November 23, 2014
BA port official: Argentina needs sweeping harbour policy changes
Argentina, one of the world’s largest food exporters, lacks a port policy consistent with the strong economic growth of last decade, says Oscar Vecslir, general co-ordinator of the Port Management Authority which reports to Buenos Aires City’s Ministry of Economic Development.
Vecslir says the country’s should draw up a port policy based on three pillars: define whether it will continue to keep Buenos Aires as a concentration (hub) port, further develop the 3,400-kilometre waterway system of the Paraguay-Paraná rivers connecting Argentina to its Mercosur trade bloc partners Brazil, Bolivia, Paraguay and Uruguay, and develop the maritime ports.
Besides, Vecslir disagrees with the opinion of many experts who claim that in the face of the global increase in vessels’ size, the huge port development in Brazil, and its own shortcomings, Buenos Aires is doomed to become a feeder of Brazilian ports.
Through the Port Management Authority the national government participated in the past in the administration of Buenos Aires City port. During the presidency of neo-conservative Peronist Carlos Menem Congress in 1992 passed Law No. 24,093 ordering the transfer of the five national ports (Bahía Blanca, Quequén, Buenos Aires, Rosario and Santa Fe) to their respective provinces and Buenos Aires City on condition that they were managed by private or public-private organizations.
Shortly afterwards, Menem vetoed the transfer of the port to Buenos Aires because at that time the city was not autonomous, a condition it would attain in 1996 after the 1994 constitutional reform. Meanwhile, between the enactment of the law and the veto, the Port Management Authority was created. It is now waiting to see if the nation finally abandons its refusal to transfer the port to the city.
Vecslir — a former acting president of the Management Authority of the Port of Bahía Blanca and a former trustee of the General Ports Administration (AGP), the national company which runs the port of Buenos Aires City — outlined his views in an interview with the Herald.
What is your assessment of Argentina’s port policy?
Argentina today urgently needs to design and implement a port policy to match the growth of foreign trade over the last decade and prepare for the changes in the immediate future. An economy which grows mainly under the influence of foreign trade requires the development of port logistics at a higher rate than that of accumulated GDP growth over the decade.
The last serious and relevant effort to transform port logistics was launched in the 1990s and hinged on three fundamental policies: deregulation, decentralization and privatization of operations. Decree No. 817/92, deregulated river and sea transport, liberalized activities of harbour pilotage and towage and allowed the redefinition of port labour regimes and operations. It created the National Port Authority. Meanwhile, administrative decentralization with the port transfers to the provinces proceeded under Law 24,093.
Regarding the privatization of port operations, it is necessary to mention the privatization of Buenos Aires City port. Although its transfer to the City was vetoed, the exploitation of terminals was privatized.
It is true that huge social costs were paid but in the end it was positive. National ports managed to attain the best operating levels in the world. Today we need a new transformation, possibly of a depth equivalent to that 1990s’ experience, but with a high component of modernity and adaptation to changes in emerging economies by capitalizing on their strengths and cushioning the impact of their weaknesses.
What should be the guidelines?
This new policy should begin by defining whether to continue maintaining Buenos Aires (or a metropolitan area or a sea port area) as a hub port operating as today with the usual trans-oceanic traffic, rejecting fundamentalist theories which argue that the Argentine market is Brazil-dependent and that large ships will only call on Brazilian ports and that, as a consequence, Buenos Aires will become a feeder of Brazil’s ports. It is easy to infer that the lack of action and the lack of a national logistics plan and a of a port plan, contributes to the loss of competitiveness of Buenos Aires — and, consequently, Montevideo can capture the growth of Argentine cargo — and also timidly leads other minor domestic ports, together with shipping firms, to start implementing services with transshipment in Brazilian ports. So far, albeit with some limitations, the larger vessels serving South America, have managed to enter Buenos Aires, but if the works proposed by private terminals materialize, and the port authority improves the accesses to the port, there will not be difficulties for several years in berthing those vessels. Contrary to what the advocates of the orthodox theory claim, as long as the share of emerging economies in global trade continues to grow (they now represent over 60 percent of the total, according to the UN Conference on Trade and Development, these markets and exporters and importers will be those discussing on an equal footing with the large shipping companies.
What about Buenos Aires port?
Buenos Aires has the “weakness” of being the last stop-over, and, therefore, can be lifted easily, but this is cushioned because precisely for being the last stop, ships arrive very lightly loaded and need a lower draft and, also, Argentina has a real “strength” of having available, for each port service, a significant volume of import/export containers in relation to the capacity of these vessels. Besides, the world economy cyclical fluctuations over almost the last two decades taught the porta-container shipping sector and terminal operators to surf the general and the particular crises, adjusting or expanding availability of transport capacity in line with the market. This ensures that there will always be shipping firms interested in maintaining ocean routes to Argentina, even at the current operational capacity of our ships because they will be able to compete in the face of the surcharges transshipping in Brazil involves today.
In addition, the fact that the trans-oceanic route starts in a foreign port such as in Brazil or Uruguay, involves a loss of sovereignty in the transfer of the freight policy decision-making centre to another country where, obviously, during logistics emergencies, in business opportunities and any possible foreign trade growth, domestic cargo will always have priority over Argentine. Proof of this is that even today the Brazilian ports are expensive, with serious operational problems handling their own cargo and are not interested in competing to capture regional transshipments.
Once again, Argentina must define which ones will function as hub ports.
There is no doubt that in the very long term it will have to think of a non-river port to fulfill this role. Its installation site should start being considered now as its planning, construction, and financing and will require 25 or more years. To achieve this without trepidation it is necessary to use Buenos Aires, with the mentioned infrastructure improvements, integrating it into a metropolitan harbour front with Dock Sud and La Plata.
What role should the Paraná-Paraguay waterway play?
Another basic pillar is the correct use of that extraordinary waterway linking the provinces of northeastern Argentina, even more than road and rail. But along this path, a navigation precedent should be granted to regional productions, grain and fuel transport and increasing Mercosur traffic. If to neutralize the metropolitan transshipment ports such as Buenos Aires or Dock Sud the upstream navigation of porta-container feeder ships grows without limit, it would mean an unnecessary conflict for the waterway.
There are asymmetries basically favouring Paraguay...
The management of the Paraguayan cargo deserves special consideration. The container traffic of the Paraguayan foreign trade has been an eternal partner of the Argentine port system.
Today, in the face of our indifference and their growth and the modernization of their river transport fleet, Paraguay is obliged to progressively replace us. Even less attention is being paid to participating in the growing traffic which Bolivia and Brazil launched to take out their production through the waterway.
How do you see the future of the maritime ports?
Broadly speaking, the further development of the national maritime waterfront, is the third cornerstone for a new port policy. The sea coastline is so varied that, to grow, it is only necessary that regional economies recover their significance and, accordingly, to plan their logistics to make them more competitive. In this growth two central items are involved: an appropriate shipping development policy, and an adequate Customs policy which matches the entrepreneurs’ efforts. It is worth noting the smooth functioning of the port of Bahía Blanca and, to a smaller degree, that of Quequén, is probably due to their management system based on mixed private-public boards and a good level of transparency. Both ports, with their own resources, maintain their infrastructure updated and make an orderly preparation to compete in the global markets.
The situation of the Patagonian ports is different. They are linked to their regional productions or cruise tourism and/or Antarctic activities.
Their competitiveness will depend more on the shipping policy the country adopts than on their own efforts.