February 10, 2021

Lasco Distributors Limited aims to power close to a third of its operation using solar energy, and potentially a portion of its sister manufacturing company at White Marl, St Catherine, through a 500-kilowatt photovoltaic system. The buildout of the solar plant, which will be Lasco’s first adoption of a renewable source for electricity, is being done in partnership with the United States Agency for International Development, or USAID, and the University of the West Indies, both of which are collaborators on a new initiative called the Jamaica Renewable Energy Alliance, along with local organisations. Lasco Distributors is the first company expected to tap into the alliance’s resource pool of US$50 million – funds that are earmarked to support ‘solar systems with battery storage’ investments over the next four years. USAID is contributing US$4 million of the funds. Other members of the alliance include local renewable energy developer Wigton Windfarms Limited; international solar energy investor WRB Energy; technical consultancy firm Cadmus; the Jamaican Hotel and Tourist Association; Rocky Mountain Institute; Xergy Energy; and Green Solutions International. The outcomes from Lasco’s project will be studied for the buildout of similar energy projects across the tourism and manufacturing sectors, in the first instance. The alliance’s goal is to accelerate the market for distributed solar and storage systems in Jamaica, while accelerating the transition to clean and sustainable energy sources. Other Jamaican businesses have been investing in photovoltaic systems, but this alliance also prioritises power storage. “It’s the largest one of its kind around with battery storage, which is the critical thing, so that when the sun goes down we will still have energy stored up. We have done all the pre-feasibility works along with all the partners and it is positive,” Deputy Executive Chairman for Lasco Distributors and Lasco Manufacturing Limited, James Rawle, told the Financial Gleaner on Tuesday. “It will not power the entire Lasco operation, but it will power a significant portion of distribution activities, office activities and things like that, and even on the manufacturing side, to get us to upwards of 30 per cent of consumption; but the coverage depends on a lot of things,” said Rawle, who is also managing director of Lasco Manufacturing. Lasco is currently in the process of securing suppliers for the solar panels and battery. Installation of the solar system will span nine months. Rawle did not disclose how much the solar project is expected to cost or the expected savings to be derived from the investment, noting that the partners are still working through the details. Since the outbreak of COVID-19 in Jamaica, Lasco has been adjusting its internal processes in response to changes in consumer behaviour and consumption patterns. The decline in sale of products that fall under the category ‘out-of-home consumption’ or ‘on-the-go consumption’ has been dramatic for Lasco Distributors, largely due to COVID-19 restrictions on gatherings, curfews and other mitigation measures. Instead, demand has shifted to the company’s product lines categorised as ‘in-home consumption’. “That has affected the entire supply chain, and manufacturing has been skewed to those products that are in higher demand. That’s the story of all food producers,” said Rawle. “It’s not only high-margin products that are affected.” He added that some high-margin products continue to do well because they suit market preference “in the moment”, but that “some low-margin products that are not relevant to how consumption is taking place, is not moving, although they are really attractive in price”. Lasco Manufacturing and Lasco Distributors have both reported double-digit increases in net profit for the quarter ending December 2020, a performance they credit to timely response to changes in the market throughout the pandemic. Lasco Distributors’ earnings grew 41 per cent to $243 million on revenues of $5.2 billion, while the manufacturing business pulled in profit of $281 million on revenue of $2.07 billion in the quarter.  

