CARIBBEAN\\\


Issue 3 2014 - Freight Business Journal


35 High rates of the Caribbean


Film makers and the travel trade would have you believe that the Caribbean is a sleepy backwater. That may be true in parts, but it is also home to some very swiſt and slick shipping operations and efficient ships and planes are essential to maintaining the lifestyle of these scattered communities and their international trade. But quality doesn’t always come cheap – it can be an expensive part of the world to do business in, say shippers and forwarders.


Economic outlook: sunshine and showers


Sugar, bananas, sunshine and sand are the popular image of the Caribbean, but there is a little more to it than that. Sugar and bananas used to be two of the main staples of the islands’ economies, in so far as one could generalise about such a disparate and widely- scattered archipelago. Then, from the 1960s onwards came mass tourism, which if nothing else has vastly increased the amount of food and consumer goods shipped into the islands. But it’s not always generally


realised that Jamaica, for instance, is one of the world’s largest bauxite miners or that Trinidad is quite a large oil producer – neither of them industries that quite fit the ‘tropical paradise’ stereotype. The financial services


industry is important in one or two places, chiefly Bermuda and Barbados. There is also Cuba, in some


ways a bit of a misfit among the Caribbean nations. Its best- known exports are probably cigars and revolutionary socialism – though the latter


has been very much toned down in recent years – but it is by far the biggest of the Caribbean countries, both in terms of geography and population. Cuba is still under US


trade sanctions, but there is no barrier to trade between the island and the rest of the world and indeed Spain is a major trading partner. Cuba is also a member of the World Trade Organisation. There are though restrictions on shipping between the US and Cuba – it is only allowed under certain very specific situations. The Caribbean economies


have had a pretty torrid time of it these past five years and, indeed, the


Caribbean


Development Bank (CDB) predicted in its annual report for 2013 that they will face continued slow economic growth in the immediate future. (However, many people we spoke in the freight industry felt that business was, at least beginning to pick up again.) The CDB, which lends to 18 English-speaking Caribbean


countries including Jamaica, Trinidad and Tobago, Guyana, Barbados and Haiti, said that countries were still struggling “to find their economic footing in 2012”, with growth bumping along at around 1% a year or so, although Belize and Guyana managed around 3%, perhaps reflecting growth levels on the Central and South American mainlands of which they are geographically a part. Belize’s agriculture did well, as did Guyana’s mining sector; otherwise most of the growth areas were in areas such as tourism or the service sector. Even tourism was variable,


with increases in some islands, such as


Bahamas


and Jamaica but declines in others, for example Anguilla and Barbados. The health of the tourist industry is very dependent on the economic performance of the rest of the world and with many places such as Europe and North America still feeling the pinch economically, it could be a while before the sector comes good.


Both private and public


sector investment has been falling in the region as a whole, though, and is one the major causes of economic decline, says the bank. Local unemployment rates are around 12-20% on most islands, it adds.


Small, isolated islands


will always be at the mercy of global economic storms – not to mention natural ones - and a central policy of recent years has been the creation of a Single Market and Economy under the auspices of the Caricom trade grouping. Historically, the islands have never pulled together particularly well – although the English speaking islands were grouped into a West Indies Federation immediately after independence, the idea never really got off the ground and it’s only real manifestation today is the West Indies cricket team. However, the Caricom Single


Market envisages, much along the same lines as the European Union, free movement of goods and services,


all trade barriers, harmonised standards


for goods and


services, a common external tariff with a single


rate of


duty applied by all members for products imported from third countries and free circulation of imported goods with collection of taxes at first point of entry into the region and provision for sharing of collected customs revenue. (It must be noted that the European Union has singularly failed to achieve the latter goal even after several decades.) The CDB notes that the Single


elimination of


Market initiative has already achieved a degree of free movement of skilled workers across the region, hassle- free travel and the common external tariff on goods from third countries, but ambitious plans to produce Caribbean goods and services as one country for export are a long way from fulfilment. Customs clearance is still required for goods moving between the different Caribbean islands and, as one local forwarder put it, customs generally “are not


the easiest of people to deal with.” Local interpretations of customs rules and regulations can vary widely, making life difficult for the forwarder and importer. The Caribbean can be a bit


of a problem for the freight industry. It’s talked about as if it was a cohesive, distinct region, like Europe or North America, but in reality it’s dozens of islands, many of them quite small, spread across around 1,000 miles of ocean. Trinidad in the south-east is well over 2-3 days’ sailing from Jamaica in the north-west – to say nothing of Cuba, whose western tip is 500 miles still further west. The islands are mostly


independent nations, apart from the handful that decided not to opt for independence, and English, French, Dutch and Spanish are all spoken, along with numerous local languages and patois. Shipping lines airlines and


forwarders tend, therefore, to specialise in specific parts of the Caribbean; no one entity can really claim to cover it all.


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