Argentina losing a good part of agricultural competitive edge due to poor port, dredging policies

Once again exit channels are in the limelight

For the Herald

I have been writing since 2002 about the need for two well-dredged and maintained channels to cope with the transportation needs of Argentina. Now we are talking Mercosur with an increase in export quantities which could only be dreamt of 10 years ago. Argentina has an agricultural produce of over 100 million tons, of which over 70 percent is exported from the Paraná River. Paraguay and Bolivia add another 5-6 million tons only of agricultural products and there is an open question as to the quantity of iron ore which will be shipped out (20 million tons is not impossible).

Argentina is probably one of the most competitive agricultural product growers in the world. However, inland transportation costs are becoming prohibitive and killing a good part of this competitive edge. The only solution lies in the rivers. More export ports, better channels and active policies toward waterborne transport is a must for a country pressed for hard currency.

The world is undergoing important changes which should be taken into account. For starters, the “warhorse” for Argentine exports (and imports) has been the Panamax size vessel. However, the Panama Channel will start operating with wider locks allowing for wider ships. The maximum beam will go from 42.24 metres to 49 metres

The beam of the vessels is, for the local channels at least as, if not more, important than the length. This has to do with the fact that vessels in the water do not go as straight as cars in a road. Currents and winds tend to move the vessels aside so the rule is that a channel should have at least three beams to be considered safe. Today this is around 100 metres but within a short time, this will go to 150 metres.

This will have a direct impact on the Mitre Channel and the Buenos Aires-Recalada Channel. On top of this, we now have LNG carriers and passenger/cruise vessels which put further strain on the Mitre Channel — bearing in mind that they already are now as wide as the new Panama limitation

Only short-sightedness can advocate against having the Martín García deepened and widened. Argentina cannot afford not to have both channels at their best capacity to cope with the increase in the traffic and size of vessels. The production areas are located more and more in the north/northwest of the country and there is the addition of Paraguay, Bolivia and Brazil.

The official draft at the Mitre Channel is currently 34 feet but the plans for a 36-foot deepening have been already on the table for quite some time. Uruguay has been complaining about lack of co-operation from Argentina to deepen the Martín García Channel to an equivalent depth to the Mitre, without even discussing the further dredging to 36 feet.

Personally, I have lost track of what is the problem with deepening and widening the Martín García Channel. Sometimes it is the Uruguayans who want to renegotiate the present contract and, in such cases, the Argentines are opposed. Sometimes it is the other way around.

In the same manner that the Mitre Channel has been maintained very well by the operator who dredged it, I can’t see any reason why the Martín García Channel cannot go the same way. There have been untold extensions already of the original contract (both sides of the river) and to change an operator of a channel under concession is equal to calling for unaffordable delays and complications (starting with palatial intrigues). The fact is that it is long overdue.

Once again I must state that with imminent decisions on deepening of (both) channels, it would be the right time to sit down between authorities, exporters, terminals and shipping entities to discuss in depth the navigation issues for the next 20 years which, without any doubt, will see dramatic increases in waterborne transport and — let there be no doubt about it — deeper, wider and well-signalled channels on both sides of the entrance of the Paraná River.

(Jan Kok is CEO of Samtrans Marítima SA and has worked for 40 years in the shipping sector, 32 of them in Argentina)