Luxner News Inc, Stock Photos of Latin America & the Caribbean

Article Search

Montevideo pursues role as Mercosur transshipment hub
Development Business / August 16, 1998

By Larry Luxner

MONTEVIDEO, Uruguay -- A multinational consortium, Montevideo Terminal de Contenedores (MTC), has been selected by the Uruguayan government to convert Montevideo from a sleepy Atlantic port into the main transshipment hub for South America's powerful Mercosur trade bloc.

MTC is composed of New Jersey-based Maersk Inc. (70%) and Christophersen S.A. of Uruguay.

Jorge Fernández, president of Christophersen, said in a lengthy interview here that the project "will be a huge step which is more important than anybody can imagine."

The government's National Ports Administration selected Maersk, which agreed to invest $118 million over a 30-year period -- over two other finalists: Hessenatic and Seaport Terminals N.V. The project originally attracted 21 companies grouped in six international consortia; some of the others were ZFM Bahamas Ltd., Hamburg Port Consulting GmbH, Sudamericana Agencias Aereas y Maritimas S.A. and International Trade Logistics S.A.

"Montevideo will become a hub for the region in the same way Freeport and Panama are hubs," he explained. "The idea is that this is going to be a transshipment port in which containers come from the Far East. Cargo destined for Brazil and Argentina will be discharged here, and lines on their way to the United States or Europe will take that cargo to Santos or other Brazilian ports.

"The advantage is that lines coming from the Far East save at least seven days' sailing time by not calling on Brazilian ports," he said. "On top of that, Brazilian ports are very expensive. Many containers, if they're discharged here, will go by truck to Brazil, because the internal cost of Brazilian trucks is very high."

In 1997, the port of Montevideo moved 143,000 containers, up from 122,000 the year before. By the end of 1998, will move over 160,000 boxes, says Fernández. Exports are led by wool, meat, citrus, fish and rice, while the biggest imports are electrical appliances and consumer goods. Montevideo handles 80% of the country's port traffic; the remaining volume is handled by Nueva Palmira (primarily a grain port along the inland Parana-Paraguay river system) and Fray Bentos (which handles mainly forestry products).

"Beginning immediately, we will expand the present pier in order to accommodate two vessels simultaneously. Now it can accommodate only one. Montevideo will also be dredged to 13 meters, compared to only 10.2 meters for Buenos Aires," which sits just across the Rio de la Plata estuary, he said. "We'll also put in a post-Panamax crane by year's end. In Phase II, we'll add another two cranes."

According to MTC's business plan, the venture projects income of $12.2 million in 1999, $18.3 million by 2003, $23.7 million by 2008, $31.3 million by 2018 and $41.7 million by 2028. Yet Fernández says "we will only start making money after Year 10, because we are re-investing our profits."

Most importantly for shippers, Montevideo's costs are projected to drop from the current $120 per container to $67.50 per container by August. At present, it costs around $120 to ship a container through Buenos Aires, and $280 or more through Santos, Brazil's chief port.

"You never know with Santos what your real costs are until you're finished -- it could go as high as $400," says Fernández. "Buenos Aires is good, safe and efficient. We are not looking to compete with Buenos Aires, but to complement it."

Ruben H. Díaz, a deputy in the Uruguayan parliament and former president of the ANP, says the current government of President Julio María Sanguinetti has successfully followed the privatization policy spelled out in Uruguay's Ports Law of 1992.

"In the last three years, we increased container volume by 40%, from 100,000 to 140,000 boxes a year, while bringing down operating costs and passing on those lower costs to the users," Díaz said in an interview here. "Montevideo's costs are now approximately 50% those of Buenos Aires, and 25% those of Brazilian ports."

Díaz -- who quit his job to return to politics -- was replaced in mid-May by Gonzalez LaPeyre, after having been in charge of ANP for three years.

"When I began, we had 1,900 port workers. In three years, we reduced that to 1,300," he said, adding that private participation has already increased through licenses and grants for the provision of storage, consolidation, packing, cold-storage and other cargo logistics services.

According to Díaz, in 1997, Uruguayan ports handled 6.5 million tons of cargo, of which 1.3 million tons were containerized cargo. Last year, the port of Montevideo had revenues of $58 million in 1997 -- a figure that's remained constant over the last three years despite an increase in volumes.

"The country's interest isn't that ANP should make money, but that the port should become more competitive," he said. "We want to lower our costs even further."

Luxner News Inc, PO Box 938521 - Margate, FL 33093 USA tel=301.365.1745 fax=301.365.1829 web site design washington dc