PILOTAGE IN ARGENTINA

Rio de la Plata (Pilotage zone)

Argentina

• Emerging economy• Competition since 1991• Particular Pilotage System• Consequences

Actors

1991- Context• Neoliberal Government• Privatization by decree• Strong Lobbies• Business = Pilotage ??????

The decree…….

• The service fee is agreed between customers and pilots.

• A maximun rate is fixed

• Registration open (unlimited number of pilots)

• TARGETS:• Greater administrative

and operating agility• Free supply and

demand• Reducing the

argentine cost

Pilotage =Business

• 2 Errors

Pilots & agents /PARTNERS

Government mistakes

Explosive Mixture

• Pilot Owner (entrepreneur) + Explosive mixture • Intermediary

Context 1994

Pilot Owner - Entrepreneur

• Takes over 70% of the market • Strong support of young pilots, who

receive only 30% of their service.• Intermediaries = Improve their income

Imminent Conflict

30% Pilots Working for its owner

70% pilotsWorking under IMPA

CONCEPT

30%market4 services

X pilot x month70% market20 services

x pilot x month

First Stage: Impact• The government: failure

• Businessmen: big profits

• Pilots: economic inequalities

• Intermediaries: excellent business

Second Stage• News divisions (more companies)• IMPA (pilots threats )• Reaction of Intermediaries

• Pilots agreement

• 40% of argentine exports are made by San Lorenzo -Ocean route.

• A vessel must sail 330 NM to reach San Lorenzo from the Ocean.

• Requires 10 pilotages services (4 Rio de la Plata, 4 Rio Parana y 2 harbour pilots) inbound/outbound

INCREASED COSTS

Total cost of the Panamax

2003: U$s 92.849 2009: U$s 140.680

2011: U$s 172.045

2013: U$s 207.055

92.849

140.680172.045

207.055

0

50.000

100.000

150.000

200.000

250.000

U$sYear 2003 Year 2009 Year 2011 Year 2013

Impact of the Pilotage • Year 2003: 35,6% • Year 2009: 41,7%

• Year 2011: 43,8%

• Year 2013: 47,0%

35,6% 41,70% 43,80% 47%

Ano 2003 Ano 2009ANO 2011 Ano 2013

Year 2003 Cost of Pilotage

Year 2013 Cost of Pilotage

35 % 47 %

Results

Results• Increase in pilotage from 2003 -2013

• 2003: U$s 33.035

195 %• 2013: U$s 97.440

Third Stage: Final Impact• The government: Total failure

• Rates: Great increase

• Pilots: improving their incomes• Pilots employed: worsening • Intermediaries: maintain their incomes

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Paradigm….

Thanks……