Journal of Commerce / July 21, 1997
By Larry Luxner
On July 29, the Uruguayan government is scheduled to open bids for the privatization of container terminal operations at Montevideo, the nation's capital and the de facto capital of Mercosur -- Latin America's fastest-growing trade bloc.
Under Article 15 of the 1994 General Systems of Port Services decree, the Montevideo container terminal will be operated either as a concession to a private company, or to a joint venture under private terms. Any option involving the direct rendering of services by the National Ports Administration won't be considered.
At the moment, Montevideo handles around 80% of Uruguay's port traffic, according to Juan Berta, an official of the country's National Ports Administration (ANP in Spanish). In 1996, the Port of Montevideo loaded 60,691 containers and unloaded 61,085 for a total of 121,776 boxes -- down from the 137,644 boxes handled in 1995 but up sharply from the 105,784 containers loaded and unloaded the year before. Much of those containerized exports consist of Uruguayan wool, meat, citrus, fish and rice, while the biggest imports are electrical appliances and consumer goods.
The remaining 20% of Uruguay's port traffic is handled by Nueva Palmira (primarly a grain port along the inland Parana-Paraguay river system) and Fray Bentos (which handles mainly forestry products). Montevideo also moves around 700,000 passengers a year, though in that regard it comes in second to the tourist port of Colonia, which sees 1.3 million passengers enter and depart annually.
So far, 21 companies grouped in six international consortia have presented offers to operate the terminal under a 30-year concession. Some of the biggest include Maersk Inc. USA, Hamburg Port Consulting GmbH, Sudamericana Agencias Aereas y Maritimas S.A., International Trade Logistics S.A., Seaport Terminals N.V. and ZFM Bahamas Ltd.
The ambitious project entails between $40 million and $70 million in investment by the winning company during the first 10 years, says Jorge Fernandez, chief executive of Christophersen S.A. in Montevideo.
With $53 million in annual sales, Christophersen is Uruguay's largest shipping firm. Mr. Fernandez says this isn't the first privatization; the government has already sold off towing, stevedoring, cold-storage and warehousing services, and will soon auction off dredging services as well.
"The reason they're doing this is to make the port more efficient, to attract more customers, to reduce tariffs and to scrap the bureaucracy," he said. "This will give the final user -- the importer or exporter -- a cheaper service."
Mr. Fernandez says that before the privatization in Montevideo, he was paying the government $14 per pallet of citrus fruit. Today, he pays about $5. In addition, port charges have dropped to around $8,000 for a 30,000 DWT vessel, compared to $15,000 at Santos and over $20,000 in Buenos Aires. The latest privatization should bring prices down even more, he predicted.
"It's happening all over South America," says another shipping official who asked not to be named. "The Uruguayan government is convinced now that these services have to be managed by private companies. The government will only administer the policies and port works, but exploitation of services have to be in private hands. In this field, all the private operators are interested in getting involved."
Last year, the terminal handled 60% of the 135,000 containers moving through Montevideo; private operators handle the other 40%, using vessels' cranes. By comparison, the government terminal has only one gantry crane, which is "about 10 years old and very poorly maintained," says Mr. Fernandez. The facility currently operates under a mixed arrangement between private firms and the National Ports Administration.
According to the ANP, private participation has already increased through licenses and grants for the provision of storage, consolidation, packing, cold-storage and other cargo logistics services. "At present," says the agency, "only a few remains are left of the previous direct services rendered by the ANP itself, such as the running of the container yard, some warehouses and the operation of dock cranes."
Recently, the Inter-American Development Bank's Multilateral Investment Fund awarded Uruguay a $1 million grant to help lure more private investment in public works infrastructure. Through the MIF, international experts will travel to Uruguay to advise officials how to award and operate concessions, while Uruguayan officials will visit other countries in order to analyze and possibly apply successful experiences to their own situation.
Efforts to privatize the port of Montevideo come amid government efforts to abolish excessive red tape and make the country's stagnant industries more competitive internationally. This year, Uruguay's $17.8 billion economy is expected to grow by a healthy 5% after seeing its GDP shrink by 2.4% in 1995.
In a somewhat related project, at least nine international consortia have shown interest in building a $1 billion bridge that'll connect Buenos Aires with the Uruguayan town of Colonia as early as 2003. The Montevideo-based binational commission in charge of the massive undertaking says the consortia involve 17 construction firms, including Brazil's Odebrecht, Japan's Mitsubishi, Argentina's Techint, Great Britain's Trafalgar House, Italy's Impregilo and San Francisco-based Bechtel.
Nikhil Bhandari, a transportation planner with Louis Berger International, says a tender for the 35-year concession could be issued by November, with actual construction beginning by June 1998. The bridge's Argentine terminus will be at Punta Lara, 50 kilometers south of Buenos Aires. It'll make landfall in Uruguay, just east of Colonia. Upon completion in 2003, the 42-kilometer-long bridge -- the longest in the world -- will carry an estimated 5,500 vehicles a day, based on a projected toll of $60-80. That should dramatically cut transport time for truckers carrying goods between South America's two largest cities, Buenos Aires and Sao Paulo.
President Julio Maria Sanguinetti calls the bridge "a fundamental link within a broader concept of the integration process" between Argentina, Brazil, Paraguay and Uruguay -- the four original members of Mercosur.