Mixed outlook for South American volumes
Ports in the region are battling strikes, legal battles and fluctuating throughput. Alex Hughes reports
In 2017 the various ports administered by Guatemala's National Ports Commission pumped up volumes by a healthy 3%, although the uptick might prove to be an anomaly if mid-year 2018 handling indications are anything to go by.
In 2017 the ports handled a combined 27.3m and the rise was down to one simple reason, says Gustavo Adolfo Méndez, Guatemala's National Ports Commission (Comisión Portuaria Nacional, or CPN) executive director: “We handled more overseas trade.”
But in the first seven months of 2018, combined traffic handled amounted to 16m tonnes, down 7% over the corresponding period last year, when the nation's ports handled 16.7m tonnes.
Mr Méndez blames fewer imports of dry and liquid bulk for the variation, although he is hopeful that this could “improve upwards over the course of the remaining months”.
Guatemala has three main ports handling its overseas trade. On the Pacific coast is the Port of Quetzal, while in the Caribbean there is the Port of Santo Tomás de Castilla and the Port of Barrios Railway Terminal (TFPB). All three are multi-purpose facilities.
In terms of container traffic, throughput amounted to 1.5m teu during 2017, which was a hike of 4% over the previous year's traffic. Traffic was split fairly evenly across all three of the ports, with Santo Tomás de Castilla handling 567,000 teu last year, equivalent to a slight fall of 0.3%. At Barrios, throughput rose 6.6% to 456,000 teu and at Quetzal by 5.9% to 453,000 teu.
“Up to and including 2017, all container traffic has been the result of Guatemala's overseas trade,” explains Mr Méndez. “There has been no transhipment at all, although there is a distinct possibility that this could start in 2019.”
The various ports and terminals overseen by the CPN are currently administered in distinct ways. Of the three, only Santo Tomás de Castilla is directly owned and run by the state. TFPB, although owned by the state, is run by a private company, Chiquita Guatemala, which is a subsidiary of Chiquita International.
It is a similar situation at the Port of Quetzal, where ownership of the land remains with the state, but terminals are privately operated. Expogranel is a dedicated sugar export facility; TERPAC is a specialist grain importing installation; Turismo Actual is responsible for the cruise terminal; APM Terminals has the concession to operate a dedicated container terminal; REPIMEX and TEMSA import coal; Z GAS handles liquid gas petroleum; and Boyas de San José is a specialist in the handling of imported hydrocarbons and exported molasses.
Mr Méndez explains that a number of investment projects have either recently been completed or are close to completion. For example, the Santo Tomás de Castilla National Port Company (EMPORNAC) has recently completed dredging at the turning basin to a depth of 11 metres, with funding coming from public funds. Also, a new privately funded dry bulk terminal has recently been completed and is awaiting the start of operations.
The state is additionally funding the construction of both a dolphin-based berth at the port, which should reach the project stage next year, and a container terminal berth, which is due for implementation in 2020. In the same year, a dedicated cruise terminal will open, again, built with state finance.
At TFPB, private capital has been used to upgrade existing container handling equipment, with the introduction of mobile harbour cranes, while the berth has also been expanded.
However, outside of Guatemala, Quetzal Port Company is possibly the best known terminal, where APM Terminals is implementing Phase I of a dedicated container terminal. This consists of a 350-metre berth, with a second phase to commence in 2019.
The APMT concession at Quetzal, which was originally awarded to the TCB Group, is shrouded in uncertainty. Alleged corruption of government officials by TCB led the Guatemala Attorney General's Office to seek to have the concession annulled on May 27, 2016. On December 5, 2017, the court approved the annulment, prompting APM Terminals, which had neither been involved in the original concession nor directly implicated in corruption allegations, to seek international arbitration, which could result in more than $200m having to be paid back in compensation.
On the dry side, Quetzal also has a privately-built coal terminal, owned by concessionaire Terminal de Carbón Mineral (REPIMEX). There are also two storage domes for the reception and storage of dry bulk, which were funded privately.
In respect of draft, both Guatemalan Caribbean ports offer a water depth of ten metres, which Mr Méndez concedes therefore limits them to second generation container vessels.
“We are planning to dredge both the access channel and turning basin in 2020 to serve panamax class ships that require a minimum depth of 12 metres,” he says. “At the Port of Quetzal, there is sufficient draft at the APM Terminals' installation to handle post-panamax vessels, which require a 14-metre water depth. At the port's other terminals, draft is restricted to 11 metres.”
Meanwhile, the Panama Canal, which is the region's main traffic driver, closed its 2018 fiscal year (FY 2018) with a record tonnage of 442.1m Panama Canal tons (PC/UMS), which represents a 9.5% increase over the previous year’s tonnage of 403.8m PC/UMS tons. The initial forecast had been for traffic of 429.4m PC/UMS.
The Panama Canal Authority (PCA) told Port Strategy that this hike in traffic had been driven by the transit of increased numbers of liquefied petroleum gas (LPG) and natural liquefied gas (LNG) carriers, containerships, chemical tankers and vehicle carriers.
However, it is containers that remain the leading market segment for tonnage through the Canal, accounting for 159m PC/UMS tons of total cargo, of which 112.6m PC/UMS tons transited the expanded Canal. Tankers – which include LPG and LNG carriers – generated 130.3m PC/UMS tons, followed by bulk carriers (73.7m PC/UMS tons) and vehicle carriers (49.5m PC/UMS tons).
“The Panama Canal currently has enough capacity to handle demand,” notes a PCA spokesperson, adding that the Canal plans to conduct in-depth analyses of current and future demand, as well as water sources, to calculate when additional expansion might be necessary.
