Remarks by Prime Minister Andrew Holness
Financial Closure and Handover of Kingston Container Terminal to Kingston Freeport Terminal Limited
July 1, 2016
- I am pleased to advise that Financial Closure was attained yesterday, June 30, 2016 with respect to the Concession Agreement between the Port Authority of Jamaica (“PAJ” or “Port Authority”) and Kingston Freeport Terminal Limited (“KFTL”). Furthermore, the upfront and other fees required under the Concession Agreement were yesterday paid over to the Port Authority, thus allowing for the transfer of the Kingston Container Terminal to the Concessionaire. Kingston Freeport Terminal Limited therefore assumed operations of the Kingston Container terminal at 12:00am today, July 1, 2016.
- Kingston Freeport Terminal Limited is a local company established by Terminal Link, one of the top 10 Global Terminal Operators with over 30 terminals under management across the world, and CMA CGM its parent company, one of the top 3 shipping lines in the world.
- The Concession is an Agreement between the Port Authority and Kingston Freeport Terminal Limited for the financing, development and expansion of the Kingston Container Terminal, Jamaica’s main transshipment port. The agreement gives KFTL a 30 year concession with the right to operate, maintain and transfer the Kingston Container Terminal at the end of the period.
- Kingston Freeport Terminal Limited has secured all the funding required for the first phase of the Capital works, which will see the dredging and deepening of the harbour, and the Concessionaire and the lenders have signed loan agreements and are working to complete all conditions precedent to disbursement.
- All 834 employees of the Kingston Container Terminal were made redundant and redundancy payments made yesterday. The Concessionaire has offered employment to all eligible KCT employees as well as to additional technical staff who were previously employed to the Shipping Association of Jamaica. Their tenure with the new organization begun this morning.
The Development in Context
- The development is timely, coming on the heels of the opening of the expanded Panama Canal. The expansion was undertaken to facilitate the transit through the Panama Canal of much larger shipping vessels, which are now being built due to evolutions in materials, hull designs and manufacturing technologies. These vessels offer much greater economies of scale than the ones that they replace and which are typical of the vessels now being processed in Jamaica.
- Five days ago I attended the opening of the expanded Panama Canal and along with leaders from 25 countries witnessed the passage of the first Panamax Vessel through the Canal. The size boggles the mind.
- With much larger vessels being ushered from the Pacific Ocean into the Caribbean Sea, transshipment terminals must be expanded and upgraded to be capable of handling these huge vessels:
- The access channel to the Kingston Harbour must be deepened to provide the greater draft required by the new vessels. This is also true of the basin of the Terminal.
- The Quay walls must be reinforced to withstand the greater forces imposed by the bigger ships.
- New larger and more efficient ship to shore cranes must be installed and more advanced container handling equipment must be provided.
- Under the Concession Agreement, the new Concessionaire, which as I mentioned is the subsidiary of a large Global Terminal Operator, will finance these works without recourse to the Government’s resources and without and Government Guarantees:
- On completion of the first phase of capital works, the capacity of the terminal will be expanded to over 3 million Twenty Foot Equivalent units (TEU’s)
- The Concession Agreement also commits the Concessionaire to a second phase of expansion to further expand capacity and further deepen the access channel and basin.
- Expanded capacity of our transshipment terminals will lead to expanded employment, even with improved efficiencies of the equipment and improved productivity.
- Employment creation is not restricted to the jobs on the terminal however. Today, manufacturing and trading firms operate increasingly in a ‘just-in-time mode’ and want to have inventories of goods, finished or partially finished, awaiting final customization and assembly, stored closer to the end users. These activities of repacking goods in the mix and volumes required in the final markets and customizing the products to match emerging demand are best accomplished in facilities in close proximity to the ports. This is what is referred to as Near Port Logistics. Many more jobs are to be created if we are able to attract the manufacturing and trading firms to establish their logistics operations in Jamaica, taking advantage of our ideal location at the center of a hemisphere of over 800 million people, and a work force that is capable of meeting and exceeding international productivity standards.
- We must move quickly however. The world around us is changing rapidly. Although we know that Jamaica is, for a number of reasons, the best suited and the most naturally endowed, other countries have similar ideas and we live in a competitive world.
- This model of developing our critical facilitating infrastructure will not be restricted to our sea Ports. The Norman Manley International Airport will play an integral role in the strategy of boosting our competitiveness in this strategically important opportunity. However, similar to the Kingston Container Terminal capital is required for the upgrade and expansion. As such, the GOJ will reconstitute an Enterprise Team for the divestment of the Norman Manley International Airport. The GOJ is committed to a successful divestment and we have already commenced talks with our advisors to ensure a vibrant, competitive process and a successful outcome.
Welcoming the New Company
- I wish to welcome Kingston Freeport Terminal Limited and its parent institutions, including CMA CGM, to Jamaica. We expect that the Concessionaire will bring best in class technologies and know how to bear on the re-development of the Kingston Container Terminal. We expect that they will harness the competencies and talents of a very good workforce to make it even better through training and exposure to allow them to compete at the highest global standards. We are confident that they can rise to that challenge.
- We look forward to welcoming your sister subsidiary, CMA CGM Logistics, and its global base of customers to establish operations in Jamaica. I understand that an interest has already been established and that serious analysis is underway.
Saluting the Employees of theKCT/KFTL
- I salute the former employees of the Kingston Container Terminal for their contributions to the development of the terminal. I encourage them to take advantage of the new opportunities to become world leaders and in the process creating new prosperity for themselves, their families and for our country.