The COVID-19 pandemic has had a debilitating impact on the global community. Not least of the consequences is the crisis this created for seafarers – the many men and women on the front line, working on-board ships, ensuring the flow of vital goods such as food, medicines, essential supplies and energy. As many governments sought to protect their citizens from this contagious disease, ports and borders were closed. This created difficult working conditions for seafarers, as they were not allowed to travel across borders to take up crewing assignments. Others who had completed their Seafarer Employment Agreement (SEA) could not return home to their families. Instead, SEAs were being extended to facilitate continuity of trade. Seafarers are still faced with a humanitarian crisis. According to information from the International Maritime Organization (IMO), as of December 2020 it is estimated that some 400,000 seafarers remain on-board commercial vessels, unable to be repatriated and past the expiry of their contracts. A similar number of seafarers urgently need to join ships to replace them. The IMO is the United Nations specialised agency responsible for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships. IMO data indicates that on any given day, nearly one million seafarers are working on some 60,000 large cargo vessels worldwide. The Maritime Authority of Jamaica (MAJ) believes a global network of crew change hubs would help alleviate the humanitarian crisis seafarers face at present. These hubs, which would provide free movement and safe travel across borders, could offer a short-term solution to the barriers presented by global travel restrictions, ensuring vital crew changes could take place, thus facilitating trade and logistics to the benefit of the world economy. According to Rear Admiral (retd) Peter Brady, director general of the MAJ, “In the Caribbean, for example, several smaller states still have not reopened their borders, so no one is coming in and no one is going out. With a hub, seafarers would be able to move, and to move more freely. Some natural crew change hubs already exist pre-COVID-19, by virtue of the concentration of shipping, and we suggest that more could be developed to deal with the current stagnation of crew travel in parts of the world. Whether they are then retained in the long term would be subject to global strategy and based on assessment by industry of their costs and benefits.” The Government of Jamaica, recognising the hardship being faced by seafarers, reopened its borders to enable controlled entry and transit of crew and has designated seafarers as essential workers under its 2020 Disaster Risk Management Order in June. “Jamaica has already positioned itself as a hub, with the investment in a crew change online platform which seafarers, crewing agencies and ship managers anywhere in the world can use to facilitate crew changes in Jamaica,” said Brady. To date, Jamaica has facilitated nearly 2,300 crew changes. UNCERTAINTY WITH LACK OF INFORMATION There has been much uncertainty regarding the spread of the COVID-19 disease, coupled with a lack of information on the control of the pandemic, and this has increased the reluctance from states to open their borders. With urging from the IMO and other organisations responsible for the welfare of seafarers, and thanks to the development of international protocols, some states are slowly looking to reopen their borders. Rear Admiral Brady, a former chair of the IMO’s Standards of Training and Certification for Watch Keeping (STCW) Committee, stressed the importance of putting seafarer welfare at the forefront of international maritime efforts: “The pandemic has highlighted that seafarers are the backbone of the global supply chain and that crew retention is even more critical to the continuation of world trade. Crew retention can be tackled by more port state and flag state administrations taking stronger positions on ensuring that living and working conditions on-board ships meet the international standards, and by designating crew as essential workers, with the attendant privileges.” STCW is the worldwide convention that ensures a unified standard of training for seafarers is achieved across all countries in the world. The MAJ director general added that a future challenge will be motivating seafarers to continue this career, in light of the crises and hardships they have endured during the pandemic. Brady further recommends: “The industry and individual companies must take steps to address crew retention by improving and increasing welfare benefits to seafarers on-board. Introduce benefits such as access to gymnasiums, to Internet connections to enable crew to keep in touch with their families, and provide online counselling and opportunities for studying.” He also recommends that “access to a safe and efficient vaccine may also put ships’ crew at ease and provide some level of calm on-board. Seafarers will be less worried about the ills of the COVID-19 pandemic as they travel globally.” In response to the pandemic, flag states have needed to be agile and adapt their regulations and methods of operating, in order to keep shipping lines open and enable world trade to continue. In addition, they have put in place measures to support seafarers. In the case of Jamaica, where the circumstances warrant and there is mutual agreement between the owner and the seafarer, the MAJ has not objected to the extension of SEA to facilitate continuity of trade. However, the MAJ encourages owners, as soon as is possible, to make the necessary arrangements for seafarers to be safely repatriated at the end of their SEA.

The Airports Authority of Jamaica is projecting a recovery in passenger traffic for Jamaica’s two international airports even as capital improvement works proceed apace at the Sangster International Airport (SIA) in Montego Bay, St James. President and Chief Executive Officer (CEO) of the Airports Authority of Jamaica (AAJ), Audley Deidrick, says the travel and tourism industries have, by far, suffered the most significant impact from the COVID-19 pandemic. Despite the downturn in traffic and revenues, Deidrick says that the airport concessionaire is pressing ahead with many of the planned improvements under the master plan, which is required every five years in response to current and future growth forecast. The projects, which represent an investment of approximately US$170 million, include expansion works under a master plan programme and a runway expansion project. The AAJ CEO says this comes against projections for a sharp recovery in passenger traffic in 2021, with SIA projected to post three million passengers, and one million at Kingston’s NMIA, representing increases of 65 per cent and 55 per cent, respectively. AAJ owns the island’s two international airports and provides oversight and contract administration for the concession agreements, which are in place for the operation of each facility. Deidrick points to an Airports Council International (ACI) Advisory Bulletin published on December 8, 2020, which had projected that the global airport industry would record a reduction of more than six billion passengers by the end of 2020, compared to the pre-COVID-19 forecast for the year, representing a decline of 64.2 per cent of global passenger traffic. Consequently, markets having significant domestic traffic are expected to recover in 2023 to pre-COVID-19 levels, while markets with a significant share of international traffic are unlikely to return to 2019 levels until 2024. However, due to wider economic and other factors that drive Jamaica’s international passenger traffic, the recovery to pre-COVID levels is not expected until 2025-2026. “So they had done a master plan, which calls for major expansion of the terminal, the car park, realignment of roadways on the air side, and access to the airport,” Deidrick says. The master plan was approved in 2019 and was expected to begin in 2020, but activities were put on hold due to COVID-19. Works under the programme, which amount to over US$100 million, are separate from the runway expansion project, which started in 2019, and are being undertaken at a cost of US$70 million. That runway expansion, Deidrick says, is significantly advanced and is forecast for completion by the end of 2021 into the first quarter of 2022. As it relates to the master plan, he says that some elements of the programme have already started. “They had gone ahead to construct 7,000 square metres of additional circulation space and retail concession space in the departures terminal. That work is significantly advanced and should be completed around August of this year,” he notes. Deidrick adds that the management of the airport has also implemented a solar power system, which will provide significant power supply to the airport at a cost of US$1 million. The installation is expected to be completed by August. “So all these works are continuing. The only ones that are not continuing right now is the stretching of the terminal building to accommodate greater space internally in terms of immigration, Customs, and the transportation halls,” he adds.

