PAGE 76 - TRANSFORMING THE CARIBBEAN PORT SERVICES INDUSTRY: TOWARDS THE EFFICIENCY FRONTIER
4. Traditional labour conditions and strong unions increase costs of operations The traditional labour conditions and strong unions have a direct effect on the cost efficiency of the cargo handling in the ports. Unfortunately, policy makers often view port organizations as places for providing employment, even when additional labour may not be required. This hampers not only immediate cost efficiency but also long-term development. The port of Nassau is an example of a port in which the labour unions have limited power and hence labour costs are low and productivity levels high.
5. Not all ports make optimal use of IT, resulting in increased administrative costs and time The implementation of IT not only limits administrative costs, but it also enables port organizations to detect the major inefficiencies in the port operations. In some OECS ports, there is no IT system. Other OECS ports have successfully implemented IT systems and benefited therefrom. The removal or reduction in these bottlenecks should be central in the formulation of the lending options by the Caribbean Development Bank.
The maritime connectivity of the ports is limited to the main transhipment hubs The Caribbean basin hosts some of the largest transhipment ports in the world. Transhipment is an important dimension of the container transport industry in the Caribbean. Shipping lines use the hub-andspoke system in order to optimize supply chain cost and network coverage. The ports in the sample are therefore mostly connected to the global markets through the transhipment hubs. Miami, the Everglades and Kingston are
frequently used hub ports by the shipping lines that call upon the ports. In the twelve port sample, Trinidad & Tobago is best connected with 24 services followed by Barbados with 13. The worst connected ports are St. Kitts, Grenada and Saint Vincent. Generally, low connectivity increases the costs of maritime trade, as competition among shipping lines is limited, and more transhipment moves are required for the containers to arrive at their destination.
The trends of transhipment and increasing vessel sizes will continue The main trends in the Caribbean maritime sector are the increasing vessel sizes and consolidation among shipping lines. These trends are expected to continue. In fact, double transhipment moves inside the Caribbean basin (which occur already) are likely to become more prevalent as shipping lines aim to optimize the utilisation of the larger vessels. In order to do so, shipping lines will call at only
several large and conveniently situated ports with the largest vessels. Subsequently, medium-sized vessels will serve several regional hubs, and small vessels will be employed to serve small regional ports. As such, it is reasonable to expect that in the future, one or two regional transhipment hubs will become the main suppliers for the OECS ports.