Copyright © 2004 Global Insight, Inc. Short Sea Shipping in Latin America January 11, 2004 TRB...

Copyright © 2004 Global Insight, Inc.

Short Sea Shipping in Latin America

January 11, 2004

TRB Annual Meeting

Omni Shoreham Hotel

Washington, DC

Robert West

Managing Director

Global Trade & Transportation

781-301-9078

[email protected]

Agenda

• Cabotage in Central America

• Cabotage in South America

3 Copyright © 2004 Global Insight, Inc

Definitions

• Cabotage – Cargo and passenger traffic by sea, between ports within a country.

• Regional Cabotage – Cargo and passenger traffic by sea, between ports within an agreed region.

• Feeder – Maritime movement from one port to another where a transoceanic vessel then exports the cargo (reverse for imports).


Develop Regional Cabotage as a complementary and competitive alternative to land transport, with substantial participation in both intra-regional and extra-regional trade – through feeder services between the region’s ports, to reduce total transportation costs and increase the cargo volumes through the ports.

Central America Cabotage Feasibility Study


• Roll-On/Roll-Off (Ro/Ro) – Ship that transports wheeled cargo over a ramp for loading/unloading. It can carry cars, busses, trucks depending on its design.

• Lift-On/Lift-Off (Lo/Lo) – Container ship, using onboard crane or land-based carne.

• Roll-On/Lift-Off (Ro/Lo) – Ship that combines the above two features.

• TEU - Twenty-foot Equivalent Unit, Standard measurement of containerized cargo. A 40’ container equals 2 TEU’s.

Ship Definitions


Cabotage can be an integral part of the supply chain.

• Complements road transportation• Environmentally favorable

– Less contamination– Lower road maintenance and repair costs

• Ship versus rail and truck capacities (Europe):– 7,451 tons of general cargo are equivalent

to:• 291 trucks, or• 10 trains, or• 1 average size RoRo

Cabotage in Central America

Not much now, but - - -


Projections – Central America

• Cabotage Atlántic/Pacífic

• Feeder Atlántic/Pacífic


Quetzal Acajutla

Corinto

Caldera Cabotage Service Intra C.A.

San Lorenzo

Guatemala

Honduras

Nicaragua

Costa Rica

El Salvador

Possible Cabotage Service

• Cabotage Intra C.A.

Ship: Ro/Ro


• Commercial interchange within Central America shows some potential.

• The Pacific Coast shows promise for intra-CA cabotage.

• On the Atlantic Coast, there is not sufficient cargo for a profitable cabotage service.

125

247

201

396

230

452

0

100

200

300

400

500

600

700

Tons

(000

)

1998 2010 2015

Cabotaje Potencial por Costa

Atlantico Pacifico

Potential Cabotage: Intra-Central America

1998 2010 2015Atlantico 125 201 230Pacifico 247 396 452

373 597 682

Tons (000) Note: 1998 figures are estimates of the potentialonly – not actual.

Pacifico

Atlántico


Demand Summary - 2002

* Atlántic after 2015

• Cabotage Intra C.A. - Pacífic*• Cargo S/B: 592 TEU’s / Week• Cargo N/B: 806 TEU’s / Week

• Feeder C.A.– Atlántic

• S/B: 4,680 TEU’s / Week• N/B: 4,942 TEU’s / Week

– Pacífic• S/B: 4,930 TEU’s / Week• N/B: 6,838 TEU’s / Week


Cabotage - Pacific:

• Service to each C.A. country: Weekly

• Proposed ship type: RO-RO

• Transit time (R.T.): 7 days

• Ship capacity: 264 TEUs

• Average ship utilization: 80%

• Ship speed in service: 15 knots

• Number of ships: 1 Ship

• Market potential: N/B: 806 TEUs/Week

S/B: 592 TEUs/Week


Once up and running, the Pacific cabotage service would be profitable.

• Revenue

- $64 million, including land portion

• Costs

- $47 million , including land portion

• Profit

- $17 million


Cooperation with the truckers - Experience in Other Countries

• Cabotage is complementary, not competitive

• Compatibility of land and sea equipment• Contractual flexibility between sea and

truck:– European experience

• Involvement of the trucker in maritime transport:– As stockholder or partner


• Feeder Atlántic• Feeder Pacífic

Santo Tomás Cortés

Quetzal

Acajutla

Corinto

Caldera Limón/ Moín

Servicio Feeder Centroamericano Atlántico

Servicio Feeder Centroamericano Pacífico

Colón

Balboa

San Lorenzo

A Manzanillo*

Santo Tomás Cortés

Quetzal

Acajutla

Corinto

Caldera Limón/ Moín

Servicio Feeder Centroamericano Atlántico

Servicio Feeder Centroamericano Pacífico

Colón

Balboa

San Lorenzo

A Manzanillo*

Possible Feeder Services

Ship: Lo/Lo


0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Ton

elad

as m

etri

cas

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Comercio Potencial Total para Feeder por Costa

Atlantic Pacific

Potential Cargo for Feeder Services

Europe• CA-Europe has few direct services.• Trade with Europe could be transshipped in

Panama or in a Caribbean port.• Of the 3 markets, Europe is the biggest and

fastest growing.

Asia-Australia• All the trade with Asia is through the Pacific

Coast.• The trade with Asia could be transshipped in

Balboa or in Manzanillo, México.

Rest of the World• Other markets Exports: 21% Pacífic, 19% Atlántic Imports: 7% Pacífic, 33% Atlántic

Global Insight examined the potential markets, excluding services to the USwhere there are direct services. Also, liquid and dry bulks were excluded.

Pacific

Atlantic

6 millon tons2000


Feeder on the Atlantic – Central America

• Service in all CA nations, and Panama: Weekly• Proposed ship type: LO-LO• Transit Time (RT): 7 días• Ship capacity: 1,130 Teu’s• Average ship utilization: 50%• Ship speed in service: 16 knots (Cap.18)• No. Ships in initial service: 1 ship• Potencial del Mercado: S/B: 4,680 Teu’s/Week N/B: 4,942

Teu’s/Week


In the first full year of operation, the Pacific Feeder service would be profitable.

• Revenue

- $78 million, including land portion

• Costs

- $56 million , including land portion

• Profit

- $22 million


Quetzal

Acajutla

Corinto

Caldera

Servicio deCabotaje Intra C.A.

Servicio Feeder Centroamericano PacíficoIncluye los mismos puertos de Intra C.A.

Balboa

San Lorenzo

A Manzanillo*

Quetzal

Acajutla

Corinto

Caldera

Servicio deCabotaje Intra C.A.

Servicio Feeder Centroamericano PacíficoIncluye los mismos puertos de Intra C.A.

Balboa

San Lorenzo

A Manzanillo*

Combination Feeder - Cabotage on the Pacífic

* The Pacific Feeder service could transship in Manzaillo, Mexico, or in Balboa, Panama.

Ship: Ro/Lo


• Service in all CA nations, incl Panama: Weekly• Ship proposed for service: RO-LO• Transit Time: 9 days• Ship Capacity: 1.130 TEUs• Average ship utilization: 72%• Ship speed in service: 16 knots• Number of Ships: 1 vessel (3

future)• Market Potential: N/B: 7,644 Teus/Week

S/B: 5,522 Teus/Week

Combination Feeder - Cabotage on the Pacífic

Also Profitable


Considerations – Central American cabotage

• The financial results are for a combined land-sea operation, with common ownership.

• Reducing the costs of land transport by 10% would improve the profitability of the cabotage service by $3 million.

• The 5 countries must work AS A REGION with unified regulations and treatment of cabotage as a unifying effort.


