World drybulk cargo leader, Oldendorff Carriers, has invested US $45 million in a new transshipment hub in Trinidad and Tobago to move iron ore from Brazil to China and the Middle East. It is the first such investment in the country's history and is expected to stimulate the growth of the transshipment industry, one of government's new priority sectors.
The shipping giant had long identified new opportunities in the Caribbean with an investment in 2006 in bauxite transshipment along the Berbice River in Guyana. Trinidad, then, is the second major investment for the company in the region.
Shipping iron ore from Brazil to China and the Middle East via medium-size ships proved neither environmentally friendly nor cost-effective, and in 2011, Oldendorff started looking for an ideal transshipment base in the Latin America and Caribbean region for capesize vessels.
Led by Scott Jones, who would eventually head the Trinidad operation, Oldendorff executives made several exploratory trips to Trinidad, liked the business climate and made a final decision to pursue the opportunity at the beginning of this year.
Jones said the Ministry of Trade, Industry and Investment warmed to the idea almost immediately and connected Oldendorff with invesTT.
He credits invesTT with making the deal happen quickly saying it was “the one stop shop” for getting the operation going within six months.
Iron ore from Brazil is transferred to a capesize vessel on the left from a smaller ship. The cargo is bound for China, a trip that takes between 65-70 days from Trinidad.
“invesTT were very proactive in telling us what needed to be done and how we would get approvals and licenses and be able to start operating. We had environmental licenses in May and we started operations in July, so it was quite a quick process,” said Jones.
Trinidad’s strong economy, stable political climate, fluency in English and low cost energy have, for decades, made it an attractive location for foreign direct investment.
But what is often overlooked is its strategic location at the crossroads of the Americas. In transshipment, according to Jones, location means everything:
“The reason Trinidad was chosen is a number of things. One, is its proximity to Brazil and the Amazon River where this iron ore is loading into medium-size ships. Two, was a good pool of labour available here. Three, was the fact that it was below the hurricane belt … and the other reason probably had to do with the fact that there was deep, protected water here.”
Commenting on the project, invesTT President Kelvin Mahabir said the Oldendorff project was a learning experience for the agency.
"We liaised with all ministries and agencies to speed up the process and we have now added this process map to our existing database to further reduce the time from initiation to setup by half the next time around . I know our facilitation team worked extremely hard to achieve this turnaround. I would again like to thank Oldendorff for choosing Trinidad as an important transshipment location between two giants in the world economy—Brazil and China."
Already, Oldendorff Trinidad employs close to 100 people, with Jones predicting an expansion of the workforce—transshipment managers, linesmen and pontoon supervisors among them—in the face of what he expects to be a highly successful operation over the medium to long term. Many of the local hires are graduates of the University of Trinidad and Tobago which the government established, in part, to meet the human resource needs of foreign companies like Oldendorff.
Jones said Trinidad has provided immediate cost savings to Oldendorff since their capesize vessels were making the trip to China—65 to 70 days depending on the port they called at—for less than it cost to use four “supermax” medium-size vessels. The trip to the Middle East, he said, took about 45 to 50 days.
Headquartered in the Hanseatic City of Lubeck in northern Germany, Oldendorff Trinidad’s parent, Oldendorff Carriers, has been a privately-held, family-owned operation for over 90 years, moving more than 200 million tonnes of cargo between 125 countries every year. To do it, about 400 ships call at ports around the world.
The company employs more than 1,800 people worldwide and had sales approaching US $5 billion in 2011.
Here's a video of Scott Jones talking about the Trinidad investment.