Chinese Company Takes Total Control of Kingston Freeport Management Firm

Chinese Company Takes Total Control of Kingston Freeport Management Firm

The Chinese firm China Merchants Port Holdings is now in complete control of Kingston Freeport Terminal Limited (KFTL), the entity responsible for managing the Port of Kingston under a concession agreement made with Jamaica’s government. The agreement has a duration of 30 years. The action was made possible through the sale by CMA CGM, a French-led shipping and port management organization of its interest in Kingston Freeport to a subsidiary, Terminal Link. Terminal Link, until the sale, had been a joint venture of CMA CGM and China Merchants. In the joint venture, CMA CGM held 51 percent of the entity, while China merchants had 49 percent. Now that the situation has changed, CMA CGM, by selling its shares in the 30-year concession agreement for KFTL, has provided China Merchants with total control of the entity.

The Terminal Link-CMA CGM consortium used Kingston Freeport to operate the Kingston Container Terminal under the 30-year arrangement with the Port Authority of Jamaica (PAJ) in 2015 for the financing, expansion, and maintenance of the Port of Kingston. The arrangement involved more than just Kingston Freeport, however, as China Merchants recently announced that it had completed the initial acquisition of he proposal in regard to eight target terminals with a value of US$814.78 million.

The eight terminals include 50 percent of Odessa Terminal Holdco Ltd (Ukraine), 49 percent of CMA CGM-PSA Lion Terminal Pte Ltd (Singapore), 100 percent of Kingston Freeport Terminal Limited (Jamaica), 30 percent of Rotterdam World Gateway (the Netherlands), 24 percent of Qingdao Qianwan United Advance Container Terminal Co., Ltd (China), 47.25 percent of First Logistics Development Company (Vietnam), 14.5 percent of Laem Chabang International Terminal Co Ltd (Thailand) and 100 percent of CMA CGM Terminals Iraq SAS.

According to the Jamaica Observer, the Jamaican government received notification of CMA CGM’s intention to transfer Kingston Freeport to Terminal Link prior to the announcement of the transaction. The PAJ stated that the transaction had received all required approvals and noted the successes achieved thus far under the concession agreement, which have allowed for expansion and the capability to handle much larger vessels. Additionally, it was explained that there is an industry trend for shipping lines to make vessel-sharing arrangements to take advantage of economies of scale.

The United States Ambassador to Jamaica Donald Tapia has expressed his country’s concerns about Chinese companies making investments in Jamaica’s economy. In particular, the Ambassador cited concerns about Chinese investments in port facilities, which could be used for the expansion of communism in Latin America and Africa. Tapia went on to link Chinese investments and corruption and encouraged Jamaica’s government to be cautious in regard to large investments from China in Jamaica.

Photo by frank mckenna on Unsplash

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