Connecting through trade that generates economic growth is one of the main objectives of APEC member economies. In this regard, ports in the region will have to overcome the triple challenge of modernizing and connecting with each other and with land transport.
On the right track. This is how Latin American ports look, from Manzanillo in the North Pacific to Coronel in the South Pacific, on their path to modernization and the opportunity to grow trade to bring prosperity to the region, especially in trade to and from Asia Pacific nations.
This is the opinion of Juan Andrés Duarte, executive president of the American Association of Port Authorities (AAPA), a union that has been representing the interests of members of the port and maritime industry in the Western Hemisphere for more than 110 years.
“Latin America is a region that has been characterized by its great recent development in port matters: it is a continent that has transformed its port infrastructure in the last thirty years in an impressive way (…) with absolutely competitive world-class terminals, which rank among the most efficient in the world,” Duarte told AméricaEconomía, recalling the third place obtained by the Port of Cartagena group in Colombia, according to the most recent report from the World Bank (WB).
However, there are a number of challenges that both operators and governments will have to face in order for ports to be more efficient and to be able to face the challenges that are coming for the sector, highlights the AAPA director.
“The [regional] port sector also needs a good connection with the hinterland (the land area connecting the port with the destinations of the goods) to establish the best communication between the markets. And in this we depend on the States to connect with roads, with the railway, to help develop the logistics communities,” adds Duarte.
“Improving land connections in geographically close regions and implementing more robust security protocols are crucial. In Latin America, the development of rail transport should be considered for its efficiency and low carbon emissions,” says Alberto Oltra, CEO Spanish-Speaking South America (SSA), DHL Global Forwarding. to AmericaEconomy .
In the report 'International Trade Outlook for Latin America and the Caribbean 2024: Reconfiguration of global trade and options for regional recovery', José Manuel Salazar-Xirinachs, Executive Secretary of ECLAC, believes that “The implementation of productive development policies with a cluster approach, and based on close public-private collaboration and sustained efforts over time, appears to be an ideal mechanism for moving in that direction, as well as for competitively positioning the region in the face of the ongoing reconfiguration of global value chains,” he said.
This is the concern of Enrique Sánchez , Director of the recently created Coahuilense Logistics and Supply Chain Cluster in Mexico , who believes that historically the creation of cargo infrastructure in Latin America has been insufficient and, in many cases, ignored or quickly surpassed.
"There are not many cases in which urban planning in cities is done considering freight traffic within and on the outskirts of cities. In general, it is created on the fly and not with the best information and projections," he explains to AméricaEconomía.
A 'SOUTH AMERICAN SILK ROAD'
One of the auspicious signs is the establishment of a bioceanic corridor in South America. According to this multilateral organization, these land transit routes in South America constitute a great opportunity to improve the competitiveness of the territories involved and boost local economic development.
Called the Capricorn Bioceanic Corridor, or Bioceanic Road Corridor (CBV), it is projected as a mega-highway that would connect Brazil and Chile from east to west, uniting four countries, crossing seven border crossings and allowing savings in time and kilometers compared to the voyages of ships with export cargo that currently pass through the Panama Canal.
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For Gustavo Mallat Garcés, an academic at the Universidad Santo Tomás in Chile, Capricorn should be the region's strategic platform towards the markets of APEC, ASEAN and some TPP-11 economies.
“This bioceanic route must become a crucial factor in generating jobs in different productive sectors and a pillar for promoting human capital at a regional level, and its retention (…) For example, receiving export products from the south of Brazil, Paraguay and the northwest of Argentina, and adding value to them in the territory, whether in industrial zones or neighborhoods of Iquique and Alto Hospicio, and that they become “Chilean exports” to the Asia-Pacific or the Indo-Pacific, in nations or markets where Chile has zero tariffs, due to free trade treaties and agreements” he indicates.
At the moment, this corridor, which was relaunched during the recent visit of Chilean President Gabriel Boric to Paraguayan President Santiago Peña, is on the right track, according to those interviewed.
“It is a great development opportunity for the countries that it links; it has been proven that international trade corridors involving two or more countries contribute significantly to the economic and industrial development of regions in each country and even of binational regions that share a border,” recalls Enrique Sánchez, from Mexico.
“Due to its length, we could call it the ‘South American Silk Road’, although it does not have the railway line developed in the Chinese strategy, and that is not a minor detail. The road route is the least efficient from every point of view and crossing from Brazil to the Pacific ports represents a very demanding objective to justify compared to the operation via the Atlantic ports,” explains Alejandro Wolf, partner of the Argentine Association of Business Logistics (ARLOG).
The international logistics consultant also recalls that the Inter-American Development Bank must finish analyzing the Master Plan on this corridor, and issue its recommendations, since bioceanic corridors can lose impact as they move away from their starting points. “The maritime routes that depart from Pacific ports usually go through other ports on the South American coast, that is, they do not depart directly to destinations in Asia, and this means that the advantages of proximity to ports in the East do not take full advantage of transit times ,” warns Wolf.
Similarly, Sánchez says that having efficient land, sea or air crossing points is not enough. “Logistics development planning must be comprehensive, [since] operational problems and complications would tend to grow along with the logistics cost for companies, as well as other urban, mobility and connectivity problems,” he warns.
THE FUTURE OF PORTS
The big change on the Latin American maritime terminals board will be the port of Chancay, in Peru, which will be inaugurated during the APEC 2024 summit.
“It will bring great benefits such as enabling direct routes for the transport of products to and from Asia, as well as strengthening maritime connectivity, redirecting traffic from countries such as Brazil, Chile, Ecuador and Colombia to Peru. In addition, it will help reduce congestion at the port of Callao, and will reduce transit times to destinations such as China, Japan and Korea, reducing the time from 35 or 40 days to just 23” highlights Iván Sánchez, Chief Operating Officer of Ransa Perú .
For the AAPA, the Chinese Cosco terminal will be an interesting challenge in the reorganization of shipping routes.
“After Chancay manages to receive ships of 24,000 TEUs and how the feeder system will be to the other ports [we will be able to] see if this really changes the routes of the other shipping companies, because we do have important trade from Asia to the Pacific, but we also have routes to the United States and routes to Europe,” says Duarte.
The executive adds to the challenges the aging of the port infrastructure. “It is a challenge that is common throughout the continent, from Canada to Argentina, and in our region it is a little more complicated because we often depend on governments and private companies require a concession framework for many years (…) We see the case of Peru, which has allowed long-term contracts for multimillion-dollar investments to come and create port infrastructure that will ultimately make foreign trade more efficient,” he adds.
In addition, both geopolitical and climatic uncertainties are ever present, as indicated by UNCTAD's Maritime Transport Report 2024, which summarizes the serious challenges facing the maritime sector in the region, due to climatic disturbances, with interruptions in the Panama Canal, plus the distortion of freight rates throughout the region during 2023.
UNCTAD also highlights a connectivity crisis in the region, aspects that can only be resolved by consolidating cargo volumes, encouraging collaboration between shippers and promoting port infrastructure with private investment.
At ARLOG, meanwhile, they remember Covid-19 as “a turning point whose effects do not seem to have been fully understood (…) it showed an excess of consumer demand creating multiple bottlenecks, altering the development of maritime transport like never before and raising rates seven times their usual values,” Wolf reflects, expressing concern that an event of this nature might be repeated without the lesson having been learned.
