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Logistics in the Caribbean Current Trends and Future Prospects Caribbean Growth Forum June 19 th , 2012 Kingston, Jama

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Logistics in the Caribbean Current Trends and Future Prospects Caribbean Growth Forum June 19 th , 2012 Kingston, Jamaica Jordan Schwartz Gözde Isik World Bank. 30. OECD. LAC. 25. 20. Productivity losses (%). 15. 10. 5. 0. Merchandise losses:.

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slide1

Logistics in the Caribbean

Current Trends and Future Prospects

Caribbean Growth Forum

June 19th, 2012

Kingston, Jamaica

Jordan Schwartz

Gözde Isik

World Bank

logistics is a driver of competitiveness

30

OECD

LAC

25

20

Productivity losses (%)

15

10

5

0

Merchandise losses:

Logistics costs as share of market value

Levels of Inventory

Share of primary goods that do not arrive at market

Logistics is a driver of competitiveness

Sources: World Bank, Guasch (2004, 2008)

logistics costs affect the poor
Logistics costs affect the poor
  • Logistics and transport costs are 2 to 10 times higher than import tariffs for basic goods.
  • These basic goods represent 20% to 30% of household income
  • For the poor may represent up to 70%
logistics costs are a driver of firm prices
Logistics costs are a driveroffirmprices

LAC Logistics Costs: % of Total Value of Firm Sales

in the caribbean connectivity costs remain high for exports too
In the Caribbean, connectivity costs remain high…for exports too

Maritime transport costs as a share of Containerized Exports to the US and South America (% FOB value)

Source: UNECLAC 2009

caribbean transshipment triangle
Caribbean Transshipment Triangle
  • Location: At the intersection of the major east-west and north-south trade routes
  • Lack of natural hinterlands and small domestic markets
  • Lack of scale economies: negative trade balances and related backhaul problems
  • Emergence of the hub and spoke system in liner services as larger ships were introduced over time for major routes
competing for transshipment traffic must haves to be in the game
Competing for transshipment traffic: Must-haves to be in the game
  • Infrastructure
  • Location
  • Depth
  • Reliability
  • Competitive rates
  • Security
  • Critical mass
the caribbean transshipment market is competitive
The Caribbean transshipment market is competitive

Large domestic markets

Source: Contecar 2011

Source: McCalla 2009

transshipment hubs have grown faster than the rest but also more volatile
Transshipment hubs have grown faster than the rest…but also more volatile

Maersk leaves

Source: Containerisation International

slide11
Not all countries face the same costs when it comes to transshipment…hubs reduce costs through better global connectivity

Liner shipping Connectivity Index 2011

Cost to ship 20ft container from Miami (USD)

Transshipment hubs

Connectivity index

Source: UNCTAD and shipping lines

slide14
Transshipment is good for some non-transshipment countries too…but it all goes back to scale economies

350 miles

700 miles

has the transshipment and the hub and spoke system increased intraregional connectivity
Has the transshipment and the hub and spoke system increased intraregional connectivity?

Intra-Regional fleet deployment

Number of vessels

Total number of TEUs

Source: CI

or port efficiency
…or port efficiency?

Efficiency scores based on utilization of infrastructure

In terms of utilization of equipment and yard and berth areas, some ports have room to grow while other do not…something to think about when considering expansion

Source: World Bank 2012

in conclusion
In conclusion…
  • Logistics is central to boosting the region’s competitiveness
  • The widely accepted prognosis is that the Panama Canal expansion will increase transshipment traffic in the Caribbean
  • Not entirely clear if capturing more transshipment traffic will help reduce logistics costs and increase efficiency of logistics services in the region as a whole (including connectivity of small non-transshipment ports)
  • Logistics bottlenecks must be removed in order to fully reap the benefits of the Panama Canal expansion