In a presentation at the recent TOC Americas virtual conference, Ricardo Sanchez, senior economic affairs officer for infrastructure and ports at the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), declared: “COVID-19 has produced the worst social and economic impact on our continent in recent decades, with the regional economy  facing the prospect of 44M people being unemployed, 231M people living in poverty and 96M people living in extreme poverty. That is a setback of 30 years or more.”

Sanchez claimed that GDP in 2020 could fall back to 2010’s level and he predicted a slow recovery with economic and social costs associated with the pandemic actually increasing in  2021. He was not hopeful of any recovery taking place until 2022 or later.

Sanchez’s comments are supported in the latest analysis of port throughputs undertaken by ECLAC. It shows that container throughput volumes across Latin America slid in HI 2020, compared with the corresponding period of 2019, with the biggest falls recorded at West Coast South American (WCSA) ports (-15%).

In particular, ports in Chile saw traffic volumes slump with the COVID-19 situation, made worse by industrial unrest and lengthy strikes by truck drivers. This led to ports being periodically blockaded and heavily congested. According to ECLAC, the number of containers handled at the Chilean ports of Valparaiso, San Antonio, Iquique and Talcahuano declined by 26.5%, 11.5%, 15% and 32.4%, respectively in H1 2020.

Loss of volumes

Elsewhere in the region, Colombia’s largest Pacific coast port, Buenaventura, and the WCSA’s biggest box port, Callao in Peru, posted falls in their container throughputs of 38.1% and 8.8%, respectively.

Despite the negative effects of COVID-19 on the region’s economy and trading performance, these are viewed by most analysts as being short-to-medium-term in nature. Indeed, longer-term prospects remain exciting, particularly in Peru and Colombia. A variety of large-scale agricultural, mining/resource and industrial projects, allied to massive infrastructural improvement programmes, could transform the region and greatly raise its presence in international trade.

The amount of investment in largescale port projects, including San Antonio, Buenaventura, Posorja and Puerto Bolivar in Ecuador and Chancay in Peru, lend credence to this argument.

In addition, many regional ports, including Arica (Chile) and Paita (Peru), are being expanded and modernised through the building of new and/or strengthening of existing berths, creation of extra cargo storage areas and installation of new cargo handling equipment.

Currently, some of the most interesting and significant investments are under way in Ecuador. In the past 12 months, DP World has opened the first phase of a new 1.5M TEU capacity container port at Posorja, and Yilport Holdings has made further progress on its more than US$850M expansion programme at Puerto Bolivar.

To date, DP World has invested over US$538M in its single-berth (400m) terminal at Posorja, taking delivery of its final tranche of equipment for the facility in May with the arrival of a fourth super post-Panamax STS crane and the last three of 15 RTGs. Effectively, the terminal can handle 750,000 TEU a year, and its 16.5m draught allows 15,500 TEU capacity ships to call. Meanwhile, a 20 km road has been built to connect the port with the country’s main highway system.

On completion of phase two, the terminal’s quay length will be doubled to 800m, four more STS cranes will be purchased, and throughput capacity will be increased to at least 1.5M TEU a year. However, according to Nicolas Gauthier, CEO of DP World Ecuador, the next stage of the development programme is more about logistics and distribution than expanding pure container handling activities.

All about logistics

Gauthier said the objective was to “replicate Dubai’s Jebel Ali Port and Free Zone facilities in Posorja and to make Ecuador a trade and logistics hub for South America’s west coast”. A huge special economic zone is to be created on over 10-ha of land near the port.

DP World has already spent US$60M on building a common-user logistics centre in the Duran industrial area, also close to the port. Specifically, it is designed to act as a cross-docking,  storage and cargo consolidation centre, particularly for agricultural exports, such as bananas, cocoa and coffee.

Both Puerto Bolivar and Posorja have the advantage of being located very close to the open sea. While Guayaquil is much closer to the capital Quito and the nation’s main  commercial/industrial districts, it is located 85 km up the Guayas River. While dredging work has been carried out, navigational restrictions still exist for larger tonnage, and this lengthens  sailing times and raises voyage costs. The port is also near the centre of the city, with roads often congested.

Nonetheless, the main terminal operating compa nies working in Guayaquil are determined to retain their customers. Recently, Chile-based SAAM, which operates Terminal Portuario de Guayaquil (TPG), and Manila-headquartered ICTSI, which runs Contecon Guayaquil, have announced capital expenditure programmes that will expand their facilities’ handling capacities, boost efficiency and enable larger vessels to be handled. This will improve the cost economies of ocean carriers calling at Guayaquil, and help compensate for the longer transit times involved in sailing up and down the access channel that links the port to the sea.

Contecon is planning to spend an estimated US$18M on a multi-phased programme that will enable neo-Panamax vessels to berth at the terminal. This plan comprises:

● Stage one – raising the heights of two of its STS cranes (units five and six) from 42m to 52m and extending their boom lengths from 50m to 56m. With their booms extended, the cranes will be able to reach across 20 rows on a vessel.
● Stage two – reinforcing the berths.
● Stage three – dredging alongside Berth 1 to an operational draught of 13.5m.

“This is a decisive move that complements the joint commitment we have made with the government to achieve great objectives in pursuit of the development of this sector,” explained José Antonio Contreras, general manager of Contecon.

Although Contecon has been handling some neo-Panamax ships for about a year since the dredging of the port’s access channel to 13.7m at low tide was completed, ICTSI’s latest investment in the terminal will mean more containers will be able to be loaded on existing ships, while even larger tonnage will be able to call too. This is extremely important for bananas – the terminal’s and the country’s main export cargo. These are mainly containerised and are heavy, which means draught is an important issue.