As for the third set of locks, this attracted rapid deployment of neo-panamax container liner services, with vessels of up to 14,863 teu. Currently, there are 28 liner services deployed through the Panama Canal – of these 16 are neo-panamax and 12 are panamax. Of these, 13 are Asia-US East Coast services, which is the main trade route through the waterway.
“This segment has experienced the fastest growth rate in volume and traffic over the past ten years, and it is expected to remain the leader in the years ahead,” says the spokesperson.
Overall, with the introduction of bigger containerships since the opening of the new locks, cargo capacity volumes through the Panama Canal have grown nearly 29%, from 12.4m teu in 2016 to 16m teu in 2018, and vessel utilisation levels have increased more than 7% overall.
Significantly, 21 liner services that use the Canal call at Panamanian ports on their northbound or southbound transit. During the last three years, Panamanian Atlantic terminals registered a compound annual growth rate of 5.8%. Important investments are being made to increase the capacity in the Pacific side; for example, in April 2018 PSA Terminal (Panama) opened a new berth of 800 meters capable of handling up to two neo-panamax positions.
In respect of the proposed new container port at Corozal, an initial tender attracted no bids, prompting the Panama Canal to initiate a market survey with key port industry operators.
“Our goal was to establish opportunities of improvement for the initial concept, including the best time to re-launch the project. The Panama Canal concluded that the development of Corozal Port is still very attractive. This is why the Panama Canal is currently working on a new proposal to be launched in the future,” explains the spokesperson.
In addition to the cross-isthmus canal in Panama, there is also a parallel rail link, which the Canal authorities view as part of the strategic connectivity that the country offers as part of a hub to the Americas.
“Panama has highly efficient port terminals on the Pacific and Atlantic oceans, as well as an interoceanic railroad and two strategically located free-trade zones. All of these work together to enhance Panama's connectivity,” notes the PCA.
In Nicaragua, the National Assembly is preparing a legislative decree that will approve a new loan from the Central American Bank for Economic Integration (BCIE). The $163.2m loan is needed to upgrade and expand the operational and technical capacity of Puerto Corinto.
Corinto is Nicaragua's leading international maritime facility in both cargo volumes and vessel calls. It is very much a multipurpose port, handling general cargo, dry and liquid bulk, ro-ro and containers.
The project to upgrade the port is predicated on obtaining the necessary finance to address deficiencies in infrastructure and also put in place new cargo transfer and handling equipment. Currently, the latter is insufficient to meet the needs of modern shipping and will have to be expanded. In addition, plans exist to expand the existing container terminal and also build a new dry bulk handling facility and a cruise terminal. A logistics centre for boxes will also be built and equipment acquired for auxiliary shipping services.
The government explains that the main aim of the upgrade programme is to improve efficiency, productivity, quality and safety in port services. It is also important that the port becomes effectively integrated into the country's logistics chain, which will mean improving the connections between the main centres of consumption and distribution.
Government ministers stress that the modernisation of the port will guarantee that port management will be able to commit to its duties of managing the port safety while ensuring environmental protection and social responsibility.
In Costa Rica, a crippling strike that impacted on the ports of Moín and Limón throughout September was finally declared illegal by the Labour Court of the Second Judicial Circuit of San José, which argued that the services provided by operator Japdeva were essential for the country. The judge involved pointed out that the suspension of dockside services meant that ships were unable to use the ports and even the movement of food had been paralysed.
Strikes had been called as of September 10, with around half of Japdeva workers committed to them, although the judge overseeing the case pointed out that these were not carried out in accordance with the guidelines set down by the Committee of Freedom of Association of the International Labour Organization (ILO).
"The Committee of Experts (Committee of Freedom of Association of the ILO) has also considered that strikes of a purely political nature are not covered by the principles of freedom of association," said Judge Vargas in his ruling.
According to Judge Vargas, despite arguing to the contrary, the labour union Sintrajap had not complied with rules laid out for strikes, given that it had not met with Japdeva management or with dock worker management.
The Judge ordered striking workers to return to their posts within 24 hours of the judgement, or face a reduction in pay or even dismissal from their posts.
In 2016 the Costa Rican ports of Limón and Moín handled a combined 11.44m tonnes, rising to 12m tonnes the following year.
According to the national ports administration, Japdeva, the extra 564,432 tonnes handled in 2017 was mainly due to an increase in the export of fresh produce, such as bananas, pineapples and other fruits. In terms of imports, there was more paper and cardboard, as well as additional chemical products and fertiliser for use in the agricultural sector. An increase in imported oil and derivatives was also noted.
A spokesperson for Japdeva notes that, for 2018, there has been little variation in traffic compared with last year and the year is expected to end on a similar tonnage figure.
Limón and Moín are Costa Rica's two main ports, handling the majority of imports and exports, as well as the entirety of the box traffic, which currently amounts to 1.3m teu, and growing by 7.5% per annum.
The Port of Moín is building a new box terminal, which Japdeva says will boost its competitiveness and also allow it to handle panamax size vessels, thereby improving economies of scale and reducing transport costs overall.
“With the putting into service of the new Moín Container Terminal, the country will be able to reach the highest levels of productivity to be found in the region,” notes the spokesperson.
At present, the state effectively directly operates the Hernán Garrón Salazar and Gaston Kogan Kogan terminals respectively in Limón and Moín, while Moín Container Terminal is a 30-year concession awarded to APM Terminals.
In respect of investment projects, at Moín, a new 350-metre berth is being built as an extension of the existing quay. An Intermodal Cargo Terminal, which will act as an interchange between road, rail and sea, is also planned, along with a Logistics Activities Zone.
New construction will also reflect the growing size of vessels serving Central America. The Moín box terminal, for example, will have alongside draft of 16 metres, while the new berth will offer 14 metres.
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