SAN ANTONIO THE WINNER IN BATTLE OF CHILEAN PORTS

San Antonio Container demand is shifting to San Antonio

Container handling supremacy has been a long-term fight in Chile but, as Rob Ward discovers, there may finally be one port set to win through.

The Battle Supreme for container handling supremacy in Chile – between the ports of San Antonio and Valparaiso – finally has a winner, and perhaps a little surprisingly it is not
the traditional major port of Valparaiso.

“This longstanding fight between San Antonio and Valparaiso to become the key port for Chile, and de facto, for our capital Santiago de Chile, is a fight that finally is in favour of San Antonio,” said Ricardo Sanchez, the Senior Economic Affairs Director, Infrastructure Division for ECLAC (the Economic Commission for Latin America and the Caribbean, part of the United Nations).

Initially this may be viewed as a controversial comment to make, but now it seems that most other Chilean port watchers would definitely agree with Sanchez. Chile, which is split into nine administrative regions, handled 4,661,469 TEU in 2018, an increase of 7% on the 4,407,772 TEU handled in 2017 and of those boxes, around 55%, some 2,564,145 TEU, were handled by the two Fifth Region ports of San Antonio and Valparaiso.

For 2018, San Antonio handled 1,660,832 TEU (up a substantial 28% from 1,296,890 TEU in 2017) while Valparaiso fell 16%, from 1,073,734 TEU down to 903,313 TEU, according to figures released by ECLAC.

Although for many years the split between Valparaiso – located some 115km northwest of Chile’s capital Santiago - and San Antonio (100 southwest of Santiago) has been very close to 50:50, the 65% share for San Antonio in 2018 was up from 55% the year before.

The latest official figures, covering the period for the first two months of 2019, showed the trend continuing, with Valparaiso handling 147,782 TEU (down 18% on the same period of last year) while San Antonio handled 319,914 TEU (up a very large 62% over January to end of February of 2018).

The combined figure of 467,696 TEU for Region V tallies to a 24% increase overall and the split for this period is 32% to 68% in favour of San Antonio. A Valparaiso port insider told Port Strategy that for August of this year the dominance of San Antonio had increased still further and was now 80:20 in San Antonio’s favour.

Despite coming out ahead in six out of the 13 years since 2006, Valparaiso has seen throughput decline and services drastically lost over the past two years and that trend will be exacerbated with the end of October announcement that Maersk Line pulled its AC1 call (to Japan and China) out of Valparaiso from the end of November.

A source at Maersk Line in Chile said that AC1 was being discontinued due to a lack of cargo and Chile will be now be served by just the one string, AC3, which calls at San Antonio’s Puerto Central facility. The departure of AC1 will see around 90,000 TEU per annum pass through Valparaiso.

There was initially some speculation that Maersk Line would switch AC1 to Puerto Central (now run by DP World Chile who bought the facility from Puertos y Logística S.A, or Pulogsa, earlier this year) having first started calling Valparaiso back in April 2018.

“The frequent recent haemorrhaging of services from Terminal Pacifico Sur (TPS) is seeing volumes plummet,” said one shipping agent who is based in historic Valparaiso. “In fact, from having five regular deep-sea services, TPS now has only one,” which is the Ocean Network Express (ONE) with its alliance partners Hapag Lloyd, Yang Ming and Hyundai Merchant Marine. The operation calls at the SSA terminal in Manzanillo (Mexico), DP World in Callao (Peru), Iquique (northern Chile). Antofagasta (Chile, fortnightly), Valparaiso, Coroneal (south of Chile) and then back to Valparaiso before sailing direct to Hong Kong, followed by China and South Korea.

TPS includes MSC as a 40% shareholder, via its stevedoring arm Terminal Investment Limited, TIL) and handles virtually all containers passing through Valparaiso. In San Antonio there are two terminal operators, Puerto Central (DP World Chile) and San Antonio Terminal International (STI), which is owned and operated by SAAM, the leading Chilean stevedoring group that also operates terminals in Iquique, Antofagasta and San Vicente. SAAM used to be part of Compania SudAmericana de Vapores (CSAV) which was sold to Hamburg Sud back in 2011.

One potential upside for TPS is that MSC might soon start switching some of its services from San Antonio to Valparaiso. In 2018 STI handled 1,173,160 TEU which is around 70% of the overall San Antonio total, with Puerto Central taking the rest.

Both terminals each have a capacity of between 1.5 million and 2.0 million TEU per annum and plenty of space to expand into, unlike TPI. STI’s concession terminates at the end of 2024 and Puerto Central’s in 2045.

Another major issue for port users in Chile is the growing influence of DP World, not only in the world’s longest country but also along the West Coast of South America (WCSA) as a whole. DP World bought a controlling interest in Puerto Central and Puerto Lirquen in Lirquen (near Concepcion in Region VIII to the south) in January 2019 and is investing more than $100million in the two facilities.

Francesco Schiaffino, a shipping consultant based in Santiago de Chile and former CEO at TPS, told Port Strategy that DP World was becoming ever stronger in WCSA. The
company also has DP World Callao in Peru and another facility in Ecuador. “With so many terminals along west coast South America DP World can now sell berthing windows not just for one port but for the entire coastline,” said Schiaffino. “This means shippers can now buy one package for the entire coast, and that has fundamentally changed the competition. It’s incredible really.”

Although Valparaiso seems to have lost its status as the leading volume port for containers in Chile, it can possibly content itself a little by becoming a more popular port of call with its long history and rambling, cobbled alleyways and colourful buildings for a growing cruise industry and extra tourism. The southern hemisphere cruise season started in Valparaiso in mid-October this year, a few weeks earlier than usual.


Peace recently lost in Chile amid protests

Chile is often seen as “the most civilized” of all South America’s 10 main countries and one of the most peaceful, at least since the demise of the dictator General Augusto Pinochet in 1990. This deserved reputation was shelved during violent protests in October and November of this year in Santiago, which left 19 people dead and more than 2,600 injured. The protests were initially triggered by a steep rise in bus and train fares, but then taking in a wide range of variegated issues and resulting in demands for a new constitution. This led to strikes at all the country’s main ports as dock workers showed solidarity by taking part in a national strike organised by the country’s leading trades unions, especially the powerful miners’ unions.

From November 12, leaders of the national port union, COTRAPORCH, persuaded members to stop work for a full 24 hours at 25 ports and terminals, with the only exception being Arica, in the far north of Chile, which also serves as the national port for Bolivia. Several days earlier 6,000 dockworkers at 20 different port terminals went on strike for two shift periods, about 12 hours in total. Several Port Strategy sources in the key ports of San Antonio and Valparaiso said that the strikes had seen close to 100% adherence and that vessels had been delayed for “several hours at a time”. “However, because advance warning was given of the strikes, the delays and dislocation was not as severe as it might have been,” said one port manager, who insisted on anonymity.

The International Dockworkers Council warned an international solidarity boycott is likely. Representing more than 125,000 dockworkers on five continents, the council expressed concern in a statement about police violence against Chilean protesters and dockworkers. “Should the repression against the dockworker family intensify, we will initiate an international boycott of cargo from ships coming from Chile,” the council said. During one demonstration an estimated 1 million people, about 5% of the country’s population, protested in the capital of Santiago. At the time of writing in mid-November, peace had broken out as President Sebastien Pinera has promised a referendum on a new constitution. However, the situation needs to be monitored.

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