A BNamericas Intelligence Series report dated from five years ago speaks of "the economic expansion seen in Latin America and the rest of the world in the past decade" which drove shipping industry growth and a need for "investment and planning of port infrastructure in order to avoid potential bottlenecks and to reap the benefits of growing trade."
Today, everything is very different. The latest figures from the UN Economic Commission for Latin America and the Caribbean (Eclac) show that containerized cargo movement in the region actually fell 0.9% in 2016, led by drops in Panama (-9.1%), Argentina (-6.1%), Brazil (-4.4%) and Colombia (-3.6%).
Since that 2012 publication, something else took place that would forever change the face of shipping in Latin America: the third set of locks came into operation at the Panama Canal, forcing port operators to update and modernize facilities in order to handle much larger ships. In anticipation, many operators increased capacity, but then regional economies started to cool.
Some say that there is barely more room for new projects. Indeed, five-year projections from Drewry Maritime Research show that port capacity development in Latin America is outpacing throughput demand. Meanwhile, the average utilization level of the region's ports has in general fallen, and when compared to already higher global utilization levels, the gap is expected to increase in the next five years.
"Latin America is overestimating port demand, and there is a proliferation of terminals that fails to consider the economic standstill," says Julián Palacio, director of Latin American ports association Latinports. "Cargo isn't increasing, but the terminals expand. The ships also increase in size, but the cargo doesn't... Just because a country builds new terminals, or makes ports larger, doesn't mean it will have more export cargo. This is a simple market equation."
The World Economic Forum's Quality of Port Infrastructure report, which measures business executives' perception of their country's port facilities, places only one Latin American country - Panama - in its top 10 ranking. The regional ranking is below:
Not all market observers however are downbeat.
"The problem is that when we talk about growth rates, it's always about the past and with that we try to say what will happen in the future," according to Octavio Doerr, port and logistics specialist at Eclac. "I am sure that this year there will be a significant increase in growth. We've seen it in the first few months of the year, there is evident growth compared to the same months in 2016. I think the second half of the year will be similar... there will be 5-6% growth which is what the industry has forecasted in the medium term."
While some ports in the region may have excess capacity because demand has not met growth expectations, other ports may be saturated and have failed to keep up with investments and demand. "That's where the investment opportunities are," he says.
While covering all of the region's planned port projects would be impossible (there are more than 100 in Brazil alone, according to Doerr), in this report we focus on some of the most important Latin American port expansion projects. We also take a look at a couple of projects that have failed, and outline the major challenges and opportunities facing ports in the region.
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