Ports: the pending tasks: improving the productivity of ports is a necessity in Latin America, but it seems for more important to enhance efficiency in the whole logistics chain, from the producer to the final consumer.

Author:Ramirez, David
Position::SPECIAL REPORT: INFRASTRUCTURE
 
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According to the World Bank's Doing Business Report 2013, Latin America has made great progress in facilitating trade across its borders over the past six years. While in 2007 it took the region an average of 25 days to export and almost 30 days to import merchandise through its ports, this fell to nearly 20 days in each case by the end of 2012. Further, these averages--which are also below those of other emerging markets, including Southeast Asia--are getting closer to the levels for Oecd economies.

Nevertheless, the World Bank report also states that Latin America still has a lot to do to facilitate the international shipment of goods, including simplifying procedures to handle merchandise in the ports and achieving reductions in freight costs. The report says that at the end of last year, the cost of exporting a container from the region was $1,353, which largely exceeds the average cost of Oecd countries, of $1,028. Importing a container to Latin America is even worse, as it costs $1,549 on average while it is only $1,080 for Oecd countries.

Reducing freight costs encompasses actions beyond the increase of efficiency in port operation itself and includes the achievement of economies of scale and synergies in the whole logistics chain. This requires immediate attention, given Latin America's growing role in international trade and the importance that the export sector has for the growth of the region's economies.

PORTS WITH ROOM TO IMPROVE

The experts interviewed for this report agreed that, in general terms, ports in the region operate well "within doors," but not so good --terribly bad, some would say--"doors out." Franc Pigna, managing director of Aegir Port Property Advisers, a U.S.-based company that advises the industry on real estate acquisitions, said about the general condition of ports in Latin America that "the region is varied, with places like Venezuela, having a very challenged port infrastructure system, and Colombia, where they have privatized port development and that has worked exceedingly well as the private sector is meeting international operational standards. Likewise, you have ports with good operations in Chile and Mexico, and challenges in Argentina and some in Brazil as well. So there is a wide scope of efficiency in Latin America."

Regarding what to improve inside the ports, Pigna pointed out "the optimization of the financial performance of all their assets, but principally their largest and most strategic...

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