The Caribbean Transshipment Triangle: Going Beyond Geometry

By Jean-Paul Rodrigue. Globalization and the increasing complexity of maritime shipping networks went on par with the growing share of transshipments, many of which are handled by major global hubs such as Singapore, Dubai and Algeciras. Transshipment accounted for around 40% of all the TEUs handled by ports. The most active markets have been Southeast Asia, South Asia, the Middle East and the Mediterranean. Although there has been an active transshipment market in the Caribbean for decades, its growth has been more modest. Still, the growth of all-water routes between East Asian and the American East Coast, as well as economic growth in Central and South America, have incited a renewed dynamism for transshipment in the region. The expansion of the Panama Canal is also likely to bring larger ships in the Caribbean, further boosting transshipment.

Transshipment usually concerns gateways that are able to combine feeder services and hinterland access or "pure" transshipment hubs that are almost entirely focusing on feeder (linking deepsea and short sea services) or relay (linking different deepsea services) functions. Irrespective of the function of transshipment hubs they exist to meet three interrelated imperatives:

  • Shipping operations imperatives. Container shipping lines are trying to optimize the utilization of their assets as well as their revenue. The usual outcome of such a process is the use of large ships (economies of scale) making a relatively limited number of port calls over long haul services covering two or more maritime ranges and the use of smaller ships over feeder services (the "last maritime mile"). Also, maritime shipping has a low tolerance for detours, implying that the transshipment activities tend to be in proximity to main long distance shipping lanes.
  • Terminal operations imperatives. Intermediate hubs must also meet operational requirements, namely greater depth to accommodate modern containership drafts, placing them at a technical advantage over many older port sites, many of which are becoming feeders. Transshipment also requires large yard areas since few containers are leaving the terminal and may be stored for several days while waiting to be transshipped. They should include land for future expansion, which is a positive factor to help securing existing and future traffic. Another important factor in transshipment remains terminal costs and efficiency (e.g. high crane throughput), with ports located in developing countries usually having lower labor costs.
  • Cargo imperatives. Optimally, shippers prefer direct point to point services, a preference that can obviously not be met. Under such circumstances, transshipment is a balancing act between the constraints behind operating maritime shipping services and the requirements of shippers (importers and exporters) preferring an array of service options with timely and reliable services. Transshipment may add additional delays in supply chains, imposing mitigation strategies when the inventory is in transit. Further, the growth in the reefer trade is placing additional pressures on transshipment hubs as refrigerated cargo is shifting from conventional reefer ships to container shipping services. This is becoming a salient issue in the Caribbean. Last, the hinterland usually has an anchoring effect on transshipment since hubs that are able to combine hinterland traffic with transshipment tend to be more stable than transshipment hubs with little hinterland traffic. Cartagena is a good example of a port able to effectively combine a substantial hinterland with transshipment. 

The structure of transshipment in the Caribbean has often been labeled as a "transshipment triangle" since all the existing transshipment hubs can fit within this simple geometric form (see figure below). Although the term can be subject to contention since a triangle does not explain the dynamics of transshipment, it remains an acceptable analogy which is simple and evocative. With the growth of transshipment activities and the potential addition of new hubs (such as Cuba) expanding a geometric perspective with terms such as "transshipment pentagon" can be perceived as counterintuitive (what happened to the "transshipment rectangle"?). If additional transshipment hubs are established, maybe the next idea will be to introduce the "transshipment hexagon" concept. At this point the reader should guess that such a line of thought should not be considered too seriously. Therefore we suggest below four perspectives to consider transshipment activities in the Caribbean that goes beyond simple geometry.

Figure 1 : Perspectives about Transshipment in the Caribbean

caribbean_transshipment_perspectives.pdf

These include:

  • Transshipment triangle. As stated before, a triangular shape can be fitted over the region and encompasses all the transshipment activity. The transshipment triangle includes two major anchor points: Panama and Freeport. The third anchor in the southeastern Caribbean is vague and ill-defined, making the whole concept a bit wobbly. 
  • Transshipment corridor. Since minimal deviation is a major factor in the selection of a transshipment hub, the Caribbean can be simplified as a transshipment corridor with a 150 nautical miles buffer on each side of the dominant shipping route from the Panama Canal, through the Windward Passage and the Bahamas and to the American East Coast. With Cartagena, the transshipment corridor accounts for more than 87% of the observed transshipment activity in the Caribbean. 
  • Transshipment funnel. The Caribbean transshipment system is bottom heavy with the Panama Canal acting as the bottleneck of a funnel for converging shipping lanes between the Atlantic and the Pacific oceans. It is thus not surprising that ports on both sides of the canal (Balboa and Colon) have a dominant transshipment function as stopping to enter the Panama Canal offers the opportunity to drop or pick up cargo. The southwestern section of the Caribbean accounts for more than 71% if all the regional transshipment activity. 
  • Transshipment clusters. They can be defined as transshipment hubs in proximity that are either competing or complementary (used by different shipping lines). The "Panama Gateway" cluster (including Cartagena and possibly Limon Moin) is characterized by a low deviation to trans-panama shipping routes and is the most important. The "Windward Passage" cluster (Kingston, Caucedo and eventually Cuba) is benefiting from another low shipping deviation. The Eastern Caribbean cluster is of limited cohesion and is mostly composed of small ports servicing their national niches. San Juan, a major port, is not part of any cluster since it is a Jones Act port, while Freeport is a niche transshipment hub. 

There is another perspective that can be considered: the Caribbean transshipment banana...

Figure 2: The "Caribbean Transshipment Banana"

Further reading

McCalla, R.J. (2008). "Container transshipment at Kingston, Jamaica." Journal of Transport Geography, Vol. 16, pp. 182-90.

Notteboom, T. & J-P Rodrigue. (2010). "Foreland-Based Regionalization: Integrating Intermediate Hubs with Port Hinterlands." Research in Transportation Economics, Vol. 27, pp. 19-29.

Pinnock, F.H. & I.A. Ajagunna. (2012). “The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency.” Caribbean Paper n.º 13, Centre for International Governance Innovation (CIGI), Waterloo, Ontario, Canada.

 

Jean-Paul Rodrigue. With a Ph.D. in Transport Geography from the Université de Montréal, he has been a professor at Hofstra University (New York) since 1999. Rodrigue's research interests cover the fields of transportation and economics as they relate to logistics and global freight distribution. He is a member of the PortEconomics.eu initiative and of the World Economic Forum’s Global Agenda Council on Advanced Manufacturing (2011-13). He was commissioned by UN-Habitat to write a chapter about urban freight distribution for the 2013 Global Report on Human Settlements.