Port Problems on Pacific Coast of South America

Recession Causing Many Ports To See Their Buiness Contract Sharply

Apr 25, 2009

Ports on the West Coast of Central and South America are taking a major hit as volumes shipped fall, sometimes dramatically, leaving them in a difficult situation.

Ports on the West Coast of Central and South America are taking a major hit as volumes shipped fall, sometimes dramatically, leaving them to deal with a difficult situation.

The Problem is Simple but Huge and Likely to Endure

Even mega facilities such the Panama Canal, a key point of so much of the worlds cargo, know its tough and that’s with data which doesn’t really show the full impact of last years credit crisis let alone the further unravellings expected in 2009.

Statistics from the canal authority show that last year (2008) it moved 133,827 tons a drop of 4.7% on 140,434 tons of cargo moved the year before (2007). Measured on the long tons index the figure was broadly similar a 4.3% drop to 83,661 tons.

The point isn't so much the detail. However a drop of over four percent in one of the most important stretches of water in the world, and without the full effects of the economic crisis factored in shows the scale of the problem better than the more dramatic drops recorded by individual and smaller ports.

An alternative could be the canal recently began a major expansion programme believing the demand for its services was always going to grow. Whilst the Authority is confident it made the right decision the timing now looks poor although no one really foresaw this crisis.

Nor is the outlook much better. "We expect this year to perform below 2008 given the present economic conditions, especially the market segments of full containerships and vehicle carriers,” Silvia Marucci, from the Authority's Marketing Research and Analysis Office told CargonewsAsia. "So far we have observed a slight decline in overall traffic performance with respect to the same period last year (October to February)."

No Doubting How Bad the Situation is on the Coast

There can be no doubt traffic to the WCSA ports has fallen as economies throughout the world digest the aftershocks of the financial crisis. Routes between Asia and South America show steep declines that seem unlikely to reverse quickly.

Valparaiso, Chile’s central port illustrates this point. “In January we experienced a 23% decrease in shipments from and to the Asian markets. In our predictions for 2009 we expect this figure to decline at least 15% less than in 2008,” said Harald Jaegar, Valparaiso’s manager in response to questions from Suite101.com. Not surprisingly he adds the company is waiting “for a better financial and economic climate.”

This is corroborated by those shippers and logistics companies who use the ports.

"Transpacific container traffic ex Asia to WCSA has indeed decreased in the last 6 months, with rates being reduced by more than 70% as a result of the economic slowdown and the traditional slack season coinciding with the Chinese New Year," said shipper CMA-CGM in response to questions.

Nor is this confined to Chile. Transpacific volumes in Peru’s Callao have dropped 23% for January when compared year on year basis said Carlos Vargas Loret de Mola CEO of Neptunia, a local storage and logistics company.

The copyright of the article Port Problems on Pacific Coast of South America in Import/Export is owned by Michael Mackey. Permission to republish Port Problems on Pacific Coast of South America in print or online must be granted by the author in writing.