INFRASTRUCTURE IMPERATIVES
AND INTEGRATION IN THE
TRANSPORT SECTOR
Presentation at
HIGH-LEVEL SYMPOSIUM ON THE CARICOM
SINGLE MARKET AND ECONOMY
SHERBOURNE CONFERENCE CENTRE, BARBADOS
29 June 2006
JOHN LEWIS
Senior Project Officer
CARICOM Secretariat
OUTLINE
•Importance of transport
infrastructure
•Considerations for infrastructure
development
•Challenges
•Enabling environment (Treaty, Air
Services Agreements)
•Imperatives
IMPORTANCE OF
INFRASTRUCTURE
• Provides necessary linkages between
sources of raw materials >
manufacturing/processing centers >
markets
• Vital for Community trade, access to
tourism markets, social integration of
peoples of Community
(NO INFRASTRUCTURE, NO TRADE, NO
INTEGRATION)
IMPORTANCE OF
INFRASTRUCTURE Cont’d
Need to cope with increasing level of traffic:
PAX:
• Tourist arrivals up 8.3%: 4.8m in ’95, 5.2m in ‘04
• Bahamas, Jamaica, Barbados and Trinidad and
Tobago major destinations (28, 26, 11, 9%,
respectively)
• US and Europe principal sources (62 and 18%)
• Cruise ship arrivals show dramatic increase; up
110% from 3.7m in ’95 to 7.8m in 04
• LA/Car accounted for 4.5% of world scheduled pax traffic
in 2002
IMPORTANCE OF INFRASTRUCTURE Cont’d
CARGO (Tonnes):
•Imports up 20%: 20m in ‘00, 24m in ‘03
•Principal sources: CC, US, LA Integ Assoc.
•D-Exports 30m in ‘00, 50% > imports
•Principal destns: US, CC, Europe in 2003
•LA/Car accounted for 3.3% of world sched
freight and mail traffic in 2002
(Regional traffic not critical for global
carriers which serve the region)
IMPORTANCE OF INFRASTRUCTURE Cont’d
•changing pattern and growth of
traffic have implications for
infrastructure development and
logistics in terms of handling capacity,
route development, frequency of
services and transhipment
•impact level of charges for freight,
handling, storage and related services
and hence the competitiveness of the
region’s imports and exports
IMPORTANCE OF INFRASTRUCTURE Cont’d
•Land transport plays a minor role in the
integration process - no “Euro-tunnels”, int’l
rail or trucking services
•Air and maritime transport major modes
•Inadequate transport infrastructure
impacts
negatively
on
integration
process, ability to expand or diversify
trade, competitiveness of firms and
integration in global economy
CONSIDERATIONS FOR INFRA DVLPMENT
• Relatively small size and spatial distribution of
populations of Community as well as the
physical geography of Member States
• CARICOM - 14.8 m
• Mercosur and CACM - 190 and 38 m, resp
• ASEAN - 500 m
• CMESA and ECWAS - 119 and 252 m, resp
• Haiti - 8.4 m, other Member States range
between 5,000 and 2.6 m
•Strategic geographical location of some
CARICOM ports offers significant economic
opportunities as transhipment hubs. The
Bahamas, Barbados, Jamaica and Trinidad and
Tobago are cases in point
•Belize and Guyana offer neighbours overland
access to the sea, and provide the Community
with alternative gateways for trade with Central
and South America partners
CHALLENGES
•Geographical spread and the operational
limitations
at
ports
present
logistical
challenges in establishing a comprehensive,
seamless
transport
system
in
the
Community
•Smaller States depend on a complementary
network of small vessel or commuter aircraft
operations to link them to their principal
markets via regional hubs
CHALLENGES Cont’d
•Low density, cyclical nature and directional
flow of cargo and passenger traffic which
impact on overall “load factor” or capacity
utilisation ratio of carriers, hence their
viability
•DOM, SVD, BAR, GUY investing significantly
in airport development to increase capacity
and air access
•JAM investing significantly (US$200m 5th
phase project) in port development to
increase capacity to handle TEU containers
and transhipment
CHALLENGES Cont’d
•Developing capacity, new route structures (transCaribbean, Southern African) and promoting
commercial arrangements with transport operators
to enable more direct access to markets
•Need to reduce dependence on transit through
United States and European gateways
•Recognise that US and European gateways will
continue to be attractive due to high traffic volumes
that impact cost, convenience of onward
connections and the high cost of route development
CHALLENGES Cont’d
•There are new imperatives resulting from security,
economic, political and social considerations
•Package of incentives, appropriate equipment and
a capacity to absorb the high initial financial costs,
present an opportunity to promote niche operations
involving both private and government sector
partnership as a means of developing nontraditional routes for the long-term overall benefit to
regional integration.