Panamá and México

• Panamá. A member of CAUCA but not a signatory to the Multilateral Treaty or to CAFTA (2004). Cabotage is not an important factor in the consideration of an international treaty, but at the same time, this indicates the necessity to give cabotage an independent treatment.

• México. Represents another important element because of the Plan Puebla-Panamá proposal and because of the trade agreements, either current or in prepartion, between México and the Central American nations.


Maersk-Sealand already operates a related service.

Source: Jan Hoffman, UN


INTERNATIONAL TRAFFIC

INTERNATIONAL TRAFFIC

MERCOSURMERCOSUR

OpenPartialOpenPartial

OpenPartialOpenPartial

OpenTo allOpenTo all Open To allOpen To all

ControlledControlled

ANDEANANDEAN

CABOTAGE TRAFFIC

CABOTAGE TRAFFIC

NAFTANAFTA EUROPEANUNION

EUROPEANUNION

ControlledControlled ControlledControlled Open - RegionalOpen -

Regional

CEN AMERCEN AMER

ControlledControlled

OpenTo allOpenTo all

Each regional block has its own criteria for controlling, or opening, local and international navigation. The EU is the most “open” for cabotage and international traffic.

Cabotage in South America

Great possibilities – Many problems


South American Cabotage -2000 Tons (000)

Chile

Colombia

Ecuador

Guyana

Paraguay

Brasil

Suriname

Argentina

Peru

Bolivia

Liquid Bulk

14.939

Dry Bulk

2.355

General Cargo

412

Venezuela

Uruguay

TOTAL

Total

17.707

n/d

4.140

2.289 2.289

n/dn/d n/d

00 351

418316 3.857

n/dn/d n/d

1120 112

n/dn/d n/d

76.743 103.356

456

n/d n/d

351

3.122

n/d

0

n/d

22.480

52.09613.570 1.761 67.428

6.8553.061 1.186 11.103

n/dn/d 456

3318 6 57


Intra-MERCOSUR Trade

THISTHIS route is not allowed.



Global Networks

Maersk-Sealand operates in this international route, with Buenos Aires as the final destination, in order to avoid the legal restrictions on cabotage.

Maersk-Sealand



Global NetworksEvergreen



Global NetworksLykes Lines



Question

If it were possible, would the international services carry cargo fromSan Antonio toIquique?



Ship capacityconnecting Chile portswith other SouthAmerican ports.



Intra-Andean Pact Trade (CAN)

THISTHIS route is also not allowed.



Advantages of a Regional Agreement

• Less international cargo international cargo on the highways

• More options and frequencies for the customers

• Lower transport costs

• Advantage of the regional fleet fleet over theextra-regional

• More port trafficport traffic

• Larger regional integrationintegration


Example: European Union

Factsheet 4.5.8.:

“ Regulation 4055/86 applies the principle of open delivery of services for maritime transport among Member Countries and between Member Countries and third partiesthird parties.”


For CAN, this would mean - - -

OpenOpenOpenOpen

InternationalTradeRegional

Cabotage


as well as pure cabotage and feedering.

Also Open?Also

Open? “Feedering”


...even cabotage by international lines.

International Lines would carry

cargo between Buenaventura &

Cartagena

International Lines would carry

cargo between Buenaventura &

Cartagena


Conclusions

• Cabotage needs special treatment

– Regulatory aspects:

• customs, legislation and regulation

– Appropriate installations in the ports

– Special tariff treatment at the ports

– Definition of the appropriate enterprise (business structure)

– Harmonization with road transport

Copyright © 2003 Global Insight, Inc.

Short Sea Shipping in Latin America

January 11, 2004

TRB Annual Meeting

Omni Shoreham Hotel

Washington, DC

Robert West

Managing Director

Global Trade & Transportation

781-301-9078

[email protected]

Copyright © 2004 Global Insight, Inc. Short Sea Shipping in Latin America January 11, 2004 TRB...

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