Close to its bidding process, the Port of Buenos Aires seeks a new identity

RIO DE JANEIRO, BRAZIL – The Port of Buenos Aires began operating in 1580, with the arrival of Juan de Garay. Today, the actors involved in foreign trade operations want to shuffle and shuffle again, betting on improving its operation, with all the players sitting at the table.

For the country to be competitive, its main port must be more agile and adapt to the needs of today’s cargo. The ten free meters that the port has maintained since its foundation make it inconsistent with receiving the large ocean-going vessels increasing in crescendo. Investing in infrastructure, digitalization, and making the “quality of service at a reasonable cost prevail over the exploitation fee” are priorities in which the foreign trade referents consulted by La Nación coincide, who emphasize the need to align with a joint long-term maritime strategy.

Read also: Check out our coverage on Argentina

How to get in tune with today’s international trade? “With a modern logistic system that helps in the fast traffic of goods in the ports. If we intend to comply with the WTO Trade Facilitation Agreement, it is essential to accelerate these changes,” says Enrique Loizzo, president of the Centro Despachantes de Aduana (CDA). He also points out that the entity has been meeting with sector representatives to interact and promote initiatives “traceable for all operators, and inviting the public sector, with sustainable proposals”.

Loizzo believes that “a port community” should be created and debated from different perspectives: “foreign trade operators, port authorities, customs, security and related services companies”. To that end, at the end of 2021, they started meetings, together with business chambers -among others the Chamber of Commerce and Services (CAC), the Chamber of Exporters (Cera), and the Argentine Industrial Union (UIA), in which authorities of the General Administration of Ports (AGP) also participated, to then express their concerns in notes addressed to “the higher regulatory bodies (Ministry of Transport of the Nation and Ministry of Production, Science and Technological Innovation of the province of Buenos Aires)”.

PRIORITIES

In the list of problems surveyed by the Chambers, prioritizing the situation in the Terminals of Buenos Aires and Dock Sud, are the allocation of import, export, and empty shifts; excessive delays in the operation within the terminals and also outside them; difficulties in communication and use of web tools; operations on inappropriate days and times; billing charges, incomprehensible costs and cost overruns in the import high cube (HC). Issues on which, in many cases, they maintain that they can be solved before a bidding process is finalized, the date of which is still uncertain “and which do not necessarily involve large sums of money”, says Oscar Fernández Choco, Corporate Director of Cera.

“With the exclusion of future infrastructure issues, the remaining ones can and should be analyzed immediately”, agrees Eduardo Rodriguez, secretary of the UIA Shippers Council, and adds that, although the number of issues to be observed is significant, “at present it has become urgent to address all the concepts that affect the costs of our foreign trade, given that the sudden and extraordinary increase in international maritime freight rates has had a very negative impact on the export costs of local companies”.

The general manager of the Chamber of Importers (Cira), Fernando Furci, emphasizes the need to “make port operations transparent” and that “it should be reflected in the invoices, because shippers do not understand what they are charged, and they still have to pay without being able to complain about something they may consider unclear in certain concepts that have a strong impact on the production industries, with a final effect that is transferred to prices and that we all end up paying. There is no shipper’s ombudsman,” he stresses. Although there is an area in the PGA where they receive the claims, the importers assure that “they do not advance”.

Furci specifies that “Cira is taking measures to lower costs at the port, in transportation and services, addressing the entire value chain, because the port cost is unsustainable”. To do so, it maintains “dialogue with institutions, companies and government offices, bringing them proposals”, such as the freight component “to consider eliminating it temporarily or capping historical maximums until something reasonable is obtained since it continues to be taxed on a taxable freight base of US$15,000. If I take US$40,000, I pay over US$55,000; and this goes against competitiveness”, he questions.

Among other points, Jorge Fernandez, member of the Foreign Trade Commission of the CAC, observes that “the HC container cannot continue to be considered out of measure when it is the most used by ships; even less taxing it with an additional 160% in all services”. Meanwhile, Loizzo claims that “all the Port of Buenos Aires’ terminals should be operative because today there is one less, which generates complexity due to the operating capacity”.

Considering the new concessions in process, Fernández Choco warns that “the Port of Buenos Aires should not, by inaction, become a feeder port for the port facilities of neighboring countries. It would mean a substantial loss of competitiveness for our exports of value-added shipments by container. And it is particularly transcendental for the Argentine hinterland, as 65% of current exports come from the provinces”.

“The challenges are multiple -he adds- starting with the necessary draught in the accesses, which is closely related to the Paraná-Paraguay Waterway and the channels through which the port is reached and exited”.

In addition, Cera’s executive specifies that “the next bidding process must necessarily contemplate the pace of technological changes and the rapid adaptation of tariff schemes. For example, today, a 53-foot container is something exceptional, but maybe not in a couple of years. Today, it may have a surcharge for excess size, but in a couple of years, it will be a charge that would threaten competitiveness in a new normal operation”.

A PUBLIC SERVICE

Among the expectations placed on the next bidding process, Jorge Fernández points out that “terminals provide a public service”, and stresses that as “the vast majority of small and medium-sized operators do not choose which terminal to use, besides focusing on competition conditions, the regulations governing the daily operation and the concessionaire-operator relationship must be worked on in depth”.

As for the convenience of granting the port to more than one firm, the coincidences are condensed in Loizzo’s words: “The competitiveness of more than one operator is essential to achieve greater efficiency”. Meanwhile, Fernando García Martínez, also a member of the CAC, finds “positive the decision of the authorities to request the opinion of organizations such as the Economic Commission for Latin America and the Caribbean (Cepal), the whole comex community, and service users”.

Regarding the granting terms, Loizzo considers that “they should depend on the infrastructure works to be carried out”. However, Fernandez Choco clarifies that as in time there are modifications in the trade flows, vessel characteristics, technological changes and other issues related to the operation; these aspects should be in the concession contracts”, as well as “adequate times to be considered in the clauses “for management, evolution, and control of port operations. Port costs are part of the cost of a product, and the entire chain must be optimized. Therefore, there must be competition among concessionary operators”.

THE PREVAILING TRANSPORT

García Martínez assumes that “today, multimodalism is gaining enormous importance in the strategy of the leading international shipping companies to control the movement of goods under the door-to-door concept, absorbing air and land transport companies and the services associated with the international operation of goods. The concentration of the global logistics market is a challenge and suggests then, “in the Argentine case, that an appropriate railway system should be preponderant, which Jorge Fernandez also defines as the necessary “backbone of all movements” of foreign trade.

Furci links “internal transport with maritime transport”, indicating that we must “work on technical and cost issues, improving routes, trains, internal fluvial transport, to be aligned with the world transport that is imposed”, because “with our location on the map, our position of power is minimal or nonexistent. Argentina’s logistic position is not good; it is of completion and not of transit. Everything that arrives should leave loaded so as not to overpay freight. We have a lot to do, and it is possible”, he emphasizes.

Fernández Choco recalls that “the Argentine Association of Business Logistics (Arlog) recently highlighted a series of critical points found in the transport chain, among them the shortage of transfer stations” and adds that “the access of multiple transport systems (maritime, river, rail and road) to the port node and the capacity with which they can operate with it, create the basis for the port, as an interface between systems, to compete for the capture of ships and cargoes”.

CONFLICTS AND MORE COSTS

In the search for improvements to facilitate the competitiveness of Argentine foreign trade, the Argentine Industrial Union (UIA) joins the dialogue of those involved in port issues. It focuses on two aspects: infrastructure and operability. In the first case, it notes “the need to have better access channels, drafts and operational capacity of its terminals”, in addition to including “the improvement in port capacity for the reception and departure of cargoes moved, as part of its multimodal capacity to handle them”, details its director, Eduardo Rodriguez.

Regarding operability, he highlights events during 2021: “We have witnessed countless port conflicts and related services that have produced long delays and costs to the cargo and have complicated users in multiple ways. In addition to the already known costs caused by generalized increases for container freight, delays or suspension of operations, cargo shifting, container shortages and reduction of services, competitiveness has worsened and port use has become more expensive for cargo”.

Given this scenario, Rodriguez stresses “the importance of knowing the preparation of the bidding documents that will shape the future of the port of Buenos Aires”, and assures that “the entire private sector wishes to collaborate to achieve the best possible design”, since “the interest of possible bidders and the future cost that the cargo will have to bear, depend on it”.

“It is fundamental to understand that a port needs two things: cargo and vessel; without cargo, there will be no vessels, and without vessels, there will be no cargo, no matter how sophisticated the port is, and we have some examples in the country. Argentina has a critical mass of 1.5/1.8 million TEUs that enter through the Rio de La Plata; if the economy is reactivated, we should exceed 2 million TEUs in the short term, and that cargo needs the best solution to be able to compete on equal terms with our competitors”, he conjectures.

The secretary of the Shippers’ Council points out that “cargo is a user of the port, not its operator, and requires reasonable costs and competition among service providers. It is the responsibility of the designated official entities to supervise, control and audit the services, tariffs, and practices that may generate extra costs, lack of competition or unacceptable delays”.

In addition, it gives relevance to the environmental impact, to be addressed in the “proposals and decisions of port improvement to be made”, since the volumes of cargo transit in and out of the port produce pollution currently being fought in all global ports”.

IMPORTANCE OF PORTS

“Maritime logistics is the backbone through which about 84% of the volume traded globally (based on total tons) and almost 70% of the value is moved. Ports play a crucial role in ensuring broad distribution of supply chains, including essential ones such as food and medical supplies,” states an ECLAC report called Post-Pandemic International Logistics. According to another ECLAC study for the AGP, Maersk and MSC hold a dominant position in the deep sea containerized cargo market in Buenos Aires, together accounting for more than 50% of the volume operated, “which raises the need to continue having these lines, which are the largest in the world while avoiding potential damage to competition”.