Filling capacity gaps
Ecuador is putting its ports front and centre. Alex Hughes reports
Ecuador is determined to prove that two’s company in its port sector. DP World’s planned new facility at Posorja in Ecuador says it has no plans to overshadow the already successful and nearby Guayaquil. Instead, it intends to complement the established port with deep sea draft of over 15 metres, compared with Guayaquil’s sub 10 metre depth.
The need for additional capacity seems to be sound: The United Nations’ Economic Commission for Latin America and the Caribbean (CEPAL) noted that Guayaquil was the seventh busiest in terms of containers during 2016 with throughput of 1.8m teu. This is up 6.9% year-on-year and compares favourably with growth of 4.5% in Ecuador itself.
Consequently, DP World sees “much potential for growth”, hence its decision to bid for the concession to build and operate the complementary facility Posorja.
The operator points out that every country on the west coast of South America except Ecuador has ports with draft of 15-16 metres, capable of handling fully laden 12,000-15,000 teu vessels. This is despite the fact that Guayaquil is the second largest import-export port in South America after Santos, but has a draft of less than 10 metres plus a vessel length restriction of 305 metres.
“It can only handle fully laden ships of up to 2,000-3,000 teu,” a DP World spokesperson told Port Strategy.
But that’s not to say that Guayaquil is taking a back seat. ICTSI’s Contecon, the port’s largest container handler, was awarded a 20-year concession in August 2007 to operate a multipurpose terminal. It has seen a steady increase in traffic, which rose from 1.06m teu in 2014 to 1.1m teu in 2015, increasing by a further 12% last year to 1.26m teu.
José Miguel Muñoz, chief executive of Contecon Guayaquil SA, notes that there is an investment plan in place to sustain port operation efficiencies achieved during the initial years of the concession. This plan, he adds, continues as volume grows. “The terminal has areas and berths to expand as volume increases in the future.”
Contecon is not a pure container terminal and other commodities count towards the overall volumes. It currently handles a lot of breakbulk cargoes such as steel products, paper reels, cars, trucks, heavy machinery, big bags and heavy project cargo.
Mr Muñoz notes that Ecuador’s growth will dictate how much cargo is non-containerised in the future: “There is a significant opportunity in Ecuador at the moment as the construction and mining sectors are being supported by the new government.”
At present, Contecon can offer shipping lines an alongside draft of 10.50 metres at MLWS, while the access channel has up to 9.75 metres. However, Guayaquil’s municipal authority has launched an international tender for a private operator to undertake dredging and maintenance of Guayaquil Access Channel up to a nautical depth of 11 meters at low tide, which could favour the entrance of vessels with up to 12.5 metres of draft. At present, the largest vessels calling at Contecon are up to 306 metres in length.
Asked about advantages Contecon has over other terminals in the region, Mr Muñoz notes that, “Guayaquil is the largest commercial and industrial city in Ecuador and is in the centre of the most important agricultural area for banana and cocoa plantations, as well as other important commodities. The city’s proximity to the terminal is very convenient in terms of landside trucking costs and security, while there is a low risk of damaging products during the transfer to the port.” Once the access channel has been dredged, convenience and cost will also favour Contecon, he adds.
DP World is also eyeing transhipment at its Ecuadorian hub. Its spokesperson tells Port Strategy that Posorja would likely handle mostly import-export traffic, but there is likelihood that, given its geographic position, large local market and ability to handle the largest ships calling at ports on the west coast of South America, there will be some demand for transhipment as well.
Once Phase I is completed, Posorja is expected to be able to accommodate a throughput of about 750,000 teu. “The first phase of the project will likely focus on containers, while subsequent phases of expansion will open increased opportunities for other cargo types. Meanwhile, we see significant growth opportunities in Ecuador with the continued containerisation of break-bulk cargoes, particularly bananas,” said the spokesperson.
In terms of the implementation timetable, DP World has already begun preparatory works ahead of its groundbreaking ceremony in August this year. Operations are expected to commence by mid-2019.
“With draft in excess of 15 metres, the terminal will be equipped with navigation capabilities and waterways to handle super post-panamax vessels. Initially, there will be three quayside gantry cranes in place, with the option to bring in more in the future.”
Asked about expected vessel sizes, the spokesperson suggested that the dredging of a new access channel and deeper drafts will allow the terminal to handle super post-panamax vessels of up to 15,000 teu. Shipping lines are already operating many services in the region with ships in the 10,000-15,000 teu range, although these currently bypass Ecuadorian ports. Those services are expected to start calling at Posorja once it is operational.
As for the port’s hinterland, the spokesperson pointed out that Guayaquil is already the main port for all of Ecuador, since most other major markets – notably the capital Quito - are located inland, handling over 90% of all containers moving through the country’s ports.
“We fully expect that Posorja will strengthen the Guayaquil region as the key gateway for the entire country,” the spokesperson concluded.
APM Terminal Peruvian hub in Callao is picking up steam in the region, handling 915,000 teu in 2016 compared with 588,000 teu in the previous year, growth of 55%. In the same period, general cargo volumes increased from 9.5m tonnes to 10.1m tonnes.
Already in 2017, throughput reached 539,000 teu by end-June and general cargo hit 6.2m tonnes, putting it on track to maintain and perhaps surpass last year’s volumes.
