Latin America’s container ports are growing strongly. Balboa grows most and Buenos Aires sees the worst decline. But Santos is now the top port, dethroning Colon.
Thanks to a strong increase in trade with the United States and China, the port of Santos has dethroned Colon in Panama as Latin America’s top container port, according to a Latin Business Chronicle analysis of data from the UN Economic Commission for Latin America and the Caribbean (ECLAC) and individual ports.
Total containerized cargo at the Port of Santos reached 2.3 million TEUs (Twenty-Foot Equivalent Units) last year, a 20.4 increase from 2004. Colon posted 2.0 million TEUs, an increase of 5.7 percent.
Other changes include:
San Antonio, Chile passing Puerto Limon-Moin in Costa Rica, thanks to a 20.8 percent increase,
Callao, Peru passing Manzanillo in Mexico, thanks to a 21.9 percent increase,
Puerto Cabello, Venezuela passing Rio Grande in Brazil, thanks to a 24.9 percent increase,
Balboa, Panama passing five ports, including Veracruz in Mexico, thanks to a 42.8 percent increase.
In fact, no other port grew as much in percentage terms as Balboa. All in all, 14 of the top 15 ports registered growth, of which seven posted double-digit increases in TEU traffic.
The increase coincides with Latin American trade growing by 18.1 percent last year, according to estimates from ECLAC. That, in turn, was the result of strong growth with the region’s top trading partners, the United States (up 13.7 percent) and the European Union (up 13.0 percent) as well as the fast-growing trade partner China (up 26.2 percent), according to official U.S., EU and China data.
Buenos Aires and Cortes
The big loser is Buenos Aires, which posted a 5.6 percent decline in its TEU traffic last year. It still kept its ranking as the third-largest TEU port in Latin America, but could be overtaken this year by a fast-growing port like Callao or Manzanillo, which is growing steady, but surely. Another loser is Puerto Cortes in Honduras, which only grew by 0.4 percent and fell behind Cartagena in Colombia and Balboa in the ranking of the top 15 container ports in Latin America.
Montevideo in Uruguay grew by 7.4 percent, but that was not enough to secure it a place among the top 15. Puerto Haina in the Dominican Republic, another important port, failed to provide accurate data and was thus not included in the comparison.
Although Santos is among Brazil’s best ports, it is not among the best-managed ones in Latin America, according to Anand Hemnani, the São Paulo-based vice president of CG/LA Infrastructure, a US-based infrastructure consultancy. The best-managed ports are Valparaiso, Buenos Aires and the Port of Veracruz in Mexico, Hemnani says.
Latin America’s worst-managed ports are the ports of Guayaquil in Ecuador and La Cruz in Venezuela, according to Hemnani. These ports have not kept up with technology investments in port infrastructure, he says.
Bottlenecks
Latin American ports are now under intense pressure to expand facilities and improve service. "The ports in southern and southeastern Brazil have reached their capacity," says Hemnani.
During harvest season, for example, there are very large demurrage charges given the time for loading bulk grain, he says, referring to the fees the ports charge for the time it takes to load and unload cargo.
The port of Itajaí has 97 percent capacity utilization, the port São Francisco has 93 percent, the port of Rio Grande has 91 percent and the port of Santos has 80 percent capacity utilization. "During peak harvest season, these ports are significantly back-logged," Hemnani says.
However, even when ports have improved their infrastructure, shippers complain that the roads leading in and out of the ports are still deficient.
"There is a lot of congestion for the trucks going into the port," says Marco Dessa, a São Paulo-based executive with BDP International, a U.S.-based logistics provider. He expects the congestions to be reduced in two years, when current construction work aimed at expanding the ports entries should be finished.
Julian Palacio, the Bogota-based Latin America coordinator for the American Association of Port Authorities (AAPA) agrees. "During the past 15 years, Latin American governments have modernized the port systems through decentralization of administration and privatization of services, which has brought excellent results in the countries that have decided to detach themselves from a purely political management," he says. "However, the governments have paid little attention to the complementary infrastructure – roads, railroads, rivers, etc. "
So, although there are ports that are generally more efficient, their advantages for foreign trade don’t achieve the ideal levels since there are still bottlenecks due to deficiencies in transport logistics, Palacio says. Currently, a majority of ports in Latin America are affected by inadequate infrastructure, he adds.
Another challenge for shippers is that costs are still relatively high. "The costs for container handling is still a concern despite significant improvements in costs per TEU," Hemnani says. "There is still room for improvement."
Other challenges include labor problems, especially with local customs who strike through go-slow strikes that delay loading and unloading vessels, he complains.
The need to improve logistics and infrastructure will be the key topic at the Latin American port conference in Guayaquil scheduled for June, Palacio says. "We want to raise awareness to the ports and governments of the urgent need to work in the ports complementary infrastructure so that the cargo can become internationally competitive," he says.
Security
Santos is one of only three ports in Latin America that has joined the Container Security Initiative (CSI), a U.S. Customs program to pre-screen maritime containerized cargo before it heads to the United States.
The other two are Buenos Aires and Puerto Cortes in Honduras. All in all, 44 ports have joined, including Rotterdam (the top port in Europe), and key Asian ports like Hong Kong, Singapore and Shanghai.
"Through CSI, the Port of Cortes now has the chance to ship more containers to the United States which will directly benefit the Republic of Honduras because foreign investors will see the country as an easy and secure way to send their merchandise to the United States," Charles A. Ford, the U.S. ambassador to Honduras, said in a statement announcing the news on March 25. "This will open more job and commerce opportunities, especially once the Central America Free Trade Act (CAFTA) enters into effect."
The CSI program entails having U.S. Customs and Border Protection officers stationed at the port, with local customs officials working with the US officers to screen any containers identified as potential terrorist risks.
Santos
Apart from the strong increase in TEU traffic, Santos also set a new record in overall cargo handled at the port. All in all, Santos handled 71.9 million tons of cargo last year, an increase of 6.3 percent from 2004 and a new record.
Santos accounted for 26.5 percent of Brazil’s total trade last year, the port said. Exports grew by 10.0 percent to 50.4 million tons, while imports fell by 1.4 percent to 21.4 million tons.
Top exports included sugar, soya and oil. The United States was the main destination for exports, accounting for $5.8 billion worth of cargo, followed by Argentina ($1.9 billion) and China ($1.7 billion).
However, exports to China grew most, nearly doubling from 2004. Top imports included coal, fertilizer, sulfur and wheat. The United States was the leading origin, accounting for US$ 3.6 billion, followed by Germany (US$ 2.7 billion), Japan (US$ 1.4 billion) and China (US$ 1.3 billion).
The growth continues this year as well. In the first quarter, Santos handled cargo worth US$ 12.8 billion, an increase of 16.4 from the same period last year. Santos is now preparing for a public listing, according to Brazilian port sources quoted by British shipping newspaper Fairplay last week.
In Brazil, other well-run ports besides Santos include Suape and Itaqui, while the country’s worst-run ports are Rio Grande and Sepetiba. They require dredging and have huge bottlenecks in terms of investments required to meet demand, Hemnani says. Dessa also singles out Suape as a well-run port that rivals Santos.
Despite the challenges at Santos, it is widely seen as better-run than in the past when strikes and high rates were the norm. The port was largely privatized in 1997. "You can’t even compare with how it was before," Dessa says of the current administration by private terminal operators.
This article was originally published in the Latin Business Chronicle – www.latinbusinesschronicle.com