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It is one of the prettiest sights in the Caribbean - the stepped heights of St George's Harbour in Grenada, all red roofs offset against a hundred tropical greens - but it is made perfect by the colourful wooden sloops and schooners that line the dock and ride at anchor in the Carenage. St George's grew up around its seaborne trade and these local boats are magnificent beasts: their graceful, curving lines hark back over centuries and they give an air of timelessness to the already tranquil Caribbean scene.

Of course Grenada is not the only place around the islands that you will still see traditional Caribbean boats. Many are used for pleasure now rather than for trading - the square-sailed yoles rondes of Martinique are famous and there are boats such as the Friendship Rose from Bequia in the Grenadines on which many tourists have taken rides. But others are still used for carrying passengers and for trading up and down the islands: Haitian boats provide the most efficient service in a country without roads to remote areas; the Grenadian sloops are regularly seen as far north as Sint Maarten and south to Trinidad and Venezuela.

Time was when the main bays in all the islands would be thick with brightly-coloured wooden boats (it is a tradition that they are painted red, sky blue or orange, so that they are most visible at sea). And the word Carenage itself, which you come across all over the islands, refers to the old place where ships would be careened (weights were attached to the masts to expose the hull so it could be cleaned). The boat-building trade reached its height at the turn of the century when two or three vast boats (over 100 ft) could come from the smallest islands each year. Plans for the boats were brought from across centuries ago by shipwrights. Then the designs were adapted to meet local conditions and the skills were passed down through the generations.

Now that passengers prefer to travel by plane and much of the trading is done in large freighters from the continental USA and Europe, the old traditions are dying. Wooden boats are expensive to keep up and as trading vessels they cannot compete with metal-hulled, ocean-going ships. However, some islands have kept up the tradition and they are still building them. In Carriacou, Grenada's small-island dependency, you will still see them taking shape on the seashore, their curved hulls like a massive rib-cage steadily being covered with planking.

Building can take years even without delays. It is an expensive business and the owner has to get the money together for each stage, for materials and for labour. There is one boat that has stood in Tyrrell Bay for many years, a hull of ribs and frames as yet without planking. I chatted with the builder. Most of the wood comes from Carriacou itself: white cedar is used for the ribs, the mast and the planking, but the keel, the largest and strongest piece, is usually cut from a trunk of greenheart wood from Guyana.

The pattern for the Carriacouan boats was apparently brought to the island by shipwrights from Glasgow. An experienced eye can recognise their curved stem and long, overhanging stern. The skill of the boat-builder is still important here, because he does his design by eye rather than by computer. The whole thing is hand-carved, as you can see by the adze marks on the frames. When I arrived they were waiting to add the planking on the hull and finally the mast and deck.

The builder also told me about the launching ceremony, which, in the best West Indian tradition, involves a party. First there is a short service by the local vicar ('godparents' are chosen, whose duty us to raise the boat if she sinks) and then there are some slightly more superstitious sailors' dedications. A full ceremony would include the sacrifice of a chicken to ensure that there should always be food enough for those on board, of a ewe lamb so that the ship should be docile and always go where she is pointed and of a bull calf to give her energy for sailing. After this there is a huge launching party as the boat is pulled into the sea on rollers. They sing a sea-shanty to get the rhythm for the launch.

There are differences in design even between islands that are just a few miles apart. About 50 miles to the north, Bequia also has a strong tradition of boat-building - the Gloria Coralita, thought to be the largest Grenadines boat ever built, was 165 feet long and had three masts. The island is particularly well known for its whaling boats, pointed at both ends (most Caribbean boats have squared keels) and up to about thirty feet long. Like the boats of Anguilla and Martinique, these are now used for racing at the regattas.

When I asked about how they sailed, they suggested that I should try one out - "take a trip to Trinidad, man". A week later I went down to the harbour in St George's and asked around about a crossing. Officially the trading boats do not take passengers, but I was told that if I came back in a couple of days then they could add me to the crew list. When did they expect to leave? Oh Tuesday, maybe Wednesday. First they had to go up to Carriacou to off-load the rest of their cargo.

I came back on Tuesday and there was no sign of them, but on Wednesday they appeared at the main dock, loading up sacks of ground provisions, Grenadian spices and fruits, and crates of empty beer bottles destined for refilling at the Heineken brewery in Trinidad. I was added to the manifest and jumped aboard.

The crossing to Trinidad is deep and notoriously rough, as I found out to my cost. But we were lightly loaded and had the wind behind, so we made good time, climbing each successive swell and then skittering, wind-assisted, down the other side. It was growing dark by the time that we entered the Bocas del Dragon, the channel between Trinidad and Venezuela that so frightened Columbus, but at least we had engine power, so we were unlikely to be swept onto the rocks by the currents.

In steadier moments chatting with the captain I found out that they stop in Trinidad for a couple of days and load up with goods manufactured there - beer, crisps, biscuits and sometimes furniture - before returning to Grenada and then the Grenadines. He told me that other schooners travel north rather than south from Grenada. They sail to the Leeward Islands and the French islands, where they find different products sent directly from Europe: white goods like washing machines and stereos, and then export beer and cigarettes, and of course, from the French islands, the finest wines in the area, even some cheeses.

Of course there is a parallel business as old as the inter-island shipping trade, and that is smuggling. Apparently shopkeepers along the island-chain have been known to get a call offering a rendez-vous in an isolated cove in the night - a cheese and wine-tasting by candle-light, but with a difference. Brand-name booze and cigarettes are the big product, but there is a nice story of a vicar being tipped off that if he went to a certain cove, he might find, by chance of course, a long-wanted church organ. A smuggler's penance perhaps.

Smuggling is a controversial issue. Quite regularly there have been raids to stamp it out, though usually there is a tip off and the contraband gets hidden in the hills. At one stage the Carriacouans called for an end to the attempts to stop them trading, claiming that the island should be given duty-free status. But for every winner on cheap booze and other products - and people like to make a day shopping trip to buy the tax-free goods - there is a loser. The island governments still want to raise the same amount of revenue, so the can is simply passed to the legitimate island businesses and understandably they resent it.

A century ago, everyone who visited the Caribbean would arrive by sea, but the pleasures, and considerable pains, of this sort of travel are almost gone now. You are most likely to see them cutting a graceful path through the waves as they ply from one island to the next. If you visit Grenada of course, you will see them in the charming setting of the Carenage.

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