Port infrastructure: a still pending issue in Argentina

Argentina’s ongoing failure to adopt a comprehensive growth strategy as a state policy continues to have detrimental effects on its future prospects, while also exerting real-time impacts across various sectors of the economy, including foreign trade. Despite possessing the resources capable of steering the nation toward a successful resolution of this complex situation, a glaring deficiency in necessary infrastructure remains a significant obstacle.

For instance, the Ports of Buenos Aires and Dock Sud, both falling short of the 14-meter draft required for larger vessels, are unable to accommodate ships necessitating a draft depth of 10.50 meters. The fact that Argentina still relies on base ports—hubs for dispatch and cargo trading—reveals the absence of a guaranteed 14-meter draft from either Brazil or Uruguay. According to experts, this circumstance is expected to change by 2024.

As Brazil works to finalize various projects across multiple ports, Uruguay has already approved $600 million worth of works, empowering a private operator to rejuvenate the infrastructure of the Montevideo port. This investment aims to attract larger vessels by ensuring the required deeper draft.

In contrast to base ports, feeder ports cater to markets within their immediate sphere of influence by receiving feeder ships from nearby hub ports. In the short term, a transition from base to feeder ports could be envisaged. However, this transition is neither advisable nor desirable. Such a shift would involve smaller vessels transporting goods to a primary port in another country, only to be subsequently transferred onto ocean-going vessels. This scenario would entail heightened costs for Argentina, prolonged transit times, and additional transshipment delays at ports.

On the contrary, in the medium term, Argentina must gradually work towards securing the trade volumes that currently flow to Uruguay or Paraguay.

Should Argentina succeed in ensuring that its ports offer a draft depth of 12 to 13 meters, this looming threat could be reversed. Achieving this requires significant infrastructure advancements. First and foremost, necessary studies should be conducted to determine feasible dredging depths. This should be followed by the long-postponed bidding process for the Hidrovia Troncal or the “Hidrovía.” Subsequently, bids for the Port of Buenos Aires 2024 and DockSud 2025 should be finalized, independent of any quay depth improvements across metropolitan ports. Moreover, it is imperative to urgently reclaim the dormant capacity of ports like La Plata—an additional example of Argentina’s stagnation.

Pending tenders for renewing expired terminal concessions will demand substantial long-term investments, potentially spanning up to 30 years, and enabling operations involving deep-draft vessels.

The nation’s logistical system must not be subjected to uncertainties arising from pivotal tenders and projects, encompassing communication and transportation networks integral to ground-based cargo operations. Swift response mechanisms are crucial in addressing labor disputes that disrupt ship operations, given the potential repercussions on the nation’s global standing. This challenge is exacerbated by maritime companies struggling to collect freight charges due to exchange rates regulated by the Central Bank.

The Argentine Shipping Federation and the Shipping Center are advocating for the reversal of the PAIS tax increase, further exacerbating an already intricate economic-financial equation. Additionally, their competitiveness is dampened by a 25% tax rate, compared to the mere 7.5% applied to foreign maritime freight. Coupled with excessively protracted payment approval timelines, these factors contribute to higher foreign payment costs within the context of instability.

With a limited fleet and a significant portion of the workforce grounded, labor unions are pressing the Government to rescind a 2003 resolution. This would mandate that foreign barge convoys arriving at Argentine ports are guided by domestic captains instead of proceeding directly to foreign terminals. The resulting excess logistics costs could potentially reach around 15%.

The vitality of port activities is strategic, essential, and forms a foundational cornerstone for the development and growth urgently required by our nation. Sacrificing short-term foreign trade gains has consistently proven counterproductive. Failing to adopt this perspective amounts to squandering yet another geopolitical opportunity for self-beneficial global engagement.

Source: La Nación

To read the original news text, visit: https://www.lanacion.com.ar/editoriales/infraestructura-portuaria-una-asignatura-pendiente-nid19082023/

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