The Dominican Republic Can Solve a Lot of Supply Chain Issues
The Western Hemisphere, particularly North America, faces massive constraints in port capacity and efficiency.
In a world of continually shifting supply chains, this is an issue. Deglobalizing from China, Russia and risky global hot spots begets globalization with different regions. Companies and countries view this nearshoring and friendshoring as keys to supply chain resiliency.
Ports must handle most of that trade. The busiest ports in the United States – Los Angeles and Long Beach – are abysmally inefficient, according to the World Bank. Smaller East and Gulf Coast ports lack the land to expand and the labor to add infrastructure.
Luckily, the solution rests about 800 miles southeast of Miami. The Dominican Republic has the location, land and labor and (L+L+L).
All it needs is logistics infrastructure (a fourth L) to become a modern-day lighthouse (the fifth L) for global trade in the Western Hemisphere.
I mentioned the Dominican Republic’s potential in my last blog on enterprise sourcing platforms. But let’s dive deeper into why L+L+L+L = Lighthouse to the West.
The End-to-End Supply Chain Control Tower – Your Digital Lighthouse
From the first recorded lighthouse in Alexandria in 280 B.C. to the end of the 20th century, physical buildings guided ships.
Today’s lighthouses are digital. The technology is based upon an end-to-end digital supply chain control tower. A Dominican Republic-based control tower could monitor, report and coordinate the flow of goods throughout the Western Hemisphere.
Beyond that, today’s technology can help companies design and plan digital transformations of their supply chains. Today’s technology also can offer logistical and operational support and analytics for all logistics providers and shippers.
And the Dominican Republic is in the right geographic location.
The Right Spot for a Western Hemisphere Lighthouse
As mentioned earlier, the Dominican Republic is just 800 miles from Miami.
Although 77% of U.S. residents live closer to the U.S. Gulf Coast and East Coast than the West Coast, no U.S. port on the East or Gulf Coast ranks in the top 20 in volume or efficiency.
This leaves a gaping hole in plans to reorient global trade flows via nearshoring and reshoring. The Dominican Republic can fill that hole with transshipment, container handling and eCommerce fulfillment for the eastern U.S.
The country can support 2-day shipping to 60-70% of the U.S. population. U.S. eCommerce alone is expected to grow from $791 billion to $1.5 trillion by 2028.
Beyond the North American market, the Dominican Republic is positioned right along East-West and South-North shipping lanes. Every route needed to serve a Western Hemisphere logistics hub passes by the Caribbean nation:
- From Asia and west coasts of North and South America through the Panama Canal to the Dominican Republic and then onto the east coasts of North and South America
- From Africa and Europe to the Dominican Republic to the east coasts of North and South America and through the Panama Canal to the west coasts of North and South America and Asia
- From South America to the Dominican Republic to North America
- From North America to the Dominican Republic to South America
Land and Labor Can Propel Logistics Infrastructure
Land and labor are expensive and limited along the U.S. Gulf Coast and East Coast. (That’s even more true for the West Coast.) Canada has similar issues.
Other Caribbean and Central American countries have inadequate space. Cuba, of course, is not viable because of politics. Panama has fairly expensive labor and land. Much of South America and Haiti are politically unstable.
The Dominican Republic has the available, affordable land and labor to cost-effectively expand port, transportation and warehousing facilities.
Logistics Can Bring A Bright Future
Available, inexpensive labor and land mean additional opportunities for the Dominican Republic and the logistics industry as well. The country could become a powerhouse for assembly, customizing, light manufacturing, even medium manufacturing.
It’s already the largest economy in the Caribbean and has free trade agreements with the United States and Europe.
True, the country lacks innovation. The World Intellectual Property Organization (WIPO) Global Innovation Index 2023 ranks the Dominican Republic 114th in the world.
But Singapore was in much the same boat in 1965. Despite centuries as a port, back then Singapore was an undeveloped country with a GDP of only $500 per person.
Since then, Singapore has transformed every part of its infrastructure: Port facilities, roads, buses, mass transit, parking, taxis, restricted travel areas, fare collections, vehicle ownership, air travel and freight, cycling – every aspect of mobility.
Last year, that country’s per capita GDP topped $82,000.
Will The Dominican Republic Step Up?
Many Western nations see nearshoring and friendshoring as pillars of the region’s economic future.
The Dominican Republic has the location, land and labor to take advantage of this disruption. It only needs to add logistics infrastructure to become a modern-day digital lighthouse, a logistics hub for the Western Hemisphere.
Port upgrades. Roads. Railroads. Warehousing. Those are all physical aspects of logistics that the Dominican Republic can build.
Logistics technology has been steadily adding artificial intelligence, machine learning and cloud computing over the last few years. Technology. Much of that progress can be bought off the shelf as standardized software.
In the process, The Dominican Republic could follow the path of Singapore, which saw a more than 100-fold increase in GDP per capita from 1965 to 2022.
The only question is whether the Dominican Republic will take advantage of this golden opportunity.
- Deglobalization from China Means Globalization Elsewhere
- Global Supply Chain Management: You’re Doing It Wrong
- What a Total Transportation Evaluation Can Do
- The Right Shift(s) for Deglobalization – and Globalization
Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.