The COVID-19 pandemic was the catalyst for a perfect storm in global shipping that has upended the global supply chain. COVID-19 triggered the closure of national borders; severely incapacitated port operations due to sick workers and national restrictions, and disrupted manufacturing as a result of shuttered factories in centres such as China, who control some 28% of global production.
With sea freight accounting for over 80% of world trade movement, the fallout from disruption was significant. The world then had to deal with supply chain shocks as consumers reacted to the unprecedented pandemic by hoarding consumer goods such as food items, toilet paper and sanitation supplies.
An unbalanced global recovery would then put supply in goods out of sync with demand. Americans reportedly spent an extra US$ 8 billion in March 2021, but a container shortage and slow resurgence in manufactured goods added to dissonance in the marketplace. The blockage of the Suez Canal which delayed over 400 vessels carrying more than 18,000 containers was another major disruptor. Global ports are now congested and bottlenecked, with container deliveries significantly delayed and shipping costs skyrocketing.
How will the world mitigate these global shocks in the future? A number of options are being contemplated. Global ports are now exploring 24-hour operations, which is nothing new to our region. Terminals like Kingston Wharves and others maintained their customary 24-hour operation throughout the pandemic.
Manufacturers have also responded by diversifying their supply sources and looking to the South East Asian nations to build contingencies into their supply chains. Additionally, supply chain solutions such as reshoring—companies bringing back production and supply chain activities from overseas to their national borders—and nearshoring—locating these activities within close proximity to their consumer markets, are being pursued.
The World Bank recently noted, “COVID-19 has highlighted the importance of supply chains robustness and resilience, and reopened the debate on reshoring, nearshoring and global value chain regionalization….” The World Economic Forum (2020) report has recommended that firms, “aggressively evaluate nearshore options to shorten supply chains and increase proximity to customers.”
Some experts argue that nearshoring and reshoring are no guarantee of supply chain robustness, citing the fact that shocks such as natural disasters, health risks, financial risks, political instability and others could happen anywhere in the world.
Yet for many enterprises, nearshoring and reshoring remain viable options to build supply chain resilience and mitigate future supply chain shocks. Multi-national corporations are moving to mitigate their supply chain risks through these strategies, and logistics companies are busy preparing themselves for emerging opportunities in these areas.
Capacity-building for nearshoring is currently underway in the Caribbean. Jamaica has a good foundation to become a nearshoring destination. The country is strategically located within close proximity to 800 million consumers in the Americas, with multi-modal transport infrastructure, including major highways and international airports. Plans for greater air access into the hinterlands of Jamaica are also in train.
Importantly, Jamaica boasts internationally certified sea gateways that provide seamless two-way flow of cargo. Located on the Port of Kingston, Jamaica, Kingston Wharves is the multi-purpose port terminal that facilitates the movement of containerised, bulk and break bulk cargo, including motor vehicles and project cargo. KWL is the motor vehicle transhipment hub for leading autoliners and facilitates over 100,000 motor moves per annum.
Kingston Wharves operates in a Special Economic Zone, affording prospective nearshoring partners the benefit of tax and other incentives offered through the SEZ. Currently, through the SEZ, Kingston Wharves serves clients in a wide range of sectors such as, the automotive, manufacturing, wholesaling, petroleum, telecommunication, pharmaceutical and other sectors.
The port company has invested significantly in building its berthing facilities, and logistics and warehousing infrastructure, placing it ahead of the game in its preparation for nearshoring.
KWL invested over US$50 Million to construct a 160,000 sq. ft. warehouse complex, which brought its total warehouse capacity to over 350,000 sq. ft. The TLF is the focal point of the company’s logistics services offerings, which include postponement services, order fulfilment, product assembly and labelling, order picking and packing, customized freight transportation and distribution services, warehousing and returns, inventory management and short-term and long-term lease.
The construction of a 300,000 sq. ft. state-of-the-art modular warehouse for lease to joint venture partners is the next major pipeline development. Located within the Special Economic Zone (SEZ), the facility is envisaged to provide regional and global distributors seeking nearshoring options. It affords companies amenities such as energy-efficient, easy access loading bays, ambient temperature controlled distribution centres and access to secure and organised pallet racked storage.
Over the last several years, Kingston Wharves has enhanced its terminal berthing capacity, through berth-face redevelopment/Cathodic Protection installation; ongoing repairs and major reconstruction. In 2022, KWL will embark upon another major redevelopment project of its’ Berth 7.
The company has also added to its equipment stock and cargo-handling capacity by acquiring an eco-efficient mobile harbour crane at a cost of Euro 5 Million. The crane will be commissioned into service shortly, bringing to seven the number of mobile harbour cranes owned and operated by Kingston Wharves.
These developments have therefore prepared and positioned KWL to provide supply chain solutions to global manufacturers and cargo owners in the region.
KW SeaScope 