ENABLING ENVIRONMENT
Revised Treaty:
• Framework for development of the
transportation sector of the Community
• Provides for coordination of national transport
policies (Art. 135); and Most Favoured Nation
treatment to be accorded to Member States
(Article 8)
• Prohibits introduction of new restrictions relating
to the right of establishment, the provision of
services and the movement of capital
• Requires removal of existing restrictions
(Chapter 3);
ENABLING ENVIRONMENT Cont’d
Revised Treaty:
• makes specific provisions for the development of
the transportation sector generally, including:
– conclusion of air transport agreements among
Member States
– establishment of joint ventures
– investment in the sector
– joint action
– cooperation among the air transport operators
of Member States in areas as interline and
inter-modal
operations,
code
sharing,
reservations, insurance and leasing; and
– development of ancillary services, including
freight forwarding and transshipment
ENABLING ENVIRONMENT Cont’d
Air Services Agreements:
• Within the scope of the Revised Treaty (Art. 80)
and must be consistent with its provisions
• Complex series of agreements, MOUs and
informal arrangements provides the basis for
conduct of international air transport
• Joint consultations initiated with UK early 1990’s.
(Consultations suspended)
• Joint consultations initiated with the US in
August 2004 also suspended. Efforts being made to
resume
ENABLING ENVIRONMENT Cont’d
ACS Multilateral Air Agreement:
• Opened for signature in Feb 2004. Signed by
certain CC and other ACS States
• Enters into force 60 days after receipt of ninth
Instrument
• Provides opportunities for the development of
non-traditional, trans-Caribbean routes and
closer economic and social relations between
CARICOM and other ACS States
ENABLING ENVIRONMENT Cont’d
CC Multilateral Air Agreement:
• Promotes the objectives of the Community
and provides the required framework for
CARICOM air carrier to provide air services
between the Member States
• Entered into force in Nov 1998, presently in
force among nine Member States
• Provides a role for niche operators on low
density routes, greater flexibility than
previously obtained in aircraft routing and
flight scheduling by the established
carriers
• Needs to be revised
IMPERATIVES
• Continuing investment in regional transport
infrastructure to enable the Community to keep
apace with developments in containerised
shipping, aircraft operations and the new
technologies and logistics systems that enhance
the efficiency of air and sea port operations
• Development of an incentive programme for
transport enterprises aimed at promoting the
development of non traditional routes within and
across the Caribbean basin
IMPERATIVES Cont’d
•Development of intra-regional shipping
services by small vessel operators to support
the
regional
thrust
of
agricultural
diversification
•Conclusion of liberal air services agreements
with major trading partners to facilitate
market access, the delivery of more
integrated multimodal transport services to
travellers, importers and exporters
•Development of intra-regional shipping
services by small vessel operators to support
the
regional
thrust
of
agricultural
diversification
IMPERATIVES Cont’d
•Conclusion of liberal air services agreements
with major trading partners to facilitate
market access, airlift and the delivery of
more
integrated
multimodal
transport
services
to
travellers,
importers
and
exporters
•Exploitation of the opportunities provided in
the ACS Multilateral Air Agreement for multidestination tourism, trans-Caribbean route
development
•Continuing support for the rationalisation
and capitalisation of regional air carriers to
ensure their their sustained operation based
on an agreed programme for improved
efficiency and profitability
Our regional transport infrastructure
is critical for the development of
regional economies and achieving our
integration objectives and should
perhaps be given special treatment
and provided with the necessary
resources to ensure its development
and maintenance.
Thank You