s two major transportation platforms: the Port of Kaohsiung and Taipei Chiang Kai-Shek (CKS) International Airport.
In 2001, the Port of Kaohsiung ranked as the world’s fourth largest seaport. But with competition heightening from mainland China as ports there develop to handle that country’s burgeoning exports, Taiwan faces challenges.
It is having to reposition itself both economically and logistically in what political and business leaders refer to as the economic ‘golden triangle’ – Taiwan, Hong Kong and Shanghai. The creation of a modern port hub system at Kaohsiung is critical to this goal – and in the works, with a building timeline of 25-30 years.
Proposed projects include development of an offshore terminal, container and bulk terminals, port gates, a harbour bridge, a rail system and rail yard, a city waterfront and distribution centres. High-density ‘mega-terminals’ are also planned to maximise performance and revenues associated with a new land-use plan.
Meanwhile, traffic at CKS has been growing since the airport first opened in 1979. Last year, it received 149,000 flights and about 20 million travellers. Cargo volumes have also increased from 190,000 tons in 1979 to today’s 1.5 million tons. Helping to accommodate the volume is a high-speed rail system, a third runway, a fourth terminal and a new cargo-handling zone.
Sri Lanka, located 29km off the southeastern coast of India, is home to Colombo Port, one of the few deepwater ports close to the Indian subcontinent and on the main shipping route connecting east and south-east Asia, Europe, and north and south America.
“The key strength of Sri Lanka is its strategic location, slap bang next to the shipping lanes,” says Susantha Ratnayake, a director of John Keells Holdings, a diversified Sri Lankan company.
Growth at Colombo Port peaked in the 1990s, leading to the need for expansion and improvements. Consequently, $245m has been spent on developing Queen Elizabeth Quay, a terminal that is handing one million TEUs (20ft containers). A major steamship line has transferred its volume from Chittagong, Bangladesh and Singapore to Colombo. Colombo Port is also working vigorously to win more volume from a mega operator, which is likely to start a feeder service as well.
Major steamship lines already use the port as a hub for regional container and trans-shipment traffic. Eighty five per cent of the trans-shipment cargo handled in the Port of Colombo is Indian container business. For that being trans-shipped to Europe, the voyage is 14 days; 19 to the US east coast.
While exporting by air is more limited, Bandaranaike International Airport (BIA) is a successful regional hub. Major airlines provide frequent flights to Europe, the Middle East, the Far East, Australia and the Indian subcontinent.
Besides the seaport and airport, Sri Lanka’s free zones have been the linchpin of economic development and inflow of FDI into Sri Lanka. Particularly significant is the development of the Colombo Freeport, which promotes its state-of-the-art distribution parks to integrated air, sea and road services on the island.
Turning to the Mediterranean, Cyprus offers an excellent trans-shipment point close to trade lanes connecting Europe to the Far East. An eastern Mediterranean island and one of the new entrants into the EU, Cyprus is one of the oldest maritime centres in the world. Its recorded connection with ships dates as far back as prehistoric times.
Seaborne traffic is served in Cyprus by a modern and highly integrated national port system composed of the new multi-purpose ports of Limassol and Larnaca, the new industrial port of Vassiliko and the three specialised oil terminals at Larnaca, Dhekelia and Moni. The island was the pioneer in the development of purpose-built container terminals in the eastern Mediterranean and was one of the first countries in the region to use specialised container gantry cranes.
The latest major addition to the island’s container port operational assets is a 1995 fourth generation terminal. At the port at Limassol, $500m is earmarked for further container port development by 2010.
From its position in the Straight of Sicily astride one of the Mediterranean’s major shipping arteries, Malta offers a whole range of international maritime services and facilities. Its deep natural harbours and well-equipped ports provide a haven for everything from international shipping, extensive bunkering, ship supplies and towage services to ship building and repair, modern facilities for trans-shipment and distribution, a very successful freeport and an oil terminal.
Malta is also home to a well-respected nautical school, hub facilities for cruise liners, international yacht marinas and an international ship register that is now long established as one of the largest in the world.
Its port at Marsaxlokk, long known for its sizeable fishing fleet, also shares space with wet bulk operations and, most recently, Malta’s new main power station. Oil Tanking (Malta) Ltd operates an independent oil terminal at Marsaxlokk, which has discharge and loading points along the breakwater pier and offers storage, blending and bunkering facilities.