ICTSI’s latest investment follows last year’s successful negotiations with Autoridad Portuaria de Guayaquil. These discussions resulted in ICTSI’s Contecon concession being extended for 20 years to 2047.

Meanwhile, SAAM is in the midst of a US$16M expansion programme that will extend the berthing line at TPG by 180m to 660m, increase container storage capacity, and add new handling equipment.

Work, which commenced in 2019, has already involved the installation of two dolphin moorings, each of which is located 60m from the northern and southern ends of the wharf. In addition, seven new reach stackers and five heavyduty terminal tractors, all from Kalmar, have been delivered. The facility can now handle two super post-Panamax ships simultaneously.

Commenting on the investment programme, Luis Enrique Navas, CEO of TPG, said: “Times are tough for the world, but we know that foreign trade drives recovery and our terminal wants to place itself at the service of foreign trade, better supporting the entire logistics chain with a modern, efficient and safe offering.”

CSP into Peru

In Peru, a new port capable of handling 1M TEU a year is being developed 58 km north of Callao, currently the largest container port complex on the WCSA, at Chancay. The project is led by Cosco Shipping Ports (CSP), which controls 60% of a joint venture established with Peruvian mining and resources company Volcan.

CSP believes the new port will help alleviate growing traffic congestion in Callao and provide a more cost-effective route for cargo moving to/from Lima by taking trucks off some of the country’s most heavily used highways. The group also thinks the port could contribute to a restructuring of current cold chains in the country and further boost the nation’s fruit and vegetable exports.

Operationally, Chancay will provide CSP’s sister company China Cosco Shipping Co with a hub port opportunity on the WCSA.

CSP/Volcan hopes to start construction work on the first  phase of the development, which will cost an estimated US$1.3B, in H1 2021. The new port will have a 16m deep access channel and feature four berths for handling containers and general cargo.

Mulling expansion

 
Elsewhere in Peru, DP World, which operates the Callao South Container Terminal, is understood to be contemplating various expansion plans for the facility. These include extending its existing quay by 400m and increasing its throughput capacity by up to 500,000 TEU a year. However, these plans are likely to be delayed as a result of the pandemic. In H1 2020, Callao’s container traffic fell by almost 9%.

In addition to its port operations, DP World has invested heavily in Peru’s maritime and logistics services sectors as it has sought to develop closer relationships with BCOs and add value to the nation’s outdated supply chains. In 2018, DP World acquired Cosmos Agencia Maritima SAC, which offers a full range of maritime services, and its subsidiaries Neptunia SA and  Triton Transport SA. The latter two companies operate a variety of logistics hubs, warehouses and bonded storage facilities across the country, as well as trucking services.

The deal also gave DP World a 50% stake in Terminales Portuarios Euroandinos SA, which manages the northern port of Paita. The port is in the midst of a major modernisation and automation programme that will see its container handling activities expanded. A new yard has been developed and the port upgraded its Navis N4 TOS last year.

“Having completed the construction of a new container yard, we were in need of a modern and high-functioning TOS capable of managing increasingly complex logistics operations at the port,” explained Eduardo Cerdeira, head of operations at TPE Paita. “Since the original implementation of N4, TPE Paita has experienced much success in achieving our goals of updating and modernising our port to compete on the international stage.”

DP World is also expanding its operations in Chile. In 2019, the group acquired a more than 70% shareholding in Puertos y Logistica SA, one of the country’s leading logistics and port operating companies, and this gave DP World controlling interests in Puerto Central in San Antonio and Puerto Lirquén in the southern part of the country.

DP World views both ports as strategic gateways. While San Antonio is clearly establishing itself as the main gateway for the Central Valley region, which includes Santiago, Puerto Lirquén is developing as a regional centre and the main port for the industrial city of Concepcion.

DP World is currently investing over US$100M in the two ports to upgrade, expand and improve their cargo processing capabilities, while mapping out longer-term strategic plans for the facilities. At Puerto Lirquén, additional storage areas have been created for containers as more of the port’s core forest products and pulp cargoes business is containerised. New handling equipment has also been ordered, with Kalmar scheduled to deliver two ‘G’ generation reach stackers, a ‘U’ generation reach stacker for handling laden containers, and six Ottawa T2 terminal tractors during Q4 2020.

All of the equipment will be fitted with the necessary hardware and software to enable it to be connected to the Kalmar Insight performance management tool.

At San Antonio, plans to build Puerto de Gran Escala (PGE), a new eight-berth outer port complex with capacity to handle over 2M TEU a year, are believed to be progressing slowly. It had been hoped to initiate the first phase of operations at the port in 2026-27, with completion of the US$3.4B+ project scheduled for 2038-40.

Plans to develop a new terminal at the competing port of Valparaiso are less certain after years of delay and the announcement last year that Terminal Cerros de Valparaiso SA (TCVAL) would terminate its concession agreement to build, maintain and operate Terminal 2 at the port. The withdrawal will become effective on 15 April 2021.

TCVAL, which is owned by the transport infrastructure group Aleatica, itself part of IFM Investors, pointed to excessive delays in the environmental processing of the project, which it stressed “had negatively impacted the project’s economic valuation and deprived it of valuable years of project operation, causing losses that could not be recovered under the concession’s maximum deadline”.

Empresa Portuaria Valparaiso is now working on a new tender for the project, valued at over US$550M, which it hopes to release to interested bidders next year, with construction to  commence in 2022. The T2 project involves constructing two terminals, each with two berths of 725m and the capacity to handle 500,000 TEU a year.

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This complete item is approximately 2200 words in length, and appeared in the October 2020 issue of WorldCargo News, on page 32. To access this issue download the PDF here