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Port building and competition on the Pacific coast of South America looks set to gear up sharply – and the controversy it is creating is equal to the problem of lack of infrastructure it is trying to remedy.

The hub of the argument, if such a pun can be used, is actually a double one. Whether to go for a mega-hub on the Pacific coast and if so where. The controversy, ever near in the shipping industry, flared up at a recent TOC Market Briefing held in the port city of Guayaquil in Ecuador.

First though the point of agreement. The general feeling about the ports on the western coast of South America is that they are not up to it, not now and not with economic growth likely to stress them even more. One possible solution suggested by Robert West, trade and transport principal with Halcrow, turned out to be a self-fulfilling prophecy.

“There is a strong argument for a transhipment hub on Panama’s Pacific coast for post-panamax ships” he said. These, he said, are facilitating trade with Asia, better ship utilisation and allowing multi-destination cargo to be loaded in China.

To add to his position he also said that after the extension of the Canal is factored in in 2015 two things will happen. The first is that the faster-than-world-average growth rate ports on the West coast of South America are currently enjoying might change. The second is that post-extension “there will be growth of transhipment in the Carribbean”. His reasoning is straightforward; “when a ship from China tranships in the Carribbean it has a lot more flexibility. The transhipment idea is really taking hold.”

Mr West said there were strong arguments and he certainly got them.

Leading the charge – a polite one, but a deliberate rejection nonetheless – were the shippers. A concise summary of their argument came from Philip Cassuto, regional director for West Coast, South America of French shipper CMA CGM. His explanation is that customers don’t like the risk associated with transhipments but do so because they have to. “If we had the right infastructure we wouldn’t want hubs,” he said.

A corroborating view comes from Tim Stout, regional director of Hamburg Sud. He believes very much in the practice of point-to-point service. “We want to connect everything with each each other,” he said. But until infrastructure allows, the shippers are going along with transhipment. “Basically the point is how can we reduce our operationals costs but we don’t believe in transhipment (and we don’t want to have it in the Carribbean),” said Mr Stout.

The fact that a number of Carribbean states are setting up such facilities suggests another argument in the offing, but sticking with South America the issue becomes one of infrastructure and that raises in its turn a series of vexed political and economic questions.

More ports raises the question of where the money is going to come from and where these ports will be put. This in a region where resources are scarce for big or multiple infrastructure ventures and the political will to get them done an uneasy fit with current political sensitivities. The argument that sets off will dwarf dramatically the current controversy in the shipping industry.

The problem isn’t just the lack of ports but geography and geology. Many of them were built a long time ago when ships were different, i.e. smaller and international trade less. They are inadequate to the task as it is and as it will be. There isn’t enough hardware and there isn’t enough water to support ships with draft being a recurring issue before the other big ones – onward movement, connectivity and labour relations – are mentioned.

“The intensity of these problems are not the same in each country but they are common” says Ricardo Sanchez, economic affairs officer of the Economic Commission for Latin American and the Carribbean. He reports these problems cause logistic costs to be one and a half to three times higher than elsewhere.

However, the solution he posits is quite possibly the most controversial of the lot: “We need a holistic approach…it requires a clear and sustained national strategy first in government then consensus with labour and business and maybe regional coordination.”

There are a host of problems with this. Many of the countries in South America aren’t rich and they tend not to operate on a consensus building model. In fact, a number of them are rather fractious both internally and with each other. Anyone doubting this statement should just think FARC, Ecuador’s constitutional referendum and armed exchanges between Ecuador and Colombia over the alleged pressence of FARC in Ecuador.

What Mr Sanchez is outlining is a momentous task, but one with rewards certain to be in proportion to the controversy it raises.