Caribbean Export OUTLOOK 3rd Edition

Clearing The Hurdles 88

With agricultural production, the gap between import and export in many Caribbean countries, where imports outweighed exports is representative of the structure of the Caribbean economies, which are primarily service based anddependent onTourism as the main economic activity. The Caribbean economies are significantly smaller and skewed toward imports, which creates an imbalance between imports and exports making cargo transportation two to three times more expensive than in other regions of the world. This high transportation cost with limited schedule options to move them is one of the primary hindrances to the development of logistics services infrastructure in the Caribbean. However, this deficiency is compensated by viable Tourism industries (Ajagunna and Pinnock, 2017). In terms of interregional trade, there is limited shipping services and connectivity within the Caribbean. This is obvious from the point of view that trade is limited, unidirectional and does not provide a critical mass to attract the attention of adequate commercial shipping lines to the region. In relation to air cargo, only Caribbean Airlines and LIAT connect the region. Most of the other movements are connected through Miami, which is the hub serving the entire Caribbean. This often relates to islands within close proximity from which cargo moves multiple times the distance to Miami and back as opposed to direct movement. For small parcels and high value items, 3PL service providers captures the major market share as they often use their own aircraft, which are still subject to a Miami / Florida hub and spoke network, and replaces the entire intermediaries (Pinnock, et all 2017). The Air Transport sector in the Caribbean is close to reaching a tipping point. Some carriers that have made significant contributions to the socio-economic welfare of the economies they have served over the year went through a period of uncertainty. For example, Caribbean Airlines acquired Air Jamaica as Air Jamaica continued to make losses. Facilitating trade through air (and other means) requires developing and expanding air transport capabilities and implementing standards for safe air transport. There must also be a Multilateral Agreement Concerning the Operation of Air Services within the region and common rules by which both regional and international airlines operate. These rules should include but must not be limited to licensing requirements, insurance, traffic and transit rights, market access, cabotage and security concerns. Global changes in logistics have contributed to new trends and opportunities for firms, but has the Caribbean adapted? The new freight logistics concepts such as ‘last mile’, ‘Just-In-Time ( JIT)’ and ‘outsourcing’ have created the need for the establishment of complex international distribution chains, the ultimate goal of which is to allow shippers to place the right product on the manufacturing or retail floor anywhere in the world at the right time and at the right price (Pinnock and Ajagunna, 2011). As a result, limited manufacturing and

global freight logistics service providers have emerged in the past three decades, and their main objective is to satisfy customer-driven demand through partnerships with industrial, distribution, and transport entities (2011). Today’s biggest business challenge involves knowing how to respond to a world in which the framework and basis of competition are always changing. Against that backdrop, any effort to set corporate strategy must consider more than just traditional performance measures. Today, few corporate strategies are more important to a company’s cost structure and competitive rank than its supply chain strategy. Companies must now consider how well their supply chain strategy addresses the risks and opportunities created by the major global trends reshaping how our businesses and societies will work. With regard to its problem-solution potential, logistics can also catalyze progress in crucial innovation areas such as in the healthcare sector, or in the context of disaster management and a range of other, still emerging fields, all of which are significant in the case of Caribbean countries. What changes can Caribbean governments begin to make to leverage advancements in logistics to their advantage? In Jamaica, for example, efforts have been made to modernize the customs department. This process involved a review of the processes and requirements to ensure increased efficiency in customs operations. This modernization resulted in the commencement of the computerization of customs processes with a number of initiatives implemented. In addition, the Customs Administration also stepped up its risk management strategies through the use of non-intrusive technology in a bid to ensure that manual inspection of legitimate cargo is reduced. The development of the logistics frameworks therefore, requires an immediate master plan linking all stakeholders of the industry. One of the major impediments in improving logistics efficiency in the Caribbean is the role of Customs. Revenues from Customs Departments form a significant percentage of the national budget for many of the islands. Over the years, as the percentage duty on specific items may have declined, the Ministries of Finance through Customs have found ways to implement new surcharges, which in some cases adds to the overall clearance costs of certain items as opposed to intended overall decline by theWTO and other international partners. Customs in the Caribbean play a dual role of revenue collection and trade facilitation/border protection for which revenue collection takes precedence. This delicate balance of government’s responsibility for revenue generation and trade promotion needs to be thoughtfully delineated. Another impediment is the legislation governing logistics, which may be considered to be grossly inadequate and outdated. There is a high degree of imbalance and lack of clarity of roles of the major actors in the process. The need for a light-handed, flexible and clear legislative

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