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DOMINICAN REPUBLIC\\\ >> 10


finally being shipped to


end customers. “Now the Pennsylvania leg can be eliminated, thereby saving time and money,” says Omar A.


Jiménez manager, Guzmán, at the plant Edwards


Lifesciences plant at Itabo Industrial Park. Meanwhile, Baxter is also


moving some product lines from Singapore to the DR. “It’s facility here is becoming a supplier of all products they have,” adds Mr. Soto. “It’s a backup strategy in


case something happens


elsewhere.” Of note, whereas most


companies operating in the DR used to perform basic manufacturing, today many have graduated to higher end processes. “Tiffany operates its only


manufacturing facilities outside the United States here,” says Mr. Torres. Fernando Garcia, who is


operations director at the Santiago Free Zone Corporation, (CZFS by its Spanish acronym), adds that Timberland, which merged with VF Corp., came to the DR 40 years ago and and was the first tenant at CZFS, uses robotics for processes in manufacturing high-end boots. “Today higher-end stitching on footwear is being done in the DR; lower-end stitching is being done in Vietnam.” Most of the raw materials for footwear, such as insoles,


Port of Caucedo handles around 1.3 million TEUs annually. (Photo by Karen E. Thuermer


its footwear from the DR,” Mrs. Cochon says. The textiles and apparel


sectors remain the main employer in the DR with 50,000 direct jobs. While those jobs used to be basic cutting and sewing, they have now diversified to vertical operations such as design, manufacturing components, and raw materials. Those raw materials


are


exported to countries like Haiti, the Honduras, and Nicaragua. Hanes has been in the DR


for 45 years and is expanding. It has 11 plants in free zones throughout the nation, including the one operated and managed by CZFS. Founded in 1974, CZFS is the


first successful model of public/ private management in the DR. Today it has over 21.5 million square feet of space and is the largest free zone in the DR. In 2012, it had 753,500 square feet. Located in Santiago, the DR’s second largest city, CZFS is home to 81 companies in 200 buildings and over 20,000 employees. Today the largest growing


segments in the DR is electrical products, components and auto parts.


China also factors in as


companies there invest in US brands. “Last year we received a lot of investment from China


and expanding zones for value added logistics purposes. The Port of Caucedo, which has been owned and operated by DP World since 2003, is the DR’s crown jewel for international trade. Last year the port handled around 1.3 TEUS, which port officials expect to be matched in 2019. Currently, 14% of container moves come from DR free trade zones; 50% transshipment. “The port represents a 100%


private investment, which is different from others in the region,” reports Mr. Flaquer. “The port was built from the ground up and was designed for new international trade needs.” The of Caucedo has played ever-increasing role


an


the Americas.” Mr. Flaquer also points out


that increased manufacturing in the DR helps fill containers that would otherwise be shipped back empty. “Empties are a major reason it is so costly to ship into the Caribbean,” he says. “By filling the containers, shippers can negotiate lower freight rates.” To increase throughput and


for


Port of Caucedo is undergoing a US$200 million extension upgrade. (Photo by Karen E. Thuermer)


are domestically sourced. Shoe boxes, however, still are imported from China. “The DR exports some 12 to


15 million shoes per year,” says Silvia Cochon of the National Free Zone Council, or CNZFE. While not many footwear/


leather goods manufacturers operate in the DR, those that are there are huge. “Red Wing, for example, exports 83% of


with more coming primarily in textiles, medical devices, and tobacco,” states Garcia. “The United States is viewing


such triangulation closely particularly since so many Chinese manufacturers moved to Vietnam for the same reason,” says Tulio E. Marti, managing partner with DR-based Group Arbor Consultants.


Seaports and zones


The island’s two major seaports, Rio Haina Port and the Port of Caucedo, are constructing


transshipment of containers due to that investment and the DR’s geographic location on global trade routes. The DR is on a direct route from the Panama Canal, which – thanks to its widening – now accommodates larger ships, many of which come from Asia. From Caucedo, ships call direct to key ports in Europe, Central and South America, as well as New Orleans. Direct service to Miami commences in September. Twenty-nine Caribbean islands are also connected directly via feeder vessels. “Caucedo is the most


productive port in the region and offers the best maritime connectivity in the region,” Mr. Flaquer states. “Only the port at Cartagena, Colombia, offers equal capability. Last year we grew 30%, the most of all ports in


accommodate larger container ships, Caucedo is undergoing an US$200 million upgrade that includes a main berth expansion to 400 meters with a 17-meter depth, four super post-Panamax cranes capable of handling up to 25,000 TEUs, eight additional RTGS to bring its total to 31, and an expansion of the port’s container yard. Completion is scheduled for Q1 2020.


While currently, 50% of


container moves at Caucedo are for transshipment and 14% coming from DR free trade zones, officials expect this to


expansions underway also at the Caucedo Logistics Center. Mr. Marti sees DP World


Caucedo as a “game changers.” “That new facility is gearing up to be the logistics hub of the Caribbean,” he says. At Caucedo, the strategy is


to make the port and its free zone the most efficient logistics platform in the region. “Ours is the first logistics park inside a port in the region,” reports Mr. Flaquer. Mr. Flaquer points out that IKEA was the first company to


Issue 8 2019 - FBJNA


locate within CLC and has since undergone a major expansion. “IKEA sends products directly to stores in Puerto Rico,” he explains. “Therefore, there is no need for localized inventory in Puerto Rico.” Products,


such as liquor


bottle packaging, can also be customized for special occasions. “Alcohol represents an inventory with a lot of rotation,” he says. “And shipments can be customized to increase sale through promotions. Two glasses, for example, can be included with a bottle of whiskey and packaged in a box. There’s no limitation into local markets. This also expedites customs processes, which reflects in better inventory visibility.” Given the port’s proximity to


Santo Domingo International Airport, DP World executives are also eyeing sea-air logistics opportunities, particularly for companies like Amazon and Alibaba. Rio Haina Port, located west


of Santo Domingo and the DR’s second largest seaport, is best


11


with all port stakeholders – steamship lines, 3PLs, customs officials, manufacturers, customers – to discuss concerns and


needs for continuous


improvement. An online system known as DR Trade is also being developed to automate logistics processes and be integrated with the private sector to facilitate all logistics functions. “Haina and Caucedo are


partners in DR Trade,” Mr. Alma says. Like Caucedo, value added


logistics services are also performed at Haina. The free zone at HIT is described by Mr. Alma as “helping companies keep inventories low as well as perform JIT services.” HIT offers nearly 2.7 million


square feet of space capable of holding 12,500 TEUs. Its warehouse is over 102,250 square feet in size and houses non-containerized cargo that needs to be under roof. It has 252 reefer plugs with room to grow. To meet growing cold chain


needs and requirements, HIT is developing climate-controlled


Las Americas Free Trade Zone near Port of Caucedo. (Photo by Karen E. Thuermer)


change given significant


known for breakbulk activity. But while 83% of shipments through Haina are breakbulk, it handles approximately 400,000 TEUs annually largely from feeder services provided by Crowley, Seaboard Marine, COSCO, Evergreen, ZIM, APL, and Maersk. “About 25% of goods


manufactured in DR free zones are shipped via Haina,” reports Haina International Terminals (HIT) CEO Erik Alma. Ship calls are made weekly to


40 ports worldwide from Haina. “We have nine sailings (general container) to the US per week. Most DR trade with the United States happens via Haina,” he says. To help keep trade moving


smoothly and boost activity, HIT executives meet monthly


warehousing that will be the only of its kind in the DR. “It will be utilized for fresh products being shipped to the United States,” Mr. Alma says. While the effort at HIT


is voluntary, such facilities are being pushed by the US government. “The FDA and USFDA are looking to reduce the number of inspections with inspections shiſting to place of origin, meaning requiring inspections at the port,” Mr. Alma says. The warehouse is expensive


since the port only exports a few thousand reefers per year. “But it’s another service we offer,” he says. “We regard it a ‘ticket to play’ since the US is putting a choke hold on trade.” Rio Haina Port, itself, is also


undergoing improvements: dredging to nearly 39 feet and two gantry cranes that will arrive in October, thus bringing its total to five.


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