Kingston:

By Mike Jarrett

2006, June 26: When WITASS announced in May its decision to slap a congestion surcharge on Kingston, it merely confirmed the talk that had been circulating in shipping circles and in the CSA’s Group C, for several weeks. Indeed, it had become common knowledge even among local folk. Fishermen from Yallahs in St. Thomas and residents of Bull Bay and Wickie Wackie in St. Andrew, areas to the East of Kingston, had noticed and were talking about an unusual “back up” of containerships waiting to go into Kingston Harbour.

In local shipping circles, the unofficial explanation was that the Port Authority of Jamaica had signed a deal with Maersk before the port was physically ready to receive the high volume of containers from what is regarded as the world’s largest container shipping line.

In fact, as the Air Jamaica aircraft bringing participants back from the CSA annual Caribbean Shipping Executives Conference on May 25, 2006 flew into the Norman Manley International Airport, there were six or seven ships in the harbour and others outside waiting for a berth at the container terminal.

WITASS CLEARLY HAD A PROBLEM

Whether these observations and explanations are accurate or false is not the point, really. The fact is that WITASS clearly had a problem with Kingston and, on May 11, announced through its website “…as a result of increasing delays and disruption to (Member Lines’) schedules resulting in extra costs to them, they have decided to reintroduce the Congestion Surcharge in Jamaica with effect from 15th June 2006 …”

It is a fact that Maersk made Kingston its regional centre in November 2005. This decision involved Maersk drastically reducing the scale of their operations in Panama and shifting their transshipment business to Kingston.

The result was that, in a matter of months, Kingston was suddenly called upon to handle a high increase of container boxes even before it had finished constructing storage space to handle the additional 600,000 TEU Maersk was expected to bring in 2006 under the new arrangement. When this construction is fully completed, Kingston is expected to easily handle the one million TEU the line is expected to bring in annually over the next five years. However, in the first three months of 2006, traffic from lines using the Kingston Container Terminal had grown by a whopping 36 per cent. And it showed.

MOVED QUICKLY

The Jamaican port authority had moved rather quickly to get Maersk's business after the Danish carrier had acquired one of its larger competitors - P&O. P&O had been doing business in Jamaica for some time but Maersk did not then have regular service into Kingston. The PAJ obviously thought that the sensible thing to do was to go after Maersk and, if successful, increase the business going through Kingston rather than simply sit around waiting to lose P&O. In fact there was every probability that Kingston would lose P&O's business.

So PAJ approached Maersk, citing Kingston’s record of stability, high productivity and competitive rates. The PAJ also knew that the fact that the Danish-led firm APM Terminals (Jamaica) Limited, which managed and operated the Kingston Container Terminal would not be lost on Maersk. Indeed, APM Terminals (Jamaica) Limited as a subsidiary of A.P. Møller - Mærsk, is actually a “child relative” of Maersk.

The Jamaicans led a successful selling initiative. The first Maersk vessel to make a call to Kingston under the new five-year hub agreement, the MV Olivia Maersk docked at the Kingston Container Terminal on March 17, 2006. Kingston was by then also handling container business for major carriers including Zim, CMA-CGM and China Shipping.

"Maersk is expected to provide additional business involving some 600,000 TEUs of throughput at the terminal in 2006, which will result in an additional 40 ship calls per month, thereby increasing our annual ship calls to approximately 2,100," Port Authority President Noel Hylton said when he addressed Rotarians in Kingston on June 6, 2006.

Indeed, the end of 2006, after just nine months of operations, Maersk was expected to account for nearly 30 per cent of the two million containers the APM Terminals Jamaica is expected to handle this year.

MAJOR PLAYER

Maersk is therefore expected to be a major player in helping to maintain Kingston’s status as the largest single transshipment port facility on this side of the Earth.

Presently, the Port Authority of Jamaica is spending some USD250 million to allow Kingston to handle over 3.2 million TEU of trans-shipment containers. This will effectively double the rated capacity of the port (currently 1.5 million TEU). This fifth phase of the on-going expansion project, which began a few years ago, is expected to be completed by December 2007. It involves the construction of 475 metres of berth at the West Terminal; paving of 66 hectares (161 acres) of yard space at the West Terminal, and acquisition of all the state-of-the-art equipment needed to run a modern, efficient, transshipment container terminal.

Projected volume for 2006/2007 is 2,345,408 TEUs but is anticipated that the 3.2 million TEU capacity being established under the current expansion project, will be fully utilized in about four years.

LONGER TERM PLANS

Longer-term plans are for the construction of another terminal, using lands at Fort Augusta, one of the old triangle of forts which guarded the harbour in the 17th, 18th and 19th Centuries. It is now used as a prison for women. This expansion will increase the then rated transshipment handling capacity of Kingston from 3.2 million TEU to 5.2 million.

All indications are that the business will be there and Kingston intends to go after it.

At the start of 2006, there were reportedly firm orders for 1,065 containerships with total new capacity of 3.98 million TEU's. This is almost 50% of existing capacity.

In order to guarantee itself a significant portion of this business however, the port must maintain its international reputation for stable, dependable, efficient operations of the highest international standards; with throughput and management that will prevent any recurrence of the recent action taken by WITASS. It has the history and experience so to do.

* Mike Jarrett is Director of Information and Public Relations of the Caribbean Shipping Association"