Issue 8 2019 - FBJNA Port of Haina. (Port photo)


Dominican Republic Offers Nearshore, Logistics Advantages

By Karen E. Thuermer

For every loser there is someone who gains. And with President Trump’s policies to divert trade away from China to the United States, some of that activity now is going to the Dominican Republic – a major island nation in the Caribbean. Trump’s recent “order” to Us companies to seek alternatives to doing business in China must have been manna to their ears. While the Dominica Republic

may be best known for its world class resorts and white sandy beaches, less than 10% of its GDP is derived from tourism. The rest comes from manufacturing and trade given that the DR is a regional business hub and regarded today as the most important


hub in the Latin American/ Caribbean region (LAC). “This is mostly because of its

free zone sector,” reports Jose Manuel Torres, Executive Vice President of the Dominican Free Zones Association, Inc. or ADOZONA. “The Dominican Republic receives 63% of all investment in the Caribbean.” For the past 31 years,

ADOZONA has been working in

coordination with the

Government, identifying and promoting initiatives in support of the development of the free

zones. Not only is the DR at the

epicenter of world shipping routings, today 705 companies from around the world operate in its 74 free zone parks. Among those companies are big-name manufacturers Cardinal Health, GE, Honeywell, NAPCO, Vishay, Baxter, Tiffany, Under Armor, Hanes, Ralph Lauren, Nautica, Tommy Hilfiger, Swedish Match, Edwards LifeSciences, London Fog, IZOD, JC Penny, Anne Klein, Hush Puppies, Kenneth Cole, MW Sportswear, IKEA, Gildan, EcoLab, Wacoal, Rockwell Automation,


Westrock, a Carillo, Manojos Tobacco Process, Arturo Fuente, Cigar Rings, and UTP (United Tobacco Processing). “Sixty percent of the

manufacturers are American,” says Mr. Torres.

High Growth

One of its biggest advantages is Its geographic position, which gives companies access to 900 million consumers in the US and LAC. According to Mr. Torres, companies operating in the DR today export to 132 countries and in 2018, exported 1,849 different products. In addition, the DR has trade agreements

with 48 countries, including

CAFTA-DR. It doesn’t hurt that the DR

itself is home to nearly 12 million consumers. The International Monetary

Fund (IMF) reports that last year the DR’s GDP grew nearly 7%, the highest growth in the entire continent. Its GDP has increased 102% in the past 10 years. Today over 90% of its GDP comes from manufacturing thanks to the government mandate to establish the DR with the region’s most efficient logistics platform. On August 12, this year,

DR President Danilo Medina honored the free zones leading companies, operators of industrial parks, and drivers of the sector at a gala celebration held at the Salon las Cariátides of the National Palace in the DR’s capital city of Santo Domingo. “I witnessed an event that

has never taken place before,” exclaimed Jose T. Contrearas, executive

vice president of

Itabo Industrial Park (PIISA), an industrial park and free zone that has been in operation nearly 35 years near Santo Domingo only 5 miles from Rio Haina Port.

Zone Network The zones offer a wide range

of world-class services and offer 3PLs on site. One is Las Americas Free Trade Zone, a purpose-built industrial park with 29 companies and 15,000 employees close to the Port of Caucedo. Today that zone is 70% developed with room to grow to 1 million square feet. Value-added logistics service functions like consolidation,

days from China. “With logistics being 30% of a

product’s cost, companies can reduce their costs significantly and be more competitive,” explains Carlos Flaquer, manager, DP World’s Caucedo Logistics Center (CLC), a massive industrial park and free zone being developed with nearly 3.25 million square feet adjacent to the Port of Caucedo One example


Swiffer products made by P&G. The US-China trade war, and Trump’s canceling of the Trans- Pacific Partnership (TPP), is

advantages of a more level playing field,” says Mr. Flaquer. “Now with increased tariffs on many products produced in China, companies are being forced to move some production lines to the Dominican Republic, a move that is only reinforcing the decision some years ago to move some here.” China still has advantages

given its dense clusters of suppliers. It’s a segment much needed to support manufacturing. But those are now also coming to the DR. California-based Edwards

Lifesciences is one example. The company, which produces products specific for cardiovascular needs, recently moved several units from Japan to CLC for free zone and logistics advantages. The reason: the DR is home to a growing number of medical device suppliers that not only manufacture devices but supply raw materials. “Having raw materials here

DP World Caucedo Administrative building, Port of Caucedo, DR. (Photo by Karen E. Thuermer)

deconsolidation, storage,

packing, repackaging, labeling, relabeling, and distribution are incentivized. Nearly all companies enjoy

tax and nearshore benefits since products made in the DR can be shipped by sea to the US within three to five days versus 25+

driving Swiffer -- and companies like it -- to the nearshore concept. “The cancellation of the TPP

could have given manufacturers an advantage in China, but companies are finding cost and lead time advantages by being here,” says Luis Pellerano Soto, commercial director at Las Americas Free Trade Zones, a well-established park located close to the Port of Caucedo. But when Trump canceled the TPP, he gave the DR “the

frees up warehousing space by 20-30%,” Mr. Fraquer says. “Bundling raw materials also makes it possible for companies to source product here.” Specialized services are also

moving to the island-nation. Case in point: Baxter, which makes intravenous products (IVs) in the DR, now benefits from companies like EcoLab that perform sterilization functions. This means that Baxter no longer must ship products to Florida, then Pennsylvania for s terilization, b e f o r e

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