VIDEO: Is Jamaica the next major international logistics hub?
When you think of Jamaica, most people have a picture of dreamy white sands and crystal clear waters on an idyllic beach. The closest thing you may associate with the Caribbean island in regards to a supply chain is care-free fisherman on rickety wooden boats, sourcing exotic fresh produce along the coastlines.
So could Jamaica really be the next major international logistics hub? The proposed transformation of Jamaica into a world class logistics centre is unquestionably the most ambitious and far-reaching project yet since the country an independent state over 50 years ago.
A Ministry of Industry, Investment and Commerce statement said the Government of Jamaica made strides towards the achievement of the growth agenda through the recent signing of a non-binding Memorandum of Understanding (MOU) to pave the way for a possible $5 billion investment earlier this evening.
The MOU, which was signed by Minister of Industry, Investment and Commerce, Anthony Hylton, Minister of Transport, Works and Housing, Omar Davies and the proposing parties, Krauck Systems and Anchor Finance Group. The negotiations came about as a result of an unsolicited Expression of Interest (EOI) to the Government.
The Expression of Interest is a comprehensive funding and development package to allow for the build out of various elements of the Global Logistics Hub Initiative (GLHI). In response to this EOI, the Government has moved to put in place an MOU to facilitate discussions and negotiations with the proposing parties.
The Industry Minister speaking in reference to the MOU stated, “It will create an environment of mutual trust and confidentiality in which both parties can share information, discuss specific projects and adopt all reasonable measures to ensure the realization of the objectives of the GLHI. It will also allow for the development of an action plan with specific timelines for the completion of the agreed projects.”
Speaking of the country’s chances of becoming a global player and an international hub, Francis Kennedy, President, Jamaica Chamber of Commerce said: “The Jamaican economy must in our view undergo the long-overdue shift from being primarily inward-looking, to an economy that is fully integrated into global value and supply chains. It is a major task but one that is within our capacity to accomplish.”
Transnational corporations and multinational businesses seeking to gain first mover advantage in the wake of the widening of the Panama Canal, are looking at Jamaica as a prime location to establish their manufacturing and distribution operations. As a result Jamaica is galvanizing itself to be ready to capitalise on the commercial opportunities arising from the Post-Panamax era of more and bigger ocean-going vessels operating in the Caribbean Basin.
In a region which has some of the highest commercial traffic in the world, a port of reference in the Caribbean makes sense, and as ambitious and unlikely as it first sounds, we really could be seeing the rise to prominence of the international logistics hub of Jamaica.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector