1. May-August 2012Ao 4, No. 2Accelerated advance of Mexicoin Ports and TransportationInfrastructureShould Latin American Ports beChasing the Mammoths of theSea?Latin America & World TopContainer Ports 2011See more... See more... See more...

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CONTENTSMayAugust2012UpcomingEventsNew MembersLatinAmerican Port NewsMailNovember 26-27: Third LatinAmericanPublic-PrivateAnnual Seminar in Via delMar, ChileContainer Management Interview to Pedro Brito,former Minister of Ports of Brazil and Directorof the National Water TransportationAgency,AntaqEditorialPortadaLogosmbolo de III SeminarioAnual Pblico PrivadoLatinoamericano en Valparaiso-Via del Mar, Chile.DiseoJulian Pinedawww.miroamarillo.comstudio@miroamarillo.com- Now is the Port of Rio de Janeiro: Article ofthe Chairman of Latinports, Richard KlienLATINAMERICA& THEWORLD- Mundo Martimo of Chile, Interview to JulianPalacio, Executive Director of Latinports- The Executive Director of Latinports, Speakerin Important LatinAmerican Events- LatinportsAchieves ImportantAgreement inMexico- Octuber: Colombia Capital Projects& Infrastructure Summit in Bogota- November: Third LatinAmericanPublic-PrivateAnnual Seminar inValparaiso so- December: TOC Container SupplyChainAmericas 2012 in Panama- Port of New Orleans, United States- Mardique Port Society, Colombia- Inland Port Magazine of United StatesHighlights Presentations of the President of thePort of New Orleans and the Executive Directorof Latinports, in the Magdalena River Event- Chile Leader in Logistics and Competitivenessin LatinAmerica- Inter-oceanic Canal in Nicaragua?- Modern Logistics for River Terminals- Legal Certainty in Concession Contracts:ACall to Good Sense- Accelerated advance of Mexico in Ports andTransportation Infrastructure- LatinAmerica & World Top Container Ports2011PRESIDENCY & EXECUTIVE MANAGEMENTLOGISTICS, COMPETITIVENESS & PORTS OFLATINAMERICA- Prime Minister of China Proposedat ECLAC a Forum for High LevelCooperation with LatinAmerica andthe Caribbean- Should LatinAmerican Ports beChasing the Mammoths of the Sea?- Widespread and DisproportionateIncrease of Sea Freights:AWorldCartel?MARITIME TRANSPORTATION &PORTS- LatinAmerica may take the Lead ofWorld Economy altogether withAsia:Carlos Slim- Reorganization of Iberian Ports? 3. Mayo - Agosto 2012S EditorialOn the third anniversary of the incorporation of Latinports this August, resultsare more than encouraging as practically we have tripled the number of members,now exceeding 40 in 12 countries, have developed three international eventsand supported more than ten, given more than 20 lectures in different countriesof America and Europe promoting the excellent positioning of Latin Americanowadays and of the port sector in particular, having edited 12 newsletters inthree languages, produced Latinports Mobile to consult our webpage in devicessuch as iPhone or iPad. And most important of all, we have disseminatedto the world the advantages of port privatization in Latin America and theimportance of public-private joint work to develop port logistics within ourregion (Public Ports Operated by Private Initiative: A Winner Model as definedby our chairman, Richard Klien of Brazil). Based on the above, the Latinportsbrand has positioned as spokesman to the world of Latin American port strongdevelopment.Other than the event represented by the Newsletter commemorating oursuccessful third year, this edition involves great importance for reasons asmeaningful as the presentation of the Port of New Orleans as new member ofthe Association, thus demonstrating the interest of the principal economy ofthe world in the development of Latin America, in general, and of our ports, inparticular, and launching our third great annual event to be held in Valparaiso-Via del Mar in commemoration of the centenary of the start of construction ofthe port., Chile in the month of November, focused on logistics. All this obligesus to reward even more all persons who have accompanied us in our task.Finally we invite you to consult our web site completely updated, from yourmobile devices.Thank you so much for your support and, until the next!jpalacio@latinports.orgwww.latinports.orgJulian PalacioExecutive Director 4. Mayo - Agosto 2012 5. Mayo - Agosto 2012NOVEMBER 26 & 27: THIRD PUBLIC-PRIVATE LATIN AMERICAN ANNUALSEMINAR IN VIA DEL MAR, CHILEAfter the great reception of our previous annualevents in Cartagena and Brasilia, now is the turnfor Via del Mar. Developing our great annualevent in Chile is of special significance as we mustremember that this country was the first to startport privatization and decentralization in LatinAmerica, an example that has been successfullyfollowed by most of the countries of the region.However, after almost 20 years of this importantadvance for the foreign trade of our countries, itis important to make a stop and look towards thefuture, and nothing better than doing this in Chile, acountry that continues innovating all its sectors andresults have caused it to be a leader in logistics andcompetitiveness within the region, as was recentlyemphasized by the World Bank and the Institute ofCompetitiveness of Aden.Thus, on Monday 26 and Tuesday 27 of Novemberat the Hotel Sheraton Miramar of Via del Mar willtake place the Third Public-Private Annual LatinAmerican Seminar, focused on a highly topicalissue as the Empresa Portuaria Valparaiso andthe Ultramar Group, and with the support of thenational authority Sistema de Empresas SEP andthe Maritime and Port Chamber, where during twodays we will refer to topics such as Latin AmericanLeadership worldwide, the repercussions of theextension of the Panama Canal and the size ofships arriving to the region, the inland logisticscenters and port sustainability; besides, experiencesand perspectives of the most important containerterminals will be shown, such as Valparaiso, Santos,Callao, Cartagena and . On the last day of theseminar there will be guided tours to Terminal 6. Mayo - Agosto 2012CONTAINER MANAGEMENT INTERVIEW TO PEDRO BRITO,FORMER MINISTER OF PORTS OF BRAZILAND DIRECTOR OFTHE NATIONAL WATER TRANSPORTATIONAGENCY,ANTAQPacfico Sur Valparaiso, TPS, and to the Special Areaof Logistical Support. of Valparaiso, ZEAL.This will be an excellent opportunity for an updatein port logistic matters and to prepare ourselves forthe challenges that gives us the global economicsituation. All this within the fabulous environment ofthe traditional Via del Mar.You will find more information on the event(program, registration, hotel registry, etc.) in thewebpage www.latinports.orgYou may also contact Emilia Per epero@emew.clor Julin Palacio jpalacio@latinports.org 7. Mayo - Agosto 2012Brazils Agency for Waterway Transportation(ANTAQ) was created by Law 10.233/01 toimplement policies formulated by the Ministryof Transport and the National Council forIntegration of Transport Policies (CONIT). Thesepolicies comprise the regulation, supervision andinspection of the activities and provision of watertransportation and port infrastructure and the use ofwaterways by third parties.Today, ANTAQs main purpose is to look afterthe legal and institutional safety of the watertransportation sector, with the objective of assuringthe continuing inward flow of private investmentthat has been received by the sector since the PortsAct was published in 1993. One of the subsequentbenefits of the Act has been the upgrading andmodernization of much of the ports and terminalssector to the same levels of efficiency, productivityand service as some of the best in the world.However, as the facilitator of access to Brazilianports, and in order to continue to increase theefficiency of the sector, it is incumbent uponANTAQ to give priority to waterways. After all,operations depend as much on efficient port accessas they do on the logistics chain.Another function is to provide and maintain a clearand modern regulatory framework, particularly inrelation to port concessions, in order that they willcontinue to be as successful as those in other sectors,such as the electricity and, more recently, the airportsectors.Yet another important function of the agency is toprepare plans for port and waterway concessions,I believe that the intermodal integration of logisticscorridors, with priority for waterways and railways,is ANTAQs most important task and arguable themost challenging. Intermodal integration is already anestablished feature of the worlds largest ports, whichis why they are so efficient. The ports attracting thelargest volumes of cargo are those in which cargoarrives (and departs) via the most efficient modeor combination of modes, whether by road, rail orwaterway. The greatest challenge for Brazils portlogistics sector is to secure intermodal integration,with all its attendant gains for export and importsalike.Another important challenge is to consolidate coastalnavigation, which in Brazil is still in its infancy,resulting in unnecessary costs within the logisticschain. Today, 60% of cargo in Brazil is transportedby road, but if and when the country increases itsinvestments in its waterways, the intention is forthis transportation modes share to increase from itscurrent 13% to around 29%. The same goes for thewhich will provide guidelines for those interestedin investing in new ports and terminals along theBrazilian coast and river shores.ANTAQ is a unique regional organization. Canyou explain its origin and aims?And what are the challenges? 8. Mayo - Agosto 2012railway sector, which is anticipated to increase from25% to 32% in the next 15 years.These modal shifts will assure better intermodalintegrations while increasing ports efficiency, as wellas benefiting coastal navigation. In addition, therewill be significant environmental benefits: a ship ora barge convoy that replaces hundreds of trucks willemit much less CO2 per ton of cargo transported.Redefining ANTAQs study and research programsin order to strengthen its role in guiding the portsector is another challenge facing the agency. It iscurrently in discussions with port authorities aboutlaunching a new environmental managementquality index, and is additionally preparing a soon-to-be-launched satisfaction index for Brazilian portusers. Furthermore, a number of studies are beingdeveloped that will provide support to the portsector in its efforts to continue to attract investmentswhilst increasing efficiency. Increasing the efficiencyof Brazilian logistics is a prime objective for theagency.I served in a number of ministerial roles, includingState Minister of National Integration and, morerecently, as Minister of the Ports Secretariat ofthe Presidency of the Republic between 2007 andDecember 2011.During my periods as minister, I was responsible fora number of initiatives that I believe have proved tobe responsible for a significant transformation ofthe Brazilian port environment: one of which wasdredging. At the time when President Lula appointedme head of the newly created Special PortsSecretariat (SEP) in 2007, Brazil had not dredge itsports for more than 10 years and, in some cases, formore than 15 years. As a result, I created the NationalDredging Plan and, with the participation of foreigncompanies, contracts were awarded not only fordeepening but also for maintenance dredging.The plan eventually encompassed Brazils 20 mostimportant ports and the resultant improvements inaccess made coastal navigation feasible, as well ascreating the conditions for the development of hubcenters in ports such as Santos, Rio Grande, Suape,Pecm and Itaqui.These in turn, brought about an important reductionin port costs and charges, which resulted in thecountrys exports becoming more competitive andour imports cheaper. The end result was that cargo-handling capacity in Brazilian ports increased by30% overall, which in Santos, for example, it leg to adoubling not only of throughput capacity but also ofthe size of vessels that the port could handle.In addition to dredging, I was responsible for anumber of infrastructure improvement works, tothe tune of US$5 billions, as part of the PresidentsGrowth Acceleration Plan (PAC). These worksincluded the construction of breakwaters in thePort of Rio Grande access channel; construction ofnew mooring berths at the ports of Santos, Itaquiand Vila do Conde and the expansion of the PortDuring your previous ministerial appointments,what systemic improvements were youresponsible for in the Brazilian port and logisticssectors and how relevant are they proving to betoday? 9. Mayo - Agosto 2012Pedro Brito, right, with the executive director of Latinports, JulinPalacio, during the last annual event of the association in Cartagena,Colombiaof Rio de Janeiro, amongst others. Moreover, wealso launched an investment program for passengerterminals that will welcome tourists during the 2014World Cup and the 2016 Olympics.Another important measure that will increaseefficiency, at the same time as helping to reduce costsand waiting time for vessels at Brazilian ports, is thePort Without Paper (PWP) project, set up jointlywith the Federal Data Processing Service and all portauthorities. Following its implementation, ports willbe able reduce the time taken to clear goods froman average 5.7 days to 2.5 days, which, although stilla long time compared with large international ports,brings us closer to them.change that is still having efficiency and productivityadvantages today.Long-term strategic planning did not exist for theBrazilian port sector when SEP was created, andwithin the PAC program we instigated partnershipsand contracts such as those with the FederalUniversity of Santa Catarina, with support from thePort of Rotterdam. Together they are concludinglong-term plans for Brazils port sector that defineinvestment horizons both public and private for thenext 20 years, with specific steering plans for the 10largest Brazilian ports.This long-term planning is vital for the sectorsdevelopment because it establishes strategic targetsfor the next few years, indicating what investmentsthe government needs to make and at what timeinvestments need to take place; this is something thatwill change Brazils port environment forever.I would also like to highlight the progress we havemade in increasing professionalism throughout theports industry. Trained port and logistics directorswere appointed in both the public and privatefacilities, and they have been able to give new visionto Brazils port strategy. Replacing political appointeedirectors at dock companies with professionals was aProgress in professionalism 10. Mayo - Agosto 2012Mayo - Agosto 2011 11. Mayo - Agosto 2012NOW IS THE PORT OF RIO DE JANEIRO:THE PRESIDENT OF LATINPORTS,RICHARD KLIEN,ARTICLEThe city of Rio de Janeiro has just received the titleof the World Heritage Urban Cultural Landscape ofHumanity, awarded by UNESCO. This landscapeintegrates urban life and the richness of the Bayof Guanabara with its sheltered waters and naturalaccess channel. The port was installed here aspromoter of economic activity for the states of Riode Janeiro and Minas Gerais, sharing with otherpeople, accumulating in the successive cycles ofregional development the following: In the 19th century, the opening of ports tofriendly nations in 1808 with the arrival of the courtof Portugal to Brazil, promoted growth with theestablishment of industries, the construction ofroads, the creation of the Bank of Brazil and theBoard of Commerce; In the 20th century, reopening of the port in1910 started a new economic cycle altogether withthe works of modernization, improvements in port-city integration, expansion of the port complex ofRio de Janeiro, bases for supporting the so-calledMarvelous City. In this beginning of the 21st century, collectingthe benefits of the Law for the Modernization ofPorts, issued in 1993, an expansion of activitiesoccurred by means of tenders that would transferthe operations of port terminals to private initiatives,and with the commitments of large investments inmodern equipment, systems and training of humanresources. 12. Mayo - Agosto 2012Results of Brazilian ports modernizationare shown especially in the movement ofcontainers, in accordance with the globalcontainerization trend of 70% of the generalcargo transported worldwide, and in contrastwith the participation of 20% in the decadeof the 70s. Adopting the model set forth byprivately operated public ports, private leasersof container terminals obtained more than fivetimes the movement of containers in a jointaction with port authorities (in the case of Rio,the Compaia Docas de Rio de Janeiro), thusdecisively contributing to the development ofinternational commercial trade.Considered as one of the main logistics cargocorridors of the country, the state of Rio deJaneiro is inserted in the so-called NationalLogistics Network, established in 2001,where Rio occupies the fourth place in cargomovement figures with a market participationof 6.4%. The port movement of Rio amountsto 8 million tons, of which 65% correspondto containerized cargo and vehicles. Worthmentioning is the high aggregated value ofits cargo amounting to US$2,063 per ton.Comparatively, Santos entered US$1,497 per tonand Paraguan US$864 per ton, and the nationalaverage being US$593 per ton.Acknowledgment of this driving developmentpotential moved a great coalition pro-port asof the first edition in 2006 of the program Portof Rio-21st Century, until its branches thatcarried on the current version. A meeting ofshareholders for the preparation of the masterplan of the Port of Rio was decisive. TheCommercial Association of Rio de Janeiro,the Federation of Industries of the State ofRio de Janeiro, the Foreign Trade Associationof Brazil, the Brazilian Association of PortTerminals, the Commission of Ports, the Unionof Port Operators, the Union of Sea NavigationAgencies and other unions, altogether withthe Federal Government (represented by theSecretarys Office of Ports of the Presidencyof the Republic and by the Compaa Docasof Rio de Janeiro), the State Governmentand the Prefecture of Rio assure projectconstitutionality.Below is the article written by the Chairman of the Executive Committee of Latinports, RichardKlien, for the July-August edition of Brazilian Business, a publication of the Brazil-United StatesChamber of Commerce: 13. Mayo - Agosto 2012Estimates are that over the next 5 years, investmentsin logistics centered in the port for an amount ofUS$1.5 billions may include more than US$0.5billion in private investments at port facilities. Publicprojects, with a significant contribution of resourcesof the Growth Acceleration Plan promote theadequacy of sea and land accesses to the port (inroads and railways). As an ultimate result, cargocurrently moved must double and reach US$40billion in 5 years.In accordance with the progressive increase ofcontainerships, profits of scale are continuouslypushed in sea and port operations. In the case of thePort of Rio, special adequacy of container terminalshas repercussions in dock restructuring for roll-on/roll-off vessels. Expansion projects developed bythe container terminals Libra Rio and Multi-Rioand of vehicles Multi-Car in the Cais Do Cajurecently approved by the National Agency of WaterTransportation, Antaq, facilitated the simultaneousberthing of up to 4 containerships Super PostPanamax. The line of docks will be increased to1,600 meters, with a growth of 522 meters.In attention to the increasing demand of the autoindustry, which has new installed manufacturers andothers in way of implementation at the states of Rioand Minas, the roll-on/roll-off terminal operatedby Multi-Car will add a second berthing dock 180meters long, doubling its operational capacity. Vehiclestorage will be enlarged by constructing garage-buildings, moving from the capacity of 326,000vehicles/year to 450,000 in a second stage. Withan extension of 1,960 meters joining the containerand vehicle terminals, the Cais do Caju, after theexpansion works that started in 2012, will be thegreatest continuous deep-draft dock of the country,making possible to quadruple current movement ofcontainers and doubling vehicle capacity.It also registers an important increase in the demandof other port services, notorious offshore supportactivities on the way of the dock of San Cristbal,extending to the dock strip of Gamboa, up toWarehouse 14, in an extension of 1,800 meters.The main fact generating this demand is thedevelopment of the activities in the oil platforms ofthe Bay of Santos, overlooking the new identified 14. Mayo - Agosto 2012potential for oil extraction, besides the alreadysigned commitments with Petrobras for the normalactivities of the ocean platforms.In the seafront of the dock of Gamboa, whichcorresponds to warehouses 7 to 13, reinforcementworks have been programmed for more viabledredging services down to a depth of 13 meters.This depth guarantees the connection up to the mainaccess channel of the port, which will maintain theoperation conditions of the existing multiple-useterminals, serving the general non-containerizedcargo movement (steel products and printingpaper imports, among other), and will facilitate thereception of wheat import vessels to the back areaof the dock of San Cristbal.Among expansion plans worth noting is thepassenger terminal, a strategic project for the plansof the city, in view of the increasing flow of seacruisers ships and the 2016 Olympics. To extendthe terminal a new Y-shaped berthing dock will bebuilt for additional and simultaneous berthing of upto six large vessels. More than double the numberof tourists is expected to be supported at the Portof Rio, more or less 1.5 million passengers per year,compared to 650,000 at present. On the occasionof the Olympics the port may receive, as in floatinghotels, visitors from worldwide to accompany the31st Olympic Games. 15. Mayo - Agosto 2012cargo in Latin America, or the Panamanian portsthat because of their strategic location having accessto the Panama Canal, make these the ports withthe greatest movement of containers, basically bytransshipment.Therefore we must be very careful with the whiteelephants as because of locations and marketeconomy, not all ports of the region have thecondition to receive mega-containerships in the mid-term. Although a must is that we must be preparedto receive ever larger vessels, as suggested byECLAC, we must be aware of our real potential andact accordingly.ECLAC investigators have alerted that SouthAmerican ports do not address the future,as they are working to the limit of theirinfrastructure. Which is, in your opinion, theworking capacity of South America? Are therenotorious differences between countries?In Latin America we are used to act when we are indeep water. Although I agree with ECLAC that mostLatin American countries are working to the limitof their infrastructure, I must recognize that actionsare being taken in this respect, although sometimeswithout sufficient criteria. One thing is Santos, theport moving the largest amount of foreign tradeIn its edition dated July 23 and under the title It is Imperative to Prepare Ourselves to Receive everlarger vessels, the executive director of Latinports refers to the reality of ports within the region.Below you will find the interview given to Mundo Martimo:Julian Palacio has more than 30-year experience in ports and worth mentioning is his work as Latin American Coordinator ofthe American Association of Port Authorities (AAPA), projects such as the Multimodal Port Society of Ro Magdalena River(Colombia) and consultancies for the Peruvian firm, Andemar. The Colombian executive, current executive director of Latinports(Latin American Association of Ports and Terminals), spoke with Mundo Martimo on the challengesahead for Latin American portsMUNDO MARTIMO OF CHILEINTERVIEWS JULIAN PALACIO,EXECUTIVE DIRECTOR OF LATINPORTS 16. Mayo - Agosto 2012Likewise, greater logistics coordination hasbeen urged for port development and work.What is the public-private coordination balanceand which are the most urgent challenges to beovercome?Public-private cooperation is ever greater but there isstill a long way to go. This is the task of Latinports,which motto is Governments and private sectorworking together for the port logistics developmentof the region. The most urgent challenge of thisrelationship is developing adequate transportationlogistics and infrastructure, on which we continuebeing way back compared to developed countries.Therefore, I agree with the former minister ofpromotion of the first government of PresidentZapatero of Spain, Magdalena lvarez, whoregarding foreign trade states, little does a good portserve without good internal connectivity. It wasprecisely during a recent event on containers logisticsat the National Entrepreneurs Association ofColombia I proposed the creation of a Ministry ofTransportation Logistics and Infrastructure, based onthe positive experiences in countries such as SouthKorea and Germany. The discussion is now open.Which are the present tasks of Latinports andits future projects?The main task in our short but fruitful existencehas been bringing closer relationships betweenpublic and private sectors, and also disseminating theadvantages of decentralization for the port sectorand privatization of operations, which is definedby the chairman of our executive committee,Richard Klien of Brazil, as Public Ports with PrivateOperation: A Winner Model.Consequential to the needs of the sector, ourcurrent approach for the mid-term is transportationlogistics and infrastructure, or in other words, internalconnectivity. Finally, working in all that the portsector of the region may require. 17. Mayo - Agosto 2012After two days of conferences on efficient portinfrastructure models from other countries withinthe framework of the FTA, the National Associationof Entrepreneurs of Colombia and the BusinessAlliance for Secure Commerce organized their ownevent. Efficient Models in World Trade was held inBarranquilla, where several tasks are pending for thelocal and national governments, as well as the privatesector. The conference featured presentations fromrepresentatives of the ports of Le Havre, Hamburg,Houston, New Orleans, the Latin AmericanAssociation of Ports and Terminals, Latinports,and the Inter-Port Police of the United States. Amajor topic was the importance of rehabilitatingthe Magdalena River. Achieve minimizing cost ofinternal transportation with the rehabilitation ofthe Magdalena waterway will be the only way inwhich the country may give a great leap towardscompetitiveness, was one of the conclusions ofinternational experts at the conference.Two old friends, Gary LaGrange, president of thePort of New Orleans, and Julin Palacio, executivedirector of the Latin American Association of Portsand Terminals, Latinports, were among the speakers.LaGrange advised that the best way of improvingport infrastructure is developing a maintenanceprogram for the access channel, particularly inBarranquilla, where funds are required to make acontinuous dredging of the river. On the other hand,he said, a specialized port in containers and bulk isa must, as well as cruisers to promote tourism. Iapplaud the initiative with the concession of ports,said LaGrange. In the case of New Orleans, thereis a consortium totaling five ports on the Mississippi.We all work together. I insist that if Colombianports work together they may achieve what we havedone, 500 million tons per year. LaGrange stressedthat the Magdalena has great potential. The MasterPlan being developed must be monitored veryclosely because I believe results will be very good inINLAND PORT MAGAZINE OF UNITED STATESHIGHLIGHTS PRESENTATIONS OF THE PRESIDENTOF THE PORT OF NEW ORLEANSAND THEEXECUTIVE DIRECTOR OF LATINPORTS, IN THEMAGDALENARIVER EVENTMagdalena River to Become Main Artery ofColombia 18. Mayo - Agosto 2012Julin Palacio said he is convinced that the Magdalenawaterway is the only thing that will give an importantdevelopment to the region, provided it operates thebest way possible and moves a great amount ofcargo at very affordable cost. Barranquilla is at themouth of the Magdalena River, which must be themain artery of the country as stated by the Presidentof the Republic, said Palacio. This gives it anenviable position in a country with a badly locatedindustry. Any country would like to have a waterwaylike the Magdalena River and we have it. In cases likeNew Orleans or Rotterdam, rivers are the logistics.When we speak of Rotterdam, the main Europeanport, 85% of its bulk cargo is moved throughwaterways. When we question what is happeningthe face of the FTA, he said. Therefore, amongmy recommendations is dredging, and identifyingwhat is produced there for exports, as in the UnitedStates there is high demand for specialized coffee. Atpresent we are receiving at the port exports from thelargest coffee processor of Colombia.here, where we have a Rhine, a Mississippi, or a Seineand do not use them. The river is already discovered.What it needs is making it work. He concluded, Thecost-by-kilometer of deepening the river is muchcheaper compared to any road, and maintenance ischeaper and benefits are much larger. In agreement,the President of the Republic, Juan Manuel Santos,announced the allocation of US$400 million for theupstream channeling Works for the Magdalena River.The work will be based on preliminary studies engagedthrough the US Trade and Development Agency andthe last studies with the participation of Rob Davinroy,of the US Army Corps of Engineers, MissouriDistrict. On the other hand, the Master Plan for theport ofBarranquilla that groups several terminals, aboutto be formally presented by the Dutch consultantsRotterdam Maritime Group and Pharos, estimatesthe potential of the river, both ways, for the mid-term between 10 and 30 million annual tons (oil,coal, grains, fuel and containers). This has attractedimportant international shipping lines, such as SeacorHoldings, which operates in the Mississippi River.President Santos concluded, We are going to makethe Magdalena River the main artery of Colombia 19. Mayo - Agosto 2012On May 25th, in a panel shared with theAdministrator of the Panama Canal, AlbertoAlemn, who referred to the effects the extension ofthe Canal will have for foreign trade, the executivedirector of Latinports, Julin Palacio, presented alecture called Effect of Post Panamax Vessels inLatin America, where he said that even thoughports of the region must prepare to receive everlarger vessels, they must also be careful with thewhite elephants as ports were not a magnet attractingshippers because of its depth, but that deepeningaccess channels should be in accordance withmarket demand and the niche where ports belong.To reinforce their point of view he referred to thatexpressed in the book of the former minister ofports of Brazil, Pedro Brito: The Emma Maersk(the largest containership at present) does not call at SouthAmerican ports, not because of the limitations of our ports,but above all for a matter of global trade logics that flowspredominantly east-west, in the Asia-Europe-United Statesaxis. North-south flows are complementary and of a restrictedparticipation in container-transported global trade, andconcluded stating Each port must be prepared for vesselsdemanding so and not for eventualities to receive once a year aship of 15,000 TEUs as the Emma Maersk.At the opening of the event, where the main tablewas shared with the Vice-minister of Infrastructureand the Manager of Logistics, Infrastructure andTransportation of the National Association ofEntrepreneurs of Colombia, ANDI, and theexecutive director of Latinports stated:At times in which Colombia is internationally perceived as ahigh level economy and considered within the group of emergingcountries with currently the best performance and perspectives,the name of the forum cannot be more revealing: Ports andContainers: Logistics and Competitiveness. Logistics is keyto competitiveness, where ports and inland transportationmust meet an outstanding role, working altogether with thegovernment and private sector. From there comes the slogan ofthe Latin American Association of Ports and Terminals:Governments and private sector working together for portlogistics development of the region.Despite the great changes of the country in economic, politicaland social matters during the last ten years, according tofigures clearly sustained by the Center of Economic Studiesof ANDI, it is no secret that in matters of transportationinfrastructure, Colombia is one of the most backward countriesof the region, and even worse, most of our industry is locatedinland and almost all depends on road transportation, themost costly of them all and which causes the most seriousdamages to the infrastructure of roadways and the environment.However, since there is no evil that lasts a hundred years, I mustEXECUTIVE DIRECTOR OF LATINPORTSSPEAKERAT IMPORTANTLATINAMERICAN EVENTS 20. Mayo - Agosto 2012emphasize the decision of President Santos to reactivate othermodes of transportation as the railroad and the river, mostlyused for long distances in developed countries.By rationalizing transportation and using modes in acomplementary manner, according to its vocation, the main portsof the country would be optimally connected at both oceans withthe most important industrial and national consumer centers,and logistics nodes would be developed inland. One of the mostrapid ways to achieve this is through public-private associationswhich require prompt and essential regulations.However, in reference to international transportation,ECLAC in a recent study states that containerships currentlywith 13,000 TEUs average capacity worldwide (SouthAmerican average is approximately half) will be arriving atthe region between 2016 and 2020 with an operating draft ofDuring a meeting held the beginning of August inMexico between the executive director of Latinports,Julin Palacio, and the executive director of theAssociation of Port Terminals and Operators,ATOP, Jaime Aguilar, they agreed on the jointcelebration in that country of the great annual eventof both organizations during May 2013. This eventis of great importance for Mexico as it will celebrate20 years of the issuance of the Law of Ports, thefirst year of the reform of this law, the nationalgovernment has shortly been in office, and the newchairman of Latinports is the founder and currentVice-president of ATOP.15-16 meters, thus concluding that these forecasts are interestingto alert on the need of an efficient planning in the mid-termfor the port logistics industry, in which its timely execution willenable preventing possible bottlenecks and negative impacts onregional economy. Nevertheless, I must alert on white elephants,as not all ports will be in conditions of receiving these mega-containerships because of locations and market economy.In addition, in the panel introduction onExperiences and Perspectives of Containers SeaTerminals in Colombia, the executive director ofLatinports suggested the creation of a Ministry ofTransportation Logistics and Infrastructure, as partof the solution to the backwardness of the sectoramong Latin American countries.LATINPORTSACHIEVES IMPORTANTAGREEMENT IN MEXICO 21. Mayo - Agosto 2012 22. Mayo - Agosto 2012ACCELERATED ADVANCE OF MEXICOIN PORTS AND TRANSPORTATIONINFRASTRUCTUREAlejandro Chacn, GeneralCoordinatorPorts and Merchant MarineWherever one looks, investment needs and plansfor infrastructure add up to thousands of millionsof dollars and materialization of these investmentsis currently the highest of all times, even thoughthere is yet a long way to go. In the case of Mexico,in June 2011 Business News Americas, in its documentInfrastructure Intelligence Series, mentioned that in thebeginning of 2008 the Mexican Government createdthe National Infrastructure Fund amounting toUS$3,900 million to finance projects for US$25,000millions in that sector during the following five years.In the case of the ports, an article in the latest editionfor Latin America of Container Management advisesthat Mexicos volumes of containerized cargo havegrown steadily, and this growth is projected tocontinue over the coming years. To meet demand,the Mexican government is rolling out a major portinfrastructure development program to increasecapacity for both containers and other types ofcargo. In 2011 total port investment, public andprivate, amounted to US$692m, 7.7% higher than in2010. Of this, US$270m was private investment, anincrease of 24.4% over 2010.A number of major projects are under way. Anew privately-funded container terminal is underconstruction at Manzanillo and is due to becompleted later this year. The terminal will beoperated by Contecon Manzanillo, a subsidiary ofICTSI, the Manila-based global terminals operator. Itwill be developed in three phases and is scheduled tobegin operations in November 2013, with a capacityof 450,000 TEU in its first year. When complete, itwill have a handling capacity of 2 million TEU peryear.Port Infrastructure Development Program 23. Mayo - Agosto 2012Elsewhere, Chilean company SAAM Puertoshas won the tender for a multi-purpose terminalat Mazatlan, Sinaloa, and will invest US$30m tomodernize and operate the existing facility. It willbenefit from other infrastructure projects in theregion, such as the Durango-Mazatlan highway,which is expected to be ready by the end of 2012.infrastructure works built on 25 ha of reclaimed land,with almost US$60 million of public investment.The new facilities have doubles the ports capacityand have enabled it to receive larger vessels.Another major project, the expansion of the Port ofVeracruz, is expected to begin this year. This will bea massive task requiring a total investment of overUS$3.6 billion, of which US$2.2 billion will comefrom the private sector. A tender will be launchedin the second half of 2012 for the construction ofa new container terminal, with four berths totaling1,440 m in length. This will increase the portscontainer capacity by over 2 million TEU a year. Thegoal is to meet demand for maritime transportationin t he Gulf of Mexico and the Atlantic, in particulartrade moving to and from central Mexico. Theproject will eventually comprise 37 berths in totalacross a number of different terminals (containers,bulk minerals and cars, among others) and willinclude a logistics zone.In addition to its plans for Veracruz, the governmentis aiming to develop port facilities elsewhere. Inthe Port of Guaymas, in the state of Sonora onthe Pacific Coast, a first phase of development willfocus on the creation of dry and liquid bulk handlingcapacity. During the second phase, a multi-modalcontainer terminal will be built. A specialized carterminal is to be constructed at Lzaro Crdenason an area of 40.4 ha, with the capacity to handle750,000 cars a year. Investment will be close toUS$37,5 million. Finally, a new terminal for handlingstone materials, mineral bulks and/or general cargowill be built in the Port of Altamira. The facility willhave a total area of 11.8 ha and a 300 m dock. Theinvestment required here is estimated at aroundUS$10m.Another bidding process has been concludedin Tuxpan, in the state of Veracruz, for thedevelopment of a container facility with a capacityof 500,000 TEU a year. The winner, SSA Mexico,will benefit from the new Mexico-Tuxpan highway,which will also go into service this year. Investmentfor this facility, which will boost Tuxpans capacity by22%, amounts to US$260m.A number of other bidding processes are currentlyunder way, including one for a specialized bulkterminal in Puerto Madero, Chiapas, which will profitfrom several mines in the surrounding area. Theport will export an estimated 500,000 tons of copperand titanium annually to Asia. In Topolobampo,Sinaloa, a tender process will conclude shortly forthe construction and operations of a facility tohandle copper and its derivatives. It is estimated thatan annual volume of 360,000 tons will be exportedfrom Arizona to China via Topolobampo. At thesame port, on February 20th, 2012, PresidentFelipe Caldern inaugurated a number of new 24. Mayo - Agosto 2012to Mazatln, from where it is placed on a truck chassisand delivered onto river barges in Brownsville in oneday, and from there these barges may be transportedto Pittsburgh, thus saving large amounts in freights(two for the cost of one). Instead, transporting onecontainer directly from China to the United Statesmust be loaded with only 20 tons to meet limitsestablished by U.S. highways.Another great advantage of logistics for this newtrade route is that the Port of Mazatln is locatedon the Tropic of Cancer, about 2,400 km northof the Panama Canal. Brownsville is located justnorth of the Tropic of Cancer, as most of China,and consequently vessels may save almost 5,000 kmfrom going south, besides the delays and costs of theCanal. In addition, Panama is located far from theeast, south of Miami, more than 1,600 km east ofBrownsville. For the Texas-China trade this meansalmost 6,500 km of extra navigation time, possibly14days.A Mexican truck from Mazatln to Brownsville willmake the trip in one day and the river barges in theUnited States currently represent the greatest cost-benefit relation for inland transportation, connectingMexico with the eastern coast of the United States athalf cost by railroad and one third costs by truck.This new inter-oceanic highway is programmed tobe completed soon, in advance to the opening of thenew Panama Canal. All U.S. shippers in the Midwestor the Northeast that depend on the trade withcountries of the Pacific basin, should use this newtrade route as an alternative to the Panama Canal andto the costs and the ever more crowded ports of theEast Coast of the United States.Until here the extract of the article of Joseph J. Linck in InlandPort.The U.S. magazine Inland Port, in its section Smart Businessof its last edition, has an interesting article written by Joseph P.Linck (former director of the Port of Brownsville) called Inter-oceanic Highway of Mexico to Compete with the PanamaCanal and Extend the Area of Influence for the Waterwaysof the United States, of which we transcribe its most interestingexcerpts:The huge and rugged mountains of the Sierra Madrewest of Mexico have always been insurmountablebarriers dividing the ports of Mexico Pacific ofTexas and the United States, in general. However,not any more. An incredible new bridge calledBaluarte, the longest in North America, has finallyconnected the Pacific Coast of Mexico with Texas,through a modern highway called the Inter-oceanicHighway. This important work is expected to be inoperation this year and will finally connect the portsof Mazatln and Lzaro Crdenas on the Pacificwith Brownsville and the system of waterways of theUnited States.Unlike the United States, mass Mexican roadsroutinely carry 40 tons of cargo (two-fold theUnited States), and are the main mode of cargotransportation of the country, easily competing withthe railroad. These fully loaded trucks may enter theUnited States at Brownsville because of the stateLaw of Ports that allows overloaded trucks withinthe corridor, and also loading and unloading same.The navigable waterways of the United States mayattract heavy 40-ton containers from China anddeliver them at the east coast of the United States, inPittsburgh, via Brownsville. Also, a container may beloaded in China with 40 tons of cargo and shippedMexico-United States Inter-oceanic Highway 25. Mayo - Agosto 2012Based on the above, Latinports decided to investigate thecharacteristics of this highway, and found surprising factsdescribed below:Federal Highway 40 or the Inter-oceanic Highwaystarts at Reynosa, Tamaulipas, just east of the Portof Brownsville, Texas, and ends at Federal Highway15, at Villa Unin, Sinaloa, near Mazatln and thePacific Coast. It is called Inter-oceanic because, oncefinished, the cities of Matamoros, Tamaulipas, onthe Gulf of Mexico, and Mazatln, Sinaloa, on thePacific Ocean, will be linked. Its total length is 1,145kilometers.The critical stretch between Durango and Mazatln,about to be completed, of 230 km, goes throughthe western part of Sierra Madre, and has 90 km oftunnels, viaducts and impressive bridges (63 tunnelsand 115 bridges in the most rugged mountain area)and an estimated initial cost of US$1,260 millions.The most representative bridges are Neveras, 320meters long and 101 meters high, and above all theaforementioned Baluarte, of 1,124 meters long and402 meters in its highest clear part, which will be oneof the longest and highest of the world, and furtherthe highest suspension bridge. Once this project hasbeen completed by the end of the year, travel timebetween Durango and Mazatln will be two and ahalf hours, which represents a savings of four hours.This important work of engineering, besidesfacilitating trade, will benefit 21 million personsresiding in the northeast of the country. 26. Mayo - Agosto 2012Intermodal Logistics Terminal of HidalgoThe concept of port regionalization is inciting portsand terminal operators to look at the hinterland tosupport their core terminal business. TILH is aninland port facility owned and operated by HPH(80% stake), which opened in 2012. It is located inthe southern part of the state of Hidalgo about 50km north of Mexico City, one of the worlds largestmetropolitan areas with a population of more than21 million people. HPH is the dominant containerterminal operator in Mexico, handling about 50%of the countrys container port throughput infour major terminal facilities (Ensenada, Veracruz,Manzanillo and Lzaro Cardenas).Mexico City as an origin or destination accounts for40% of all the container cargo handled by HPH,generating about 700,000 TEU per year. In recentyears, significant developments have taken placein the northern part of the metropolitan area withseveral large retailers and manufacturers establishingdistribution facilities in the area. The site includes astandard greenfield logistics zone of 127 hectares(Logistics Activities Zone Hidalgo; 80% owned bythe Mexican trucking company Unne) co-locatedwith an intermodal terminal facility covering 53hectares, with an additional 10 hectares allocated tocustoms. Securing land was a complex endeavor thattook 3 years since the ownership of the rural landwas collective and required a process where it wastransferred to the state and then to private interests(HPH and Unne). Recognizing the potential of sucha facility and its logistics zone for employment andregional development, the public sector contributedby building an access road, a bridge and utilities(electricity, water and sewage).TILH is a grounded intermodal facility wherecontainers are stacked trackside (see abovephoto), which is different from the standardNorth American chassis-based storage. The initialintermodal capacity of the facility is about 200,000TEU and once all expansion phases are completed,the capacity would increase to above 1 million TEU.In its current setting, the terminal provides 4 railsidings of 600 meters directly connected to the railnetwork of two of Mexicos largest railways; KCSMand Ferromex. Because of its geography, the MexicoCity metropolitan area has a scarcity of large surfacesof flat land, implying that the TILH site requiredsignificant modifications (mostly infill and gradeadjustments) to make it suitable for intermodal 27. Mayo - Agosto 2012operations. The main value propositions of thefacility are: Modal shift. Like many developing countries,the share of trucking for inland distribution inMexico is very high, which is linked with congestion,energy consumption, air pollution and delays. Theexpectation is that the inland port will favor a modalshift of a share of the cargo bound to MexicoCity to rail, thus improving the cargo capacity (raileconomies of scale) and the use of a more energyefficient mode. One of the key advantages of thefacility is its direct connectivity to both the Pacific andAtlantic maritime ranges where HPH operates portterminals. Veracruz on the Atlantic side is about 500km away while Lzaro Cardenas and Manzanillo onthe Pacific side are about 600 km away. This distanceis at the threshold of commercial competitiveness forrail services. Custom clearance and dwell time. Importershave the option, through bounded deliveries,of having the custom clearance deferred to theinland port instead of at the gateway port. Thiscan lower inspection costs as well as delays. Inlandterminals having abundant storage space can alsooffer convenient dwell time, implying that they canpartially act as a warehouse for their customers sincea container at the inland port can be considered aspart of the inventory of a nearby distribution center. Load center. As a facility integrated to themaritime ports it is linked to, TILH acts as adeconsolidation (for imports) and consolidation (forexports) center. This can be effective to attract andretain customers as well as improving the quality ofthe transport service since the HPH port terminalsand TILH are one functional transport chain. Inaddition to the inland accessibility from ports onthe Atlantic and Pacific sides (longitudinal flows),TILH has the potential to become a load center forthe NAFTA trade (latitudinal flows), which remainsdominantly serviced by trucks. Its access to theLzaro Cardenas - Laredo - Kansas City corridoroffers a strategic commercial opportunity. Metropolitan accessibility. A logistics cluster(intermodal terminal and nearby distribution centers)offers a platform that is better placed to service ametropolitan area (Mexico City) than direct truckservices from port terminals, particularly if wellconnected to an urban highway system. There arealso more opportunities to deconsolidate the cargo inloads that are more suitable to urban demand (highfrequency) and driving conditions (congestion).Since TILH represents a novel intermodal model forMexico, it is facing the challenge of securing regularrail services to its facility.(Taken from The Geography of TransportSystem) 28. Mayo - Agosto 2012With the publication in the Official Diary last June11th, entered in effect the decree by which provisionsof the Law of Ports of Mexico are amended,supplemented and repealed, approved by Congresson April 25th. In the meantime, concessions, permitsand contracts partially assigning the rights andobligations of the terminals granted prior to the datethis decree entered in effect, will continue using theseas for which they were granted until the conclusionof its validity or its extension, whatever the case.The Secretarys Office for Communications andTransportation, SCT, made known that this decreedetails more aspects of the definition of publicand private use terminals, and also the guidelinesfor investors and the integration of a planningcommittee. In this sense it is specified that for its usethe marine terminals and port facilities are public inthe case of containers and general cargo, or if theobligation exists of placing them to the service ofany requestor, while these will be individuals if holderuses them for its own purposes, and third parties ifby means of a contract, provided services and cargoare of a similar nature to that originally authorizedfor the terminal.This resolution also establishes that the port authoritywill be in charge of promoting competitiveness ofMexican ports within their facilities and its servicesand tariffs, based on the interests of the nation.In addition, it will promote different types oftransportation services converging at national portsin order to interconnect efficiently, and that servicesby which ships, persons and goods are assistedin navigating between ports or national sites beefficiently provided.The SCT specifies it may authorize for only one timethe extension of the area of public use terminalsand port facilities, which have been subject matterof partial assignment of rights, registered at thatoffice. Thus, surfaces may grow up to an additionalberthing position with a maximum length of 350meters, and its corresponding ground surfaces. Theseextensions will be granted provided there are at leasttwo terminals or port facilities of the same kind fordifferent operators in a port, as was made clear bysaid office.Port planning will be in charge of a PlanningCommittee, formed by the Port Administrator, theHarbormaster, a representative of the SecretarysOffice of the Environment and Natural Resourcesand by the assignees or port service providers. Thiscommittee shall be acquainted, among other matters,with the master port development program andits modifications; the assignment of these areas,terminals and port service contracts undertaken bythe port administrator; as well as any other matteraffecting the long-term operation of the port.The Secretarys Office for Communications andTransportation Diffuses Law of Ports Reform 29. Mayo - Agosto 2012Reforms to the Mexican Law of Ports greatly favorcurrent operators, stated to BNamericas Hugo Cruz,lawyer of Bitaz Consultores. Reforms are biasedtowards protecting current terminal operators,stated Cruz.The criticism target for the analysis of the industryhas been Article 10 of the Law, which establishesthat terminals are public, even though they may referto containers or general cargo terminals in the handsof private operators. Besides, terminals are availablefor any user requiring access. In virtue of the law,extension and access to these public terminals willbe done by public tenders that will be granted by aplanning committee. This means that companieswishing to move products through a port will have toenter a bidding process, stated Cruz.There is also great concern in how the planningcommittee is formed. Although it is constitutedby three government officials, all current suppliersof services within the terminal are entitled toapprove or reject the expansion plans and theentry of new entities, he added. The fact ofhaving placed the decision in the hands of thoseaffected does not seem logical, stated Cruz, whoadded this deprives the government from portdevelopment responsibility. Prior to the reforms,operators established a committee that deliveredrecommendations on the expansion plans or the newoperators. Now they decide who gets in and whodoes not, stated the lawyer.As general director of ports between 1996 and 2003,Cruz participated in drafting the original law as legalrepresentative of the decentralized organizationMexican Ports. Prior to the enactment of the originallaw, ports were limited, they lacked importantinvestments and were under the control of theunions, he stated. The objective of the originallaw was to open the sector to private investorsaddressed to transforming ports into enterpriseswith international levels of productivity, accordingto Cruