Space open to logistics operators in Uruguay

Logistics Services: Uruguay, Gateway to MERCOSUR

Additional information

August 2010

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Export logistics operators

At the Port of Montevideo, several companies are concessionaires or permit holders for warehouses and other areas owned by the ANP National Port Administration for a determined time period. Permits are granted for up to three years and concessions are given for up to 15 years with the ability to increase the number of years depending on the canon to be paid and the investment in infrastructure for projects. Services that add value to merchandise are usually performed at warehouses. The following are some examples:

Comfrig1

Comfrig belongs to the Insug Corporation of South Korea and has cold storage chambers primarily for fish storage, but also for other frozen products such as meats, fruits and vegetables (up to 26,000 m3 and 9,000 tons with temperatures between -30ºC and +15ºC). Adjacent to the chambers is a 1,000 m2 container storage area as well as power sources for refrigerated containers.

Comfrig serves fishing fleets from China, South Korea, Europe and Russia that operate in the South Atlantic. Services offered include: consolidation, deconsolidation, palletization and de-palletization, labeling, wrapping and cargo classification. Products are then shipped back to the aforementioned countries/region.

Jaume & Seré2

Jaume & Seré has warehouses that operate under the Rilcomar firm where logistics, storage and Free Port tasks are performed (the nature of the merchandise is not changed).

This operation is complemented by the company’s own warehouses at the Colonia, Libertad and Rivera Free Zones to cover a wide range of needs including product manufacturing, storage, distribution, repackaging, classification and relabeling.

The company believes that operations at the Montevideo Free Port are complemented with those at the Free Zones, including product transformation, but there are certain tax and duty limitations when the product is for the domestic market or for MERCOSUR member countries. Both options add value to the logistics chain and are focused on providing unique integral logistics services in the region based on an innovative and reliable legal framework.

Grupo RAS3

Grupo RAS is a Uruguayan company specializing in the administration of logistics services with branches in Argentina, Bolivia, Brazil, Chile, Mexico and Paraguay. The company has

1 Sources: www.comfrig.com and interview with company staff on 15 March 2010.

2 Source: www.jaumeysere.com

3 Sources: www.gruporas.com and interview with company management on 7 April 2010.

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more than 600 employees in 30 offices in these seven countries. Grupo RAS helps integrate supply chains from foreign manufacturers and suppliers to final destinations in MERCOSUR, Chile, Bolivia and Mexico.

Grupo RAS has created a Port Logistics Pole (PLP) specializing in the regional distribution of merchandise that uses the advantages offered by the Montevideo Free Port. There, the company has a 40,000 m2 covered storage area, a 10,000 m2 container terminal, cold storage, a show room for regional clients to promote products for the region, a conference room and more.

In addition, Grupo RAS has just opened a new covered 22,000 m2 National Distribution Center.

Currently, the company is setting up offices in each market in the region to benefit from the synergies available thanks to its in depth knowledge of local markets. Through the RAS International affiliate, the company offers services for international companies that seek to position themselves in the region, providing consulting, marketing, sales, distribution, opportunity identification, product promotion and buyer, partner and joint venture searches, with inventory and samples at the PLP in Montevideo.

Lobraus4

Lobraus is a Brazilian company founded in 1989. It moved its headquarters to Uruguay due to its “excellent geographic location, simple laws, low operational costs and above all for the advantages offered by the Free Port system.” The company has

implemented the supply chain concept in all areas, including logistics and information systems. It is located at the Port of Montevideo and serves as a distribution hub for MERCOSUR with warehouses in the port area.

Costa Oriental5

Since 1984, Costa Oriental has operated at the Colonia Free Zone, located 180 km from Montevideo and 55 km from Buenos Aires. There, the company has 7,000 m2 of warehouse space for the storage of chemical and agrochemical products. Since 1992, Costa Oriental has been operating in Zonamerica, located 17.5 km from the Port of Montevideo and 9 km from Carrasco International Airport. There, the company has 20,000 m2 of warehouse space.

In 1997, the Katoen Natie company of Belgium purchased shares in the company. In 1999, Costa Oriental opened Costa Park I, a 10,000 m2 regional distribution center. In 2000, Costa Logística was created to offer domestic storage and distribution services for clients in Uruguay. There, the company has 12,000 m2 of warehouse space located 1 km from Zonamerica. Costa Oriental has two refrigerated chambers, three value added rooms, seven loading docks and a 3,000 m2 pharmaceuticals area with controlled temperatures and 9,000

4 Source: www.lobraus.net

5 Sources: www.costaoriental.com and interview with company management on 9 April 2010.

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m2 for end consumer products. In 2008, Costa Park II was built, providing 10,500 m2 of warehouse space.

Costa Oriental performs the following VAL (value added logistics) services:

labeling, ink jet

case placement, packaging, blending, mixing

slitting, quality control

kit assembly, electrical/electronic supply placement/swap, refurbishments

catalogue inserts, assembly line supply

The company has specific areas inside the warehouse for “mini factories” (small plants for assembly, set up, cutting, laminating, testing and other semi-industrial activities that add value to the final product).

Business units include the following: consumer products, vehicles and machinery, raw materials, pharmaceuticals and agrochemical products.

Transcargo6

Transcargo is a domestic company founded in 1976 that offers logistics services through various possibilities:

Transcargo ZFM at Zonamerica, with 5,000 m2 of warehouse space to operate as an RDC, as an indirect user of Transcargo ZFM or simply as a warehouse user.

At Libertad Free Zone with 2,000 m2 of warehouse space to enable clients to make full use of Free Zone advantages with accessible rates.

A warehouse at the Port of Montevideo under the Free Port system.

A National Distribution Center located near the Montevideo highway access that offers merchandise storage with 2,300 m2 of warehouse space, national distribution, value adding services and a staging center for export merchandise.

The company offers regional logistics services and performs operations including: national and regional transport, cargo control, insurance and customs brokerage. At Transcargo ZFN at Zonamerica, the company offers diverse value adding, commercial and industrial activities and services (fractioning, grouping, repackaging, manufacturing, software development, inventory management, remote administration, warehouse and warrant certificate issuance, etc.)

Ralesur/DB Schenker7

Ralesur, founded in 1996, performs logistics operations in Uruguay associated to DB Schenker, a German firm with 88,000 employees in 2,000 locations in 130 countries. As such, it has agreements with top global shipping lines and airlines to be able

6 Sources: www.transcargo.com and interview with company management on 25 March 2010.

7 Sources: www.ralesur.com.uy and telephone interview with company staff on 18 May 2010.

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to provide door to door deliveries. At its Zonamerica warehouse, the company performs logistics services for the region (RDC) and has its own fleet of trucks available for Uruguay.

Domestic logistics operators

Plateran S.A. (Farmared-Logired)

Plateran is a Uruguayan company with ISO 9001:2008 and ISO 14001:2004 certifications. It provides logistic and distribution solutions within the country, and has high specialization in consumer and health-related products. It has had permanent activity for 13 years. Today it has a team of 160 employees and six premises with over 16,000 m2, with computer systems with web-like applications for users to access through the Internet.

The services provided include reception and inspection of goods; storage at controlled room temperature and in deposits that meet sanitary requirements; preparation of orders and deliveries in Montevideo and the rest of the country, for which it has a fleet of vehicles including large-sized trucks for the transport of palletized goods; packaging with value-added activity; remote client billing, collection on delivery or current account; receipt of exchanges and returns; destruction of goods and materials; etc.

In 2009 the company obtained the National Quality Award in the services category. Murchison (Uruguay) S.A.

It started operating in Uruguay in 1985, providing full logistics services. It currently operates three warehouse and distribution centers in Montevideo and in-house logistics.

The services the company offers are transfers of containers and merchandise; unloading/ loading of goods, removal and conditioning of goods, merchandise storage, inventory control and management, picking, preparation and distribution of orders and deliveries "just in time".

Also perform value-added tasks: Murchison acquired a modern packaging plant, where products are thermo-contracted, special packaging, assembly of packs and sales promotions, relabeling/repackaging, consolidation/ deconsolidation/ break bulk.

It has 40,000 m2 of closed warehouses, piers for simultaneous loading and unloading, container carrier chassis and for container for merchandise in general, trucks and vehicles from 600 kg to 3,500 kg.

Murchison has certified its Quality Management System (ISO 9001:2008) and its system of safety management and occupational health (OHSAS 18.001:2007).

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Other logistics operations perform activities principally for the local market: Frigorífico Modelo, Tiempost, Calico, Logipark, Interflet Cargo, Exo Logística, Bomport, DSL-Milanco, Costa Logística.

Current and planned private investments in the sector

Merck Serono and Zonamerica8

Merck Serono, a pharmaceutical multinational in Uruguay since 1997 (see point 4.3), is planning an additional US$ 2.5 million investment in laboratory equipment located in a building to be constructed by Zonamerica at a cost of US$ 5 million. Merck will have a 10-year concession. The total US$ 7.5 million investment is estimated to be completed by mid-2011. Production will be exported throughout South America.

Grupo RAS 9

Grupo Ras has announced US$ 14 million worth of investments in two logistics projects. The first is a US$ 6 million investment to expand the company’s national distribution center located in Veracierto, Montevideo. The company is planning to build a new 14,500 m2 warehouse to its existing 7,500 m2 of space. A second US$ 8 million investment seeks to update the current 40,000 m2 of warehouse space at the Montevideo Free Port (RDC-PLP) and to construct a new building for the company’s main offices and for international companies that operate regionally through the RDC that require show and trade rooms.

Lobraus

Lobraus is planning to build Torre Lobraus, a 20-story tower at the Port of Montevideo that will be equipped with modern technology to offer office and storage space for domestic and international logistics companies.

Cargo Terminal Uruguay (TCU), Carrasco International Airport

In addition to the new passenger and cargo terminals completed in 2009, Carrasco International Airport’s master plan calls for a second stage for cargo facilities with a logistics park under the same legal framework as the Free Airport system on an eight-hectare site located at the airport. Work is slated to begin in 2011. The new park will offer opportunities to new regional operators.

8 Source: El País Digital, 22 April 2010.

9 Sources: www.gruporas.com and presentation by company president in February 2009.

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Polo Oeste (West Pole) - Frigorífico Modelo S.A.10

Polo Oeste (West Pole) is an industrial, logistics and service park undertaking located on a 74-hectare site of the Frigorífico Modelo S.A. company.11 The site is located 11.5 km from downtown Montevideo on national highway 1 and will operated under the Bonded Warehouse system. With the undertaking, the company seeks to expand by rendering services to foreign trade operators and bringing together companies that work in exports, imports, services and manufacturing.

Polo Oeste will enable resource optimization for perishable goods, national and international cargo transport, merchandise transfer to smaller trucks more suitable for city use and activities related to the manufacturing sector, among others.

Investment to date has exceeded US$ 10 million and includes 14,000 m2 of constructed space, 12,000 m2 of which are covered. Possible activities include land leasing for individual projects and the construction of turnkey solutions. The company announced that it would be open to strategic partners, especially those linked to port and transport activities.

A space for the Customs Bureau will be available so that cargo headed for the Port of Montevideo can be inspected and sealed upon departure from Pole without follow up controls to facilitate operations.

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Sources: www.frimosa.com.uy and interview with company management on 16 April 2010. 11

Frigorífico Modelo S.A is a domestic company founded in 1929 that has been expanding production from cold supply and ice making to other activities including: fruit packing, production and sales of juice concentrates and essential oils and other agriculture-livestock activities.

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Uruguay at a Glance (2009)12

Official name República Oriental del Uruguay (Oriental Republic of Uruguay)

Location South America, bordering Argentina and Brazil

Capital Montevideo

Surface area 176,215 km

2 - 95% of the territory has soil suitable for agriculture

and livestock activities Population 3.3 million

Population growth 0.3% (annual)

Per capita GDP US$ 9,458

Per capita GDP (PPP) US$ 13,019

Currency Uruguayan peso ($)

Literacy 98%

Life expectancy at birth 76 years

Form of government Democratic republic with presidential system

Political divisions 19 departments

Time zone GMT - 03:00

Official language Spanish

Main Economic Indicators 2004-20084

2005 2006 2007 2008 2009

Annual GDP growth rate 7.5% 4.3% 7.5% 8.5% 2.9%

GDP (PPP) US$ millions 32,048 34,602 38,235 42,543 43,551

GDP, US$ millions (current) 17,367 20,035 24,262 32,207 31,606

Exports (US$ millions), goods and services13

5,085 5,787 6,936 9,291 8,551

Imports (US$ millions), goods and services 4,693 5,877 6,775 10,217 7,775

Trade surplus / Deficit (US$ millions) 393 -90 166 -926 796

Trade surplus / Deficit (% of GDP) 2.3% -0.5% 0.7% -2.8% 2.5%

Current account surplus / deficit (US$ millions) 42 -392 -212 -1.502 258

Current account surplus / deficit (% of GDP) 0.2% -2.0% -0.9% -4.7% -0.8%

Overall fiscal balance (% of GDP) -0.4% -0.5% 0.0% -1.4% -2.2%

Gross capital formation (% of GDP at current prices) 16.5% 18.6% 18.6% 20.2% 19.1%

Gross national savings (% of GDP) 17.6% 16.9% 19.0% 17.9% 17.1%

Foreign direct investment (US$ millions) 847 1.493 1.329 1.84 1.139

Foreign direct investment (% of GDP) 4.8% 7.5% 5.4% 5.7% 3.6%

Exchange rate peso / US$ 24.5 24.1 23.5 20.9 22.5

Reserve assets (US$ millions) 3,071 3,097 4,121 6,329 8,373

Unemployment rate (% of EAP) 12.2% 11.4% 9.7% 7.9% 7.7%

Annual inflation rate 4.9% 6.4% 8.5% 9.2% 7.5%

Net foreign debt (US$ millions) 8,938 9,157 9,662 8,254 11,123

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Source: GDP data was taken from the IMF; data on foreign trade, FDI, exchange rate, international reserves and foreign debt was provided by the Central Bank of Uruguay (BCU); population growth, literacy, unemployment and inflation data comes from the National Statistics Institute (INE). 13

2008 and 2009 data includes a partial estimate of production activity in Free Zones and the information regarding the survey coordinated with CUTI for software related activities.

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