To date, APM Terminals has invested $460m in stages 1 and 2 of the modernisation project of the North Terminal, which encompasses upgrades to pier 5, pier 11, the container gate and the administrative and public buildings. In addition, a further $10m has been spent on new general cargo equipment.
APM Terminals Callao is now looking to modify the current terminal design. Chief executive Javier Lancha de Micheo explains why the operator is looking to bolster the ports multipurpose handling: “It has been observed that as the Peruvian economy has grown and foreign trade steadily increased, the amount of non-containerised cargo being handled in Callao has also gone up, something which is also happening because of the delay in developing other ports in Peru. We therefore see the need to continue developing our infrastructure to handle both types of cargo and ensure an appropriate balance to meet the country’s trade needs.”
In its multipurpose role, Callao´s North Terminal will continue to handle rolling cargo, breakbulk, liquid bulk, project cargo, solid bulk, frozen goods and cruise ships as well as containerised cargo, which makes APM Terminals Callao a one-of-its-kind terminal in the region.
Added to which, Mr Lancha de Micheo points out that the West Coast of South America does not yet currently have a regional transhipment hub. “In that sense, the current market in Callao is demonstrating that the exchange of imports and exports is higher than transhipment. Nevertheless, the conditions could vary based on international market dynamics in the upcoming years and APM Terminals strives to provide the necessary services to customers,” he says.
Indeed, Callao currently handles healthy levels of both import and export box traffic, although there is a growing trend towards exports due to demand for valuable Peruvian commodities; the current ratio is four import boxes to every three export boxes.
At present, the largest vessels calling at North Terminal are 13,000 teu boxships, of up to 367 metres in length. However, Mr Lancha de Micheo says: “We expect a gradual upsize of vessels considering a growth in the Peruvian market and the cascading of more modern vessels displaced to new routes.”
Asked about the relationship between APMT and former ENAPU workers, he notes that APM Terminals Callao always maintains an open dialogue with its employees and ensures that all labour laws are complied with throughout the process. As a result, the successful signing of a Collective Bargaining Agreement of over two years was achieved with the port union without any legal strikes having taken place.
The concession agreement states a ten-year commitment to invite former ENAPU workers to become part of the APM Terminals team. However, there have been numerous murmurings of discontent at the port. Mr Lancha de Micheo notes: “The transition from ENAPU (the terminal operated by the Peruvian Government) to APM Terminals brings the implementation of new global standards of operations and a significant improvement on our safety management system, which requires an inherent period of adaptation.”
GUAYAQUIL RIVAL IN THE WINGS
Within the Port of Guayaquil, Contecon has an emerging rival: Terminal Portuario Guayaquil (TPG), owned by SAAM. In 2016, TPG handled 204,051 teu at its 210,000 square metre terminal, which has a 360-metre long quayside, with alongside draft of 12 metres.
In May 2017, the operator took an important step forward when it took delivery of two super post-panamax gantry cranes, which are the largest and most modern in the country. They each have a 60-metre outreach and can handle 22 rows of vessel-stowed containers.
According to TPG executive director Enrique Brito: “We are the first to bring this type of crane to Ecuador, which will allow us to upgrade the level of competition in our port.”
The cranes form part of an ambitious expansion plan, which also includes lengthening the quay to 480 metres. TPG has also incorporated the adjacent Trinipuerto terminal concession into its own, for which it has obtained a 40-year concession, effectively doubling existing container and general cargo capacity.
“The expansion of the infrastructure and the new equipment will allow us to keep our port as the most productive in Ecuador and allow us to tackle new challenges effectively,” he adds.
AGUNSA BENEFITS FROM LOW INTEREST
When the Port of Manta, Ecuador published its tender last year, it expected a decent showing. However, by the deadline, only the Chilean company Agunsa presented a bid. Consequently its subsidiary Terminal Portuario de Manta was awarded a 40-year concession on December 5, 2016.
A spokesperson explained why it saw potential where others didn’t. Having been present in the port’s logistics sector since the 1990s, Agunsa “came to realise the potential of the port and of the region’s productive sector. Being locals and understanding the reality of the port, we believe this gives us a distinctive perspective to that of other operators,” said the spokesperson.
Indeed, today, TPM’s senior management structure is filled entirely by Ecuadorians, mostly from Manta.
In an initial development phase, Quay 2 will be extended, and dredging to a depth of 12.5 metres will take place alongside the berths and in the turning basin. Two mobile harbour cranes are also on order along with other support equipment to allow up to 150,000 teu to be handled annually, along with other general cargo. A cruise terminal will also be built.
In Phase 2, a further extension of Quay 2 is being contemplated, as well as dredging of the harbour to a depth of 14.5 metres. This is also when two new ship-to-shore gantry cranes will be put into operation and four rubber-tyred gantry cranes.
“We plan to invest some $177m over a period of 40 years,” says the spokesperson.
Asked about the type of traffic TPM is aiming to attract, the spokesperson says that Manta will look to serve both the province and the country as a whole. Above all, it will concentrate on international trade, with transhipment a consequence of that.
“Manta isn’t a port focus exclusively on container traffic. It’s a diverse port and has potential in lots of area, unlike those ports operating in the Gulf of Guayaquil,” he says.
Above all, he adds, Manta and its hinterland plays an important role in the country’s export sector, generating around 20,000 teu annually, equivalent to 3% of the total market, with certain industries already based there.
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