High Port Logistics Costs in Argentina Impact Exports

Industrial business leaders have voiced concern over the high costs of operations at port terminals in Argentina, describing them as a “barrier to exports” and warning that the situation has worsened in recent months.

A survey conducted by the chambers and companies that form the Argentine Industrial Union (UIA) found that the country’s ports have the highest operational costs in the region, surpassing Brazil, Chile, Colombia, Peru, and Uruguay.

The UIA expressed concern in this context, noting that “port terminals took the opportunity to renegotiate contracts under Decree 299/23, which removed the price cap on service fees.” This renegotiation has led to an increase of more than 25% in costs, measured in dollars.

Additionally, the tender to increase toll fees on the Troncal Waterway (VNT) by 40% to 60% has had an impact. The fee hike aims to settle an outstanding debt with the company responsible for dredging services.

“At UIA, we have expressed in various working group meetings our disagreement with this increase and reiterated the need to find an alternative way to renegotiate the debt or redistribute resources within the entity to fulfill this obligation,” the UIA stated. “This approach would prevent the burden of past mismanagement from being passed on to the productive sector, which would undermine national production’s competitiveness.”

The industrial leaders emphasized that the primary sector expected to shoulder the cost of this debt will be the productive industry. Simultaneously, a 20% tariff reduction has been granted to cruise ships.

According to the UIA’s study, the cost of handling a 40-foot container in Argentina is 2% higher on average, with peaks of up to 24% for exports, while import costs have surged by 51%, with peaks of up to 70%.

Meanwhile, handling a 40-foot High Cube container in Argentina is more expensive than the regional average, costing 1% more with export peaks of up to 22% and 70% more with import peaks reaching 151%.

Industrial Proposals for Argentine Ports

As a solution, the UIA suggests increasing transparency in port security costs, which are currently charged across all cargo, and extending customs service hours to reduce reliance on overtime fees.

They also propose eliminating additional charges for High Cube (HC) containers, removing truck parking fees when delays are caused by terminal issues, clarifying that “withdrawal” fees should not apply to domestic cargo, and implementing electronic Bills of Lading.

For the specific case of the terminals at the Port of Buenos Aires, whose concessions expired on August 31, 2023, and were extended for three years starting in September 2023 without a maximum tariff limit, the UIA calls for tariff adjustments to be based on a presentation of cost structures and justification for increases. They also demand a rollback of AGP (General Port Administration) tariffs to November 2022 levels, as these fees are in dollars and relate to the use of fully amortized spaces, piers, and structures.

The Port of Buenos Aires plays a strategic role in the country’s economy. Please refer to the chart below to see the most exported commodities recorded in Buenos Aires terminals in the first eight months of 2024, according to DataLiner data.

Top Cargo Buenos Aires Port | 2024 | TEUs

Source: DataLiner (click here to request a demo)

Finally, for the Troncal Waterway, the UIA recommends revising the current tariff structure applied by the AGP, including the ports of Buenos Aires and Dock Sud in the first segment; implementing an appropriate tariff structure for the Santa Fe-Confluence segment; conducting environmental impact studies to deepen the VNT to 42 feet; and eliminating the “Ship Watchdog” role, which has been replaced by a safety and management code.

In a letter to the head of the General Port Administration, Gastón Benevuto, the UIA stated that these excessive dollar-based increases are occurring “in a context where logistics challenges have been mounting for our production over recent years, without taking into account the additional economic difficulties, which are negatively affecting industrial activity, particularly for SMEs.”

They also noted that “declining sales and production significantly hinder the ability to absorb these costs, which severely impacts competitiveness and export potential.”

Source: Ámbito

Original reporting in Spanish: https://www.ambito.com/economia/advierten-que-los-altos-costos-logisticos-los-puertos-argentinos-golpean-las-exportaciones-n6067159

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