The creative community has received a breakthrough following on the forging of a three-year technical agreement between Kingston Creative Limited and IDB Lab, the innovation laboratory of the Inter-American Development Bank. The collaboration, which will fast track social and economic transformation through the merger of creativity, culture and technology will support 1,500 entrepreneurs and creative enterprises, notably 300 creative entrepreneurs based in downtown Kingston. Additionally, 60 creative businesses will benefit from the integration of new technologies in their business models and 25 entrepreneurs will be connected to new international markets and opportunities. Therese Turner-Jones, IDB’s General Manager for the Caribbean Country Group and Country Representative for Jamaica, noted that the creative community has suffered immensely since the onset of COVID-19. “We are very happy to provide support to this industry especially as this partnership will afford creative entrepreneurs a vista for valuable global connections, greater visibility for their work and new opportunities for learning, incubation, and acceleration of their efforts,” she said. The technical cooperation agreement is for US$1,295,000 with IDB contributing US$ 595,000 and Kingston Creative US$700,000. The programme will involve improving the digital and business skills of creatives, creating online platforms, market access tools and strengthening the creative ecosystem. It will be supported by entities such as the Kingston & St. Andrew Municipal Corporation (KSAMC) and the Tourism Enhancement Fund (TEF) an agency of the Ministry of Tourism. Andrea Dempster-Chung, Executive Director of Kingston Creative, said that she was excited about the benefits that will accrue to creatives that drive the $84 billion-creative economy. Noting that 2021 was designated by the United Nations as the International Year of Creative Economy for Sustainable Development, she said “the partnership will position Jamaican creatives to recover and re-emerge stronger post-COVID. IDB Lab will also connect creatives with regional and global partners through a host of networking capacity-building opportunities. The new coworking space, the Kingston Creative Hub, will also provide creatives physical access to space; hot-desks, meeting rooms, offices, and podcasting, dance and digital studios. “We are also excited about continuing our work on the inclusive and balanced development of the new Downtown Kingston Art District and now connecting Port Royal by linking community creatives into the tourism value chain and providing them with digital platforms and skills to improve their market access,” Dempster-Chung added. Terry-Ann Segree, IDB Lab Private Finance Senior Specialist, also explained that there is an increasing trend globally to mix the traditional artistic elements of contemporary art and culture, music, fashion, literature, theatre, dance, and film with animation, augmented and virtual reality, 3D printing, science, gaming and software. “We will focus on fostering collaborations between artists and developers, designers and scientists, to add economic and social value to cultural and creative assets while creating a transmedia storytelling focus on Jamaican creators to give them visibility locally and internationally.”

Following Derrimon Trading Limited’s (DTL) initial acquisition in August 2014, which culminated in a majority interest control in February 2017, Caribbean Flavours and Fragrances (CFF) has grown significantly with the company set to gain a larger runway as DTL expands into the North American market after its highly successful additional public offering. Despite several flavourings in food being imported into Jamaica, CFF has supplied the local market by allowing several Jamaican manufacturers of all sizes to tap into the local expertise of a home-grown business to provide the best options to its clients. These products extend from beverages, milk-based products to snacks consumed by the everyday Jamaican which also includes colouring to give it a distinct Jamaican taste. This led to CFF Managing Director and DTL Chief Executive Officer Derrick Cotterell describing the business as very small in terms of people but very large in reach and efficiency, as seen by the company’s financials which topped $452 million with a 32 per cent gross profit. “We’re not just importing a finished product and reselling it. We actually manufacture the flavours in Jamaica and sell to the market. Since we bought the plant from Anand James some years ago, it’s a completely different business. We have retrofitted the plant, which has seen it improve to international standards,” said Chief Financial Officer Ian Kelly in a recent Jamaica Observer Business Forum. A major focus which Kelly pointed towards was the company looking to extract unique Jamaican flavours such as ginger, along with other home-grown products, to allow for a wider market to appreciate the value Jamaican products can have in a larger market space. With the Safe Quality Food (SQF) Institute certification under its belt, Kelly believes that the company will be able to expand its exports to the North American market in addition to the seven other countries in the Caribbean it currently serves. He’s also confident that the company will be a vital player in the fight against COVID-19 with the company creating fragrances and other products for sanitation companies locally. “We’re going to have some unique products that won’t just have an appeal to Jamaicans abroad, but international appeal that will spill over into the wider North American market. This is one of the acquisitions we’re very proud of since Mr James still consults with the firm and provides insight where needed,” Kelly said.