As Cuba-US relations begin to thaw, anticipation of the eventual lifting of the 54 year old trade embargo with this island nation located just 90 miles south of Florida is playing out in the press. The possibilities are great and could position Cuba as a major transhipment hub. But, an emphasis on infrastructure improvements will be necessary to even consider this possibility.
Cuba has taken a step in this direction thanks to financial assistance from Brazil. The Mariel port development project is the country’s biggest infrastructure project in years. At a cost of $900m, the port has a capacity to handle 800,000 containers a year along with the ability to support the big cargo ships sailing through the expanded Panama Canal. In addition, Mariel’s Special Development Zone will allow foreign firms to be 100% foreign owned unlike foreign firms elsewhere in Cuba which are required to operate as a joint venture with Cuba. Furthermore, Mariel will be administered by PSA International, a port operator based in Singapore.
The largest airport, Jose Marti International Airport, located near Havana, is also undergoing an expansion. Thanks to funding from Brazil upgrades to Terminal 3 are underway for the anticipated increase in American tourism. Cuban officials noted tourism increased 16% in January following the announcement to improve relations between the two countries.
With an increase in tourism it is likely that air cargo flows will rise too. In March IAG Cargo announced plans for a Madrid-Cuba route to begin in June. Cuba’s tobacco products are expected to be its main export, while the country will import perishables and mechanical goods. IAG Cargo noted that Havana is also an important stop for transhipment of flowers, fruit and textiles.
Other air cargo providers include Air China Cargo and Canada’s CargoJet which flies a weekly flight on behalf of Cubana, Cuba’s largest airline.
Projects to improve road and rail networks are also underway within Cuba.
Despite the trade embargo with the US, Cuba has established trade relations with many of its Latin American neighbours such as Venezuela, which represented 14.2% of Cuba’s exports and 37.4% of its imports. Brazil is responsible for 4.7% of Cuba’s total imports. China is another large trade partner, receiving 15.2% of Cuba’s total exports and 12.3% of Cuba’s imports. However, Canada is Cuba’s largest export market, accounting for 16% of total Cuban exports. In 2014, Canada exported $448m worth of goods to Cuba, while importing $562m. Indeed, this seems to be a relatively small amount of trade. With the eventual lifting of the US trade embargo combined with reforms that are slowly being introduced in Cuba, the outlook for the country is cautiously promising.
For more information on logistics in Cuba and the wider Latin American region please take a look at Ti’s latest report Latin America Transport and Logistics 2015.
