Hub to fuel service changes?

With one million TEU of extra capacity due to come on stream in central Peru over the next 18 months to two years, shippers and logistics providers are now seriously considering their options.

Indeed, the fall-out from the opening of the Chancay mega-port will not only affect logistics activities and liner calls in Callao – Peru’s leading port with around 2.5 million TEU handled in 2021 – and Peru in a wider sense, but also the rest of West Coast South America (WCSA), and especially to the south in Chile as well as near neighbours Ecuador and Colombia, and even land-locked Bolivia.

“Callao has suffered from congestion for several years and although progress is being made to improve affairs there, Chancay will provide a much better and more efficient alternative for Peruvian shippers and could also, in the future, become the major hub port for the entire West Coast of South America,” says Simon MacKenzie, President of the Chilean Shipagents Association. “This,” he explains, “is a regular conversation among the shipping community in Chile who fear it might see a curtailment in direct services to our key ports.

“It also doesn’t help,” he elaborates, “that much-needed investments in port infrastructure in Chile, to keep it competitive, are being delayed for a variety of reasons: mostly environmental as we have strong environmental lobby groups.”

At present Peru’s box trade with China lags well behind Chile, with the latter unloading 643,958TEU in 2021 and loading 331,047TEU for China, and Peru shipping out 133,239TEU and unloading 397,046TEU but that could all change if neighbouring countries start transhipping from Peru.

CHILE CATALYSTS

A veteran stalwart of Chilean shipping, Mackenzie, tells Port Strategy that the lack of infrastructure investment in Chile in recent years could accelerate the process of the development of the deep-water port of Chancay. Further, with a 16m depth, the port could become the hub port for WCSA with carriers such as Cosco starting to tranship from Peru to Chile.

“We have not seen the hoped-for investment in San Antonio and Valparaiso that had been promised so this could speed up Chancay’s future role as hub for the region,” he says. He points to the aborted tender process at Valparaiso, currently Chile’s second-largest port for containers, which has led to a short-term, stop-gap, three-year contract for the Agunsa stevedoring group. Similarly, MacKenzie highlights delayed port infrastructure improvements in San Antonio, Chile’s leading port with 1.84 million TEU handled last year. These, he notes, are being held up owing to a “Wetlands and Birds environmental issue”. Two other sources additionally offered the view that Chilean port operators themselves were dragging their heels somewhat, for fear of Chancay and Callao becoming the main relay port for all WCSA, and that spending too much now on improvements, and capital dredging, might be a waste if the big ships don’t come anyway.

COMPLEMENTARY CLAIM

Peruvian and Chinese politicians flag up the idea that Chancay will complement the port of Callao – where DP World and APM Terminals operate – and not take too much cargo away from Peru’s traditional gateway, excepting, of course, services operated by Cosco. But the fact is that once the two ports are fully functioning with investment plans completed, the two combined ports could dissuade carriers from bothering to head south to Chile with their larger vessels.

MacKenzie suggests: “Once Chancay is up and running carriers can utilise their 18,000TEU vessels and save four to six days sailing time down to Chile, so the cost-savings for shipping lines by turning around in Peru will start building and be difficult to ignore.”

Ricardo Sanchez, the senior Economic Affairs director at UN body ECLAC (Economic Commission for Latin American and Caribbean), adds: “From a political point of view Peru has not been so stable in recent years but Ecuador is small and also unstable, Chile is important for shipping but so far away from everywhere, and Pacific Colombia, which effectively means Buenaventura is a very problematic port and region so this means Chancay/Callao will be the logical hubs for the future.”