Also at Marsaxlokk is the modern Malta Freeport Terminal, a major container terminal in the Mediterranean. In October 2004, the Malta Freeport Terminals Ltd operations were leased for a 30-year period to French steamship line CMA-CGM.
Still, economic development on the island is largely geared toward tourism and financial and private services. Currently, the government is looking at ways to increase sustainable competitiveness of Malta’s manufacturing sector with a focus on high-tech manufacturing and services. Another advantage is Malta joining the EU last year.
The Canary Islands, an archipelago of seven main islands in the Atlantic Ocean off Africa’s western Sahara, is not equipped to accept large steamships, yet each island has its own airport. More significant, a special economic zone has been created to encourage economic development and the diversification of the island’s manufacturing and service sectors. Since the Canary Islands belong to Spain, they enjoy the benefits of EU membership.
The Caribbean has become a breeding ground for trans-shipment ports, with several islands offering large container hubs: Kingston, Jamaica; Freeport, Grand Bahamas; and the Rio Haina Terminal in the Dominican Republic, as well as that country’s new Caucedo facility operated by CSX World Terminals (now owned by Dubai Ports International, one of the world’s leading port operators). The 50-hectare Caucedo is being billed as ‘the Caribbean hub of the future’.
It is no secret why the Caribbean has so many trans-shipment hubs. They are a good source of revenue. Plus, with the huge volumes of freight coming from Asia via the Panama Canal and trade with North America, Europe and South America, the Caribbean makes a superb location at which to converge and exchange containers. Few locations in the world offer such a geographic advantage.
Caucedo is already attracting significant business with major steamship lines calling on the port as part of their rotations. Under development next to the terminal is a 30-hectare logistics park, which is to be incorporated with the Caucedo Multi-modal Free Trade Zone. The project developer, Zona Franca Multimodal Caucedo, SA, has been granted tax-free status by the Dominican Republic government. The zone is being developed adjacent to the container terminal, allowing direct access to both the new container terminal and the Las Americas International Airport.
Puerto Rico is in the process of developing the Port of Ponce, which will become its future Port of the Americas. With the expanded port project, there are hopes of capturing significant steamship line rotations. For now, the Port of San Juan operates as Puerto Rico’s main seaport, although it is at full capacity.
Once operational, the Port of the Americas is expected to receive marine cargo and facilitate the trans-shipment or export to markets in the Caribbean, South America, Central America, the US and Europe. To date the government has not fully implemented its proposed multi-billion-dollar infrastructure programme, however. The programme has been subject to delays over the past two years, making businesses reluctant to increase investment.
A plus for this US Commonwealth territory is that it has the strongest economy of all islands in the Caribbean, with 40% based in manufacturing. Pharmaceuticals is by far its biggest industry.
“In terms of logistics, Puerto Rico has a great location due to its proximity to the US,” says Enrique A. Mirandes, deputy executive director for new business development at Puerto Rico Industrial Development Co (Pridco).
Besides the seaports, Mr Mirandes points out that Puerto Rico also offers one of the most important airport hubs for cargo for the Caribbean. “We have many direct flights, mostly to the US eastern seaboard,” he says. San Juan’s Luis Muñoz Marin International Airport, for example, is served by large intercontinental jets operated by American Airlines. Rafael Hernandez Airport in Aguadilla has the longest runway in the Caribbean. As part of a corridor development project, the airport’s international and domestic cargo shipping capabilities are also being developed.
To enhance the port concept, officials are promoting free trade zones on the island. The goal of the zones is to utilise both the seaport and Puerto Rico’s airports.
Jamaica’s Port of Kingston is one of the island’s shining stars for development. Kingston has built up more experience in trans-shipment than any other port in the Caribbean. Ninety percent of its operations are related to trans-shipment services, which are provided to international carriers operating in the region.
The port may have experienced a backlog of business late last year as ships diverted their cargo to Jamaica from the trans-shipment hub at Freeport, the Bahamas, and Miami due to devastation caused by a violent hurricane season, but the port showed it was up to the task.
By constantly upgrading and adding new equipment and facilities and by operating the container terminal round the clock with a well-trained, highly motivated workforce, Kingston has earned a reputation for fast and timely turnarounds.
Kingston Container Terminal currently has a rated capacity to handle 1.2 million TEUs annually. Over the past several years, a continuing expansion programme has been undertaken at the Kingston Container Terminal. That programme is now in its fourth phase, after completion of which, the rated capacity of the terminal will be 1.5 million TEUs annually.
Additionally, a management contract was awarded to APM Terminals (Jamaica Ltd), a subsidiary of the AP Moller group of Denmark. With the award of that contract the terminal subsequently experienced a significant upturn in the efficiency of its operations. Recently, Jamaica’s prime minister announced its fifth phase of expansion to the tune of $100m to begin in 2007 with completion in 2009.
Jamaica is also home to two international airports: Norman Manley International Airport in Kingston, which serves the local market; and Sangster International Airport in Montego Bay, which lands international flights. Both are undergoing significant modernisation and expansion.
“Large sums of money are going to be spent over the next three years – $200m for the Montego Bay airport, which was agreed upon when the airport was privatised three years ago,” says Dennis Morrison of the state agency Airports Authority of Jamaica. A new terminal building is due to go into partial operation in July and become fully operational in December.
Norman Manley International Airport is still managed by the airport authority, although plans call for its privatisation as well. “However, the first phase of the expansion and modernisation has to be done quickly because the World Cup for cricket will be held in 2007 in the West Indies. Some of the events will be held on Jamaica,” Mr Morrison explains.
Of the two airports, cargo is more significant at Montego Bay. A Cargo Village is being developed at this airport which will encompasses some 80,000 square feet of warehousing space.
Curaçao, located 35 miles off the Venezuelan coast, offers logistics advantages thanks to its naturally sheltered, deepwater harbour, airport and free trade zones. Curaçao is the largest of five Dutch Caribbean islands, which together constitute the Netherlands Antilles, an autonomous integrated part of the Kingdom of the Netherlands. Since Curaçao has no manufacturing industry, all products must be imported. Consequently, its economy is predominately service-oriented, although oil refining remains its number one industry.
With three runways, Curaçao International Airport accommodates a host of carriers servicing the island, including KLM, which lands daily with a direct 747 service from Amsterdam.
“KLM lands 747-400s here with 99.3% load factor on the outbound,” says Walter Abernathy, CEO of Curaçao Airport Partners (CAP). “Therefore, aircraft have much capacity going out.”
This opens up opportunities for trans-shipment, especially for cargoes such as flowers and perishables coming from Latin America destined for North America and Europe.
CAP, which operates the Curaçao airport, is owned by London-based Alterra Partners Limited (partially owned by Bechtel) and Singapore Changi Airport.
“Singapore Changi Airport usually invests in larger-scale projects,” comments Mr Abernathy. “But their executives saw Curaçao as a place where they could make a difference. Alterra has ownerships in Costa Rica and Lima, Peru, and saw synergies.”
Since 1981, the Curaçao Ports Authority NV (CPA) has been managing all the island’s ports. CPA owns the container and cruise terminals, most of the wharves and the property adjacent to the harbour.
While Curaçao cannot compete with large container ports elsewhere in the Caribbean, it has carved out its own niche, which includes cruise ships. “We operate the most multi-purpose harbour in the region,” says Richard J Lopez Ramirez, CPA general manager. In addition, the Curaçao Drydock Co, located at the port, offers renowned repair and bunkering services.
Landside, the Curaçao Industrial & International Trade Development Co NV (Curinde) manages the island’s industrial park and two free zones, the Airport Economic Zone and Harbour Free Zone. “Companies located in zones largely import from the Far East for distribution in the Caribbean,” says Edgar J Yzer, head of investment promotion at Curinde. Trade is primarily in garments and shoes, followed by flowers and pharmaceuticals.
“We are trying to establish Curaçao as a logistics harbour,” says Mr Yzer. “Products are shipped and consolidated here. In the case of pharmaceuticals, products are shipped here for labelling and repackaging.”
While islands may be vulnerable to weather conditions and even politics, some make the world’s most outstanding logistics locations. However, given their limited local markets, much of that business is restricted to the trans-shipment of goods to more populated shores.