Logistics opportunities in Trinidad and Guyana

Trinidad and Tobago

Sean Patience, managing director of Cargo Consolidators Agency (CCA), talks to The Energy Year about energy-related logistics opportunities in the Trinidadian market and abroad, as well as the company’s recent evolution. CCA is a Trinidadian freight forwarding company for the local and Guyanese hydrocarbons sectors.

How has CCA evolved in 2021 and 2022? What trends are you observing in regional activities?
Over the last two years, our agent base expanded. We have a lot of connections with foreign agents, which is useful if a company wants to import from China, the USA or Europe. The pandemic prompted us to start reaching out to new international agents, and that has helped us to sustain our business activity and grow our base. For example, in China we have about five or six agents now. So if a client puts in a request to move material, we now have queries going out to six agents instead of just two, which gives us more options.
We implemented a work from home [WFH] policy, which continues to work for us even after Covid. Some of our staff now work from home while others work in the office. In order to sustain a seamless WFH policy we improved our internal IT systems in terms of security, firewalls and ICT policy.
We managed to make improvements to our accounting policies, and our ACH online payments process as well, during this period. Our Guyana office has ramped up activity as Guyana’s oil and gas economy is booming. We saw a lot more of the business come from Guyana, over the past two years. We found that even though we lost revenues in Trinidad, the Guyana office started picking back up at a much quicker pace than Trinidad.

What are some of the challenges for the logistics sector that affect the efficiency of operations?
There are definitely challenges involved with Customs operations and new Customs policies and procedures. Foreign Customs authorities are adapting to digital methods of work. If Trinidad adopts these methods, it can help improve efficiency even more. It is very expensive, for example, to do trans-shipment in Trinidad. It’s an opportunity that they’re missing by not upgrading or revamping the Customs system here.
Another challenging factor is access to US currency. The lack of access to foreign currency makes doing business in any sector in Trinidad a challenge.

What opportunities do you predict for the company and other logistics players with new major oil and gas projects coming on line?
In Trinidad, the opportunities could be two-fold. Firstly, if more offshore blocks are opened up and auctioned off, a new round of drilling activity will bring a lot of movement for tools and supplies in the upstream sector. The other area of opportunity is increased activity in the downstream or petrochemical sector.
As the world searches for alternative supplies of natural gas, ammonia and fertiliser, Trinidad can benefit from this increased demand. Doing so will mean an increase in maintenance programmes on the manufacturing plants. This means more movement for parts, machinery and equipment needed to support this rise in production.

How important is the energy industry for your activities here in Trinidad?
The petrochemicals sector makes up a high percentage of our clientele. There was recently a tax in the US that was removed for foreign imports of fertiliser. Once that happened, the plants that produce the ammonia and nitrogen ramped up production right away and decided to do overhauls to further increase output.
Increased output resulted in engineering requiring parts for repairs or replacements, and that is a great opportunity for logistics companies. The energy industry is a significant area to our business, in this regard.

How do you view Guyana’s potential and what is the nature of your current activity there?
I believe Guyana is going to be the next big thing. And even if Suriname comes on line, I believe Guyana will be the jewel of the Caribbean because of all the finds that ExxonMobil and other, smaller international oil and gas players have made. We have already started to see some of the migration of business activity from Trinidad to Guyana. Some of the companies we work with have already moved tools.
In Guyana, the logistics sector is very competitive as many companies are entering the market to take advantage of the new business opportunities, due to their exponential growth. The nature of the work there is similar to what we see in Trinidad.

What opportunities do you see for the logistics sector in renewable energy projects in the region?
The renewable energy space is good for potential business. If you take solar, for example, the panels aren’t manufactured in Trinidad. Local companies may manufacture some of the components perhaps, but the majority of it would have to be imported. Other than import opportunities, there are also opportunities for storage or warehousing, and in-land transport.
However, once the construction phase is over, there won’t be a lot of ongoing business besides replacement parts. It is not as lucrative as oil and gas, at the moment, where the service companies have tools, pipes, valves and consumables moving around. I can see the renewable energy space providing more opportunities in the future for logistics, as many entities are now focusing on becoming green. This, however, will take some time for integration.

What is the capacity of your Freeport 3PL warehouse and what growth opportunities does it bring to CCA’s services and operations?
Our Freeport 3PL warehouse is 20,000 square feet [1,858 square metres]. And the model for that is third-party logistics – basically the outsourcing of logistics processes, including inventory management, warehousing, fulfilment and storage on demand. On-demand storage is the ability to access warehousing services as and when required without the need for long-term commitments.
This allows fixed costs to be converted into variable costs. We offer storage options as small as one per-pallet position, per month. This concept, although not a new concept worldwide, is relatively novel in Trinidad.
Our facility is also Customs bonded. Bonded storage works for companies that want to defer payments of duty and VAT to assist with their cashflow. Also, it works for companies that may want to re-export products that do not sell on the local market. We see this type of storage as a definite growth area for us.

Given the commodity price uptick and new opportunities, where do you plan to take the company going forward?
We just moved into a warehouse in Guyana, and obtained our local content certificate. This is where we expect the greatest growth opportunities. It’s a small warehouse, but it is better to start small, see how that works and then expand.
The main reason for that is to maintain the highest level of service. If you start too big it can be a problem if you can’t maintain it. We also plan to maintain our level of business activity in Trinidad. And in 2023 we will consider whether Suriname is the next step in our development.

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