Logistics hub - saviour or destroyer (Pt 1), Commentary, Jamaica Gleaner

Logistics hub - saviour or destroyer? (Pt 1) Ronald Mason, Contributor. Jamaica's strategic geographic location at the crossroads of major international shipping lanes has not been fully utilised in the development of the country. Making the best use of this maritime asset for the great benefit of Jamaica has been recognised for centuries. In the 17th century, Port Royal was the commercial hub of the Western Hemisphere. In 1668, Sir Thomas Modyford was quoted as saying, "To any with money in Port Royal, the opportunity for profit [is] far greater than existed in England at the time. We offer double, nay, triple our money without any hazard." Jamaica needs to cash in NOW. Many decades ago, while a student in Washington, DC, I had the opportunity to speak with an officer of the State Department. He was then assigned to the Jamaica desk. During the conversation, I enquired as to the US recognition of Jamaica's strategic value to America based on our location. His response shocked me to the core. He told me Jamaica's failure to use its strategic location meant, if Jamaica were to sink, the only thing the world would mourn is three million persons drowning at the same time. The good that accrued to me from that conversation was that my interest in the maritime industry was awakened. It has never waned. I remain a fervent, determined and strong advocate for my country to claim pride of place in the maritime industry. We have built a tourism sector on sand, sea and sun. But it is anaemic. We retain 20 cents on the net dollar earned. We struggle to convince our people that tourism requires service, not subservience. We lock off the beaches for our own people and hide the tourists in all-inclusives. We import the needs of the visitor and do very little to improve and sustain the quality and quantity of our production suitable for the tourist industry. All in the name of sand, sea, and sun, all marine-related. The public has now heard of a proposed logistics hub. Goat Islands are identifiable. Those who begin any environmental intervention with NO are back on the front burner. What is the logistics hub? Dr André Haughton, on May 15, 2013, published an excellent article outlining the logistics hub. I invite readers to see the full article in this newspaper ('Exploring logistics hubs' - http://jamaica-gleaner.com/gleaner/ 20130515/news/news1.html ). The definition he offered is from the Euro-Platform report: "A logistics hub is a centre or specific area designated to deal with activities related to transportation, organisation, separation, coordination and distribution of goods for national and international transit, on a commercial basis by various operators. "These operators may own, lease or rent the buildings and/or the facilities of the hub. These include warehouses, storage areas, distribution centre, offices, trucking and shipping services. "The hub must be equipped with facilities necessary to carry out the above functions. Also, to ensure synergy and commercial consistency, it is best if the logistics hub is managed by a single, neutral legal body, preferably under a partnership between government and private interest." Note, it does NOT make reference to a port. The port is NOT the logistics hub, but rather a conduit for the essentials that the logistics hub will efficiently, effectively, profitably utilise. Logistics hubs are to add value to the cargo going through the ports. Logistics hubs provide not only traditional activities such as storage, but also value-added logistics services such as labelling, assembly, semi-manufacturing, and customising. These centres combine logistics and industrial activities effectively in major port areas to create country-specific and/or customer-specific variations or generic products. Let us illustrate. A television manufactured in South Korea has customers worldwide. This would include Brazil, Ecuador, and Canada. The same television is sold in all these markets. However, each country has labelling regulations and product manuals which must be with the television for it to clear customs in Brazil, Ecuador and Canada. The manufacturer makes the decision to ship five containers with the product to the Jamaica logistics hub. The products destined for the market in Brazil and Ecuador will need to go through the Panama Canal to get there at least cost. Those for Canada's east coast do not have to use the Panama Canal. Here in Jamaica's logistics hub, we 'strip' the container, take off all the televisions, label those for Brazil with the Portuguese stickers and repackage them with the Portuguese user handbook. We repack the container and ship it to Brazil through the Panama Canal. We do the same thing, except in Spanish, for Ecuador, and the televisions destined for Canada are so serviced in English and French. That's an illustration of what a logistics hub does. This activity will employ Jamaican labour and not all high skilled. It will steadily provide an opportunity for the Korean television manufacturer to do only its core function: making televisions. Jamaica finishes the television for the market. We perform receiving, storage, order processing, order assembly, palletising, labelling, marking, stencilling, documentation, and forward shipping. The more efficiently we do this, the better the growth prospects with good jobs. The goal is to position Jamaica as a fourth node in the global logistics network, to complement Singapore, Dubai, and Rotterdam. It is accepted that the project is "the most transformative economic activity that we will undertake as a Government".