DELUSIONS OF GRANDEUR?

Local news outlets in Barbados are reporting that Kirk Humphrey, Minister of Maritime Affairs and the Blue Economy, has stated the intention to position Barbados as a Caribbean transshipment hub.

In the local Nation News paper Humphrey is quoted as saying: “To counter the negative impacts of COVID-19, ports around the world are moving towards new dynamic approaches to development and efficiency. They are building specialised facilities, developing multi-purpose terminals and focusing on becoming large-scale hubs.”

This follows on from a report earlier this year in BN Americas, after an interview with Humphrey, which reported new infrastructure plans for the port of Bridgetown including cruise facilities, an expansion of bulk handling capacity, developing shore power, establishing a boat repair facility and expansion of the port’s Shallow Draft Marina.

At this time Humphrey also pointed out that Barbados will open new diplomatic offices in Kenya and Ghana which will allow for the sharing of information and best practices, developing technology and systems and a range of other initiatives. This, in turn, he suggested will facilitate Barbados’s ambition to position itself as the Caribbean hub for Africa and South America.

POLITICAL SPEAK

A laudable ambition or political speak? It is the statement on fulfilling a role as a regional hub on what seems to be a large scale that is questionable. The port of Bridgetown may have the potential to undertake the role of a secondary transshipment hub, i.e. a quite limited role in conjunction with nearby ports, but to light-up the dream of fulfilling a major role in the Caribbean transshipment market appears to be a step that is closer to fiction than fact.

Basic realities in this respect are:

• Barbados is located in the south-eastern sector of the Caribbean Sea – it does not enjoy a central location and as such in transshipment terms only has a relevance in terms of undertaking a secondary transshipment role for locations such as nearby Saint Vincent and the Grenadines.
• The Caribbean region is very well served in terms of available transshipment capacity with this to a significant extent established by leading international terminal operators who have invested substantial resources into developing efficient service capacity.
• In the southern CaribbeanTrinidad is a wellestablished location for secondary regional transshipment. Over two terminal facilities, Trinidad handles in excess of 600,000TEU with approximately 40 per cent of this accounting for transshipment traffic. It has ample spare capacity available.
• Main existing northern Caribbean hubs such as Kingston, Jamaican and Caucedo, Dominican Republic, have recently seen significant volume depart for locations such as Cartagena, Colombia and Panama leaving ample spare capacity in the former locations. Highly competitive rates will no doubt be available to fill this capacity.
• Transshipment generally offers much lower returns than import/export traffic coupled with the fact that it is a ‘terminal confined’ activity offering little in the way of wider positive economic impact.
• Transshipment is not all loaded containers and where empties are concerned earnings become even lower.
• It is difficult to predicate an expansion of terminal capacity based on transshipment earnings as in order to make an acceptable level of profit high volumes are required. It is essentially a high volume, low margin business. There also needs to be a good deal of confidence behind investing in new capacity for transshipment traffic as it is not an ‘anchored’ traffic, it is portable. In practical terms, it can be ‘here today, gone tomorrow’ should a shipowner find a better price elsewhere or be required to move as part of new consortia arrangements etc.
• In a micro context, it is also known that the existing Bridgetown container terminal operation is not highly competitive at a cost level, indeed the opposite. It is a public sector operation with a very large workforce for the traffic volume involved and one that to a significant extent has not yet seen reforms that deliver workplace best practices in key areas.

REALITY CHECK

The facts speak for themselves – transshipment is not a panacea but can be a very difficult business and especially in terms of making it pay. In years gone by the idea of transshipment used to be regularly wheeled out by politicians as a potentially exciting new area of business development – but those days are long gone.

It appears a relevant and wise course of action for Kirk Humphrey to check his facts prior to ‘hanging his hat’ on the idea of container transshipment in Barbados. After all, the world is alive to ‘fake news’ nowadays.