President & CEO (Port Authority of Jamaica)

Jamaica, as well as other countries in the Caribbean, is working to promote and attract foreign investment.What would you say is Jamaica’s competitive advantage compared to other countries in the region such as Trinidad or Bahamas?

I think Jamaica’s competitive advantage relative to our regional neighbors is embodied in a couple of things. Firstly, we are the largest English-speaking island in the Caribbean Sea. Secondly, we are located in the northwest of the English-speaking Caribbean. We are centrally located relative to our main trading partners: North America and Canada as well as Central America, Latin America and South America.  So size would be one and our location would be another. Historically we have focused on the extractive industries including bauxite alumina as well as service industries, hospitality, tourism and business processing outsourcing. Within that space, aside from the existence of our natural resources, I think the capacity of our people has been an important asset. The energy and drive of the Jamaican people and the resilience to deal with the consequences of the various natural and other disasters that we have faced would be another source of advantage. So I’d say three competitive advantages: location, the size relative to our Caribbean partners and the quality of our human resources.

Vision 2030 strives to position Jamaica as a global logistics hub and promote private investment in the logistics sector. How are the government’s measures helping the logistics sector and what does the sector offer private investors?

There are two issues. To put the logistics hub into perspective, Jamaica by virtue of its location has emerged as one of the important transshipment locations in the Caribbean. Today most goods are manufactured in Asia but are consumed in the western hemisphere, and there are two major ways to get goods to those consumers: one is through the Suez Canal where large ships take their goods up to northern Europe. They are then trans-shipped from the major ports throughout Europe. For the goods that come to the Americas typically they come across the Pacific and go up to the north coast of the United States of America (USA) either to San Francisco or Los Angeles and then across by train to the more populous cities on east coast. Alternatively they come through the Panama Canal and they are left somewhere in the Caribbean, then taken by ship up to North America or down to South America and Central America. Jamaica is ideally located for the second branch. We are directly on the route if you come through the Panama Canal and we are of a size that we have the services of the feeder vessels and the smaller vessels. The big vessels bring large volumes of cargo and leave it here. Smaller vessels take it to the various other locations. That’s the basis for our development as an important transshipment hub.

It’s a very dynamic industry and a number of things have been happening. One is that the technologies have been changing so ships are getting much larger. A few years ago ships carried 5,000 containers; today they are producing ships capable of carrying up to four times as many containers. The Panama Canal currently will only allow currently ships up to 5,000 TEUs (twenty-foot-equivalent units) to transit but the expansion of the Canal is to more than double the size of the ships that can pass so they will now allow ships up to 13,000 TEUs to pass through the Canal. That is one important issue. Besides the size of the vessel, the widening of the Panama Canal means that there’s the expectation that more goods being transported to the west will go through the Panama Canal rather than going up to San Francisco and Los Angeles. That gives a sense of optimism for the expanded role of Caribbean ports in the trade for the western hemisphere. The Harvard Business Review article readers would know the world is a dynamic place so the ports in North America and rail lines are going to compete to make sure they are not cut out of the market but the economists of transportation, which favor an all water route, will give some realism to the expectation that we could see expanded volumes here. That speaks about what will happen in trans-shipment. Trans-shipment is different from logistics as the ship comes with containers and offloads them to the port until another ship comes to pick them up.

The way it works today is that many firms want to operate in a “just-in-time” environment. Walmart, for example, no longer wants to get a container load of shoes and a container load of pants. Instead they would like to have the goods, going directly into their stores on a “just-in-time” (shelf-ready) basis. So they want to receive a container, which has all the goods that are going to be used by the particular store, rather than having a large warehouse in the back that has lots of goods that will be stocked under the shelf. They want them to come just as they are going to be consumed so it creates an opportunity for locations where these boxes are offloaded to then unpack them and repack them with the exact mix of goods that will be delivered to the distribution outlet. That’s a simple way to look at the logistics that we do. So instead of just being a trans-shipment port, you can now become a port where some of this repacking can be done. Another example of the logistics is that there will be goods that will be used throughout the southern hemisphere (South America and the Caribbean). It may be convenient to have a location such as Jamaica that is well served by feeder vessels going in to those countries. Rather than having a warehouse in all of those, you would have a central warehouse here and feeder vessels to take those goods on a “just-in-time” basis to the various islands that are being served.

The locational advantage of Jamaica is what gives rise to the opportunities for the logistic opportunities that I’ve just spoken about. We are not the only one capable of doing that. Panama has emerged as a major location because the ships have to go through Panama via the Canal so the ports that are on the Pacific and Caribbean seaside of the Canal have benefitted from an expansion in their logistics activities. We think we can compete with them because of a couple of factors. Firstly we think that our our labor costs and environmental costs will be lower than theirs. Secondly if we look at the distance to the destination, Jamaica is even more centrally located for that purpose than the Panama Canal. We have other competitors, for example, Dominican Republic, Colombia, Bahamas and Cuba is emerging so we have to understand that if we are to be successful in this global context, we have to be very efficient and effective at what we do. So the role of the Port Authority of Jamaica is to create the right environment that will see us becoming a very effective and efficient player. This means that we also have to create the right environment to attract investors. The reality is that the kind of investors that are required here are firms that are themselves involved in logistics operations across the globe and therefore need to have the right investment climate for them to want to establish their operations here as against one of the regional competitors. So we work closely with the Ministry of Transport, Works and Housing and the Ministry of Finance in trying to create that enabling environment to try to attract the investors.

Last year the port suffered a reduction in the volume of twenty-foot-equivalent units (TEUs) per annum. Despite this decrease, Jamaica presents a convenient trans-shipment point. What services does the port offer that makes it the best option in the region?

The volumes declined in 2014 but the volumes are expected to be much better this year. All of the indications from the past six months would indicate that we are improving. I think the efficiency of the operations is an important part of what makes our port an attractive transshipment location. An important feature is having adequate equipment to move the containers quickly and efficiently from their ships, storing them and returning those that are to go on the ship.

Having the flexibility to accommodate large shipping lines. Often these lines will come outside of the window they have booked but they expect that you will have the capacity to respond to that. It’s like an airline coming late to Chicago or New York, but they hope that the air control system will be able to get them a spot so they can land quickly and refuel and back out in record time. As a terminal we have to be able to accommodate things like that which means you have to have excess capacity to be responsive.

Responsiveness is another issue that we have to have. I think that when they come into a port like ours they will expect that there will be a set of other services. They would like to be able to refuel (“bunkered”), repair their ships and any electrical or mechanical problems. They like to know that you have both the equipment and spare parts to provide repair services. Their crew needs to be supplied with food etc so the set of ancillary services also makes a port an attractive location. We seem to be one of the ports that would be able to provide a wide range of services for the lines that use our facilities.

In order to maintain its competitive advantage, the Port Authority of Jamaica has to innovate. How is the Port Authority of Jamaica incorporating innovation into its work?

The port has to constantly reinvent itself. It has to be able to introduce the latest equipment. As the ships get bigger the access channels for the ships into the harbor have to be constantly deepened and widened and that requires a lot of resources. One of the things that Jamaica is doing at the moment is exercising a high level of fiscal control, which means not borrowing as much as we used to and being much more careful with the extent to which the government provides guarantees to statutory entities like ourselves. We have decided in this instance to provide the operating rights for the Kingston Container Terminal to a global terminal operator. We currently operate the port but have invited tenders from global terminal operators to assume the responsibility for the terminal and in that process they will also be investing in the deepening of the channel, the reinforcement of the terminal and the introduction of new equipment that will improve the efficiency and excellency. So we have to create the right environment to have the best players operating here. We are close to finalizing an arrangement with one of the largest terminal operators in the globe. They would add to the innovation we would have had ourselves but are also able to provide the financing to have this done in a timely manner without the government increasing their debt burden in the process. It’s a prime example of the government working with the investor community in a public private project that will make us even more globally competitive.

We are the one of the larger cruise destinations. We have four ports on the north coast of the island, including Ocho Rios. It is the oldest port and has a very appealing location because we have a plethora of attractions there. We have the world famous Dunn’s River Falls, Dolphin Cove, where you can swim with the dolphins, and zip lines so the tourists can get off the ship and walk to these attractions. Port Falmouth is our newest port. It has a historic tone because it was one of the locations where a lot of the sugar trade with North America took place, slaves were coming there and sugar would be exported to the USA and then re-exported to Europe so it was a dynamic little town. Many buildings are historical sites and have been restored and we have built a very modern port alongside Falmouth with many of the attractions. We hope that young people might also find that quite interesting as an adventure location. We also have excellent shopping facilities there. We also have a port in Montego Bay, which is the center of our tourism. It’s an older port but it has been modernized as well. So we have three very exciting ports and what makes them valuable is their location. Given our distance from Miami, Fort Lauderdale and Houston, which are the locations where the largest number of cruise tours get on to these ships, these ships make a 5-day or 7-day loop and they stop at various countries. Jamaica is the ideal position to be on those 5 or 7-day loops and so our location again serves as a source of competitive advantage. If you are too far from the routes or alternatively too close to one of the main islands where they stop, you are not as attractive as a location. So Jamaica has a locational advantage as well as excellent human resources and extensive experience with foreigners and in tourism and hospitality, which make us as an attractive destination.

Apart from the Kingston Container Terminal, is the Port Authority promoting investor interest in any other way?

In all of our ports we are working with both local and international investors as well as the cruise lines themselves to facilitate investments in each of those ports. We need to create an environment that makes it attractive for investors in the cruise business to make those investments and get a return that would be internationally competitive. An important function of the Port Authority is to facilitate the creation of the environment that makes it attractive for investors to be here. We also are positioning ourselves as a logistics hub and attracting firms that would be being engaged in logistics activities and I’ll describe the kind of things they would be doing. The Port Authority’s responsibility is to develop facilities that are close to all of our ports in order to facilitate economic development. Historically we’ve done this in the past by having lots of warehouses close by the ports. Many of those today have been converted into business process outsourcing centers/call centers as many firms are finding it increasingly attractive to outsource even some of their more knowledge-based activities, conveyancing, legal systems, some of their IT repair and IT development. We are in that business and we are the largest player on the island in that business and we are constantly seeking to expand our operations there. Again our intention is to attract the very best players to the country. Our location is also important because we are close to the USA. Even though calls can be made from the Philippines and other locations, many of the firms that outsource would like to have their call centers geographically close to them so they can visit them on a regular basis and participate in the training that occurs. This again makes Jamaica a very attractive location. We are served by the airlines systems with all of the east coast so if you are in New York you could be in one of our call centers in Montego Bay or in Kingston even more quickly sometimes than you could be in Fort Lauderdale or Miami because there are direct flights and immigration and transportation are easy. The fact that we also have a large labor force that is cost effective, quite well trained and more importantly is trainable and adaptable.  So the requirements of the outsourcing firms make us an important location and the Port Authority seeks to create again the environment to attract more investment in that business. So I’ve told you about the cruise, trans-shipment, logistics and BPO, so the last one is maritime services. For the cargo operations, there are huge ships and you need to have tugs, pilot boats, dredges, buoy tenders and lots of other pieces of ancillary marine equipment. We offer these, and will be expanding, in those services. Again these are globally competitive industries so there are firms located in Panama and Costa Rica but we think we can compete very effectively on a regional basis in the provision of these services.

The USA is Jamaica’s top export destination. Just how important is the trade between Jamaica and the USA for the future development of Jamaica?

I think it’s very important for many of the products we produce. The USA and Canada have historically been our main trading partners because that’s where a lot of our bauxite and alumina went. A lot of our agricultural exports, which were viewed as non-traditional crops, went to Canada and the USA. We are a large service provider of hospitality and tourism products and the majority of our customers come from North America. When there is 4-6 ft of snow in Boston we offer a warm location. The point is that many of the goods and services we trade are out of North America but I also want to underline that for our transshipment business, South America is also very important. The trade of a lot of the goods that are left here for trans-shipment will go to places such as Venezuela and the countries around the northern coast of South America are all serviced from here. You spoke earlier about the volumes being lower last year, a lot of that can actually be traced to the fallout in demand for so many products out of Venezuela. So the Port Authority must monitor which markets are being serviced and what is happening there and we have to try to create additional markets to replace those that might be at a low for a period of time.

Hon. Dr. Omar Davies Minister of Transport, Works and Housing, said that your appointment as CEO expected to create the assurance of strong leadership and strategic direction. In your opinion, why did the Government appoint you as CEO?

We were fortunate to have a strong leader for the Port Authority for the past 40 years, Hon. Noel Hylton, and it’s always very challenging to replace someone who was very successful and at the top of their game for a long period of time. I think the Minister wanted to ensure the continuity but at the same time, given the industry is changing, technology is playing a much larger role and understanding the grasp of the global trends is important, I could only guess that given the diversity of my background he felt that I would be able to provide the leadership that is necessary in this transformative period. I think too working with the international community because whereas in the past we have sought to do a lot ourselves, being able to develop relationships with the global terminal operators and cruise lines, attracting new logistics operators and building even stronger bridges with the BPO. My mandate is to move even more aggressively than we have done in the past.

Prior to being CEO of the Port Authority you were Principal and Pro Vice Chancellor of the University of the West Indies. How has that experience prepared you for your role as CEO?

I think it may be useful to look at my entire background but that one in particular. I think the issue is that I was responsible for Jamaica’s leading tertiary institution and I have gained from that a very good grasp of the capabilities of our human resources particularly our tertiary trained students. I understand both their capabilities and the demands that exist for the job market. Part of my responsibility here is to leverage the opportunities presented by the maritime sector to create many more job opportunities, not just some of the traditional employment opportunities but also knowledge-based ones that would absorb tertiary students. So that's an important objective in coming here and that role would have served me well in both understanding the supply and demand requirements for that human resource capacity.

Prior to that I was also the ambassador to the USA and in thinking about the relationships that I spoke about with large firms and understanding geopolitics, I think that would have served me well. I have an engineering background and so before that I headed the power utility here so I do have a private sector background with the capacity to understand the needs both of the public and private sectors. I am also the Chairman of one of the largest Jamaican companies that is successfully competing in a global market place, so again it's a combination of aspects of my background that I think may have influenced the Minister and the Government to think that I might be the person to head this organization for a period of time when we have to be responsive to the dynamic and global environment in which we compete.

What are your expectations of the Port Authority over the next 2-5 years?

The expectation is that we would see the transshipment volumes grow substantially particularly with the introduction of a new global terminal operator working alongside ourselves. The expectation is that we will see new ports also being developed probably with private sector investments so we see the Port of Kingston not just being Kingston Container Terminal but potentially several terminals and the expectation is that we would see at least one addition to the existing ports that are here. Another expectation is that we would see the emergence of a set of dynamic logistic centers forming that hub. I think the expectation would be that we see the maritime services that I spoke of support the ships that come here. I think the expectation would be that we see an expansion in the number of cruise passenger arrivals and the number of cruise ships coming to the island. Another expectation would be that we see substantial growth in the BPO sector. I think that the Port Authority has always played a pivotal role in creating growth and employment in important areas particularly those that are linked to the maritime sector and the expectation would be that we do this in a dynamic way in the next five years.

The readers of Harvard Business Review include some of the world’s most important leaders. What message do you have for them?

I’m hoping that the materials that you will develop will portray Jamaica as a very resilient country. I use the word resilient because being located where we are, we have to faced many challenges. We have frequent natural hazards, natural events, hurricanes and earthquakes, and have rebounded from each of those and each time become a bit more resilient. Also, given our reliance on external resources including oil, we are vulnerable to major shifts in the global economy and we have responded again to those. In doing so we have found ourselves in the past with a very high debt level. But we are now committed to a much more rigorous set of fiscal measures to ensure the economy is on the right footing and we are now also committed to creating the right environment to attract investors in the key sectors of the economy and certainly the ones that I’m responsible for: transshipment, logistics, cruise shipping, BPO, maritime industry, maritime services business etc. We want to convince them that we are not just open to business but are eager to be the kind of partners that will create the environment in which they can create a globally competitive advantage through their investments.