Ti’s CEO speaks at UN conference on maritime logistics

John Manners-Bell is moderating and speaking at a United Nations conference entitled ‘Global Supply Chain Forum Transport, logistics, and trade facilitation for sustainable development’ taking place in Barbados, May 21-24th 2024.

Whilst political, technological, environmental and economic trends are having a transformative effect on supply chains on a global basis, their impact is being felt most acutely at a local level, not least in Small Island Developing States in the Caribbean.

Although the world’s economy has been fragmenting for the past decade, the risks involved in supply chains became most apparent during the Covid crisis. Governments across the region experienced difficulties in procuring a whole range of goods supplied from abroad including personal protective equipment (PPE) and medicines. However, in addition to this, tourism and agricultural supply chains were hit hard as a result of border closures and airline and cruise line cancellations. At a basic level it proved impossible for exporters in the region to procure packaging such as cans, bottles and plastic containers, affecting small and medium-sized businesses in particular, the bedrock of the Caribbean economy.

Since then, the region has also felt the impact of disruptions to the shipping industry, most recently the drought which reduced the transits of the Panama Canal, delaying shipments from China and increasing shipping costs, and even the diversion around the Suez Canal which has pushed up global shipping rates.

Whilst disastrous in the short term, many governments believe that the Covid pandemic could be a watershed moment for the region. It has focused minds on making supply chains more resilient through a wide range of policy initiatives. These include far more localization and regionalization of supply, making islands less dependent on the USA, Europe or China. This would ideally involve more on-shoring of manufacturing presently undertaken elsewhere. In order to facilitate the movement of goods on an intra-regional basis, some believe that there needs to be investment in faster and more frequent ferry services linking the islands more effectively. Also supply chains need to be more circular, enabling products to be reused and recycled, reducing the need for so many imports.

Some politicians also believe that there could be benefits from the present trend of near-shoring, already a major force for economic growth in Mexico. For example, Roberto Alvarez, Minister of Foreign Affairs of the Dominican Republic, believes that some supply chains could be restructured to include the Caribbean region, helping manufacturers avoid the tariffs which have been imposed by successive US administrations on Chinese imports. He has gone on record as saying, “In the case of the world’s largest market, the United States, nearshoring represents a big opportunity for countries in the Caribbean and Central American regions”.

However, for these opportunities to become reality, much work needs to be done in terms of logistics infrastructure and services. Reports have highlighted that many ports lack equipment and that which exists is often in a poor state of repair; accessibility of ports is often difficult; ports often lack autonomy and investment (private and public); IT systems are weak and labour needs restructuring at key ports.

The region is also being disadvantaged by the longstanding shipping industry trend towards more efficient but ever larger vessels. According to the Caribbean Development Bank, new generations of ships can only call at a small number of large hub ports and this will mean an increasing level of transhipment to vessels small enough to call at many of the islands. In turn this will add cost and time to deliveries.

In summary, high costs, inefficient logistics operations, limited investment and constrained competition mean that it is challenging for Caribbean exporters to compete on a global scale.

However, there are government initiatives which could reduce trade friction. The new Maritime single window CARICOM IMPACS, developed in collaboration with national border control agencies, will facilitate the movement of low risk shipments across the region whilst identifying those which present a security risk. Governments must also invest in logistics, financial and ICT infrastructure as well as providing a secure, stable and business friendly environment for foreign investors. Manufacturers and logistics companies can also play a role by undertaking risk assessments and crisis training to ensure the resilience of their supply chains.

There is no doubt that Small Island Developing States face many challenges from the global forces which are presently transforming supply chains and the logistics and shipping industry. However, the right policy decisions can ensure that the region’s economy can become more robust and better able to cope better with high levels of volatility, complexity and uncertainty which are likely to characterize markets for many years to come.

Author: John Manners-Bell

Source: Ti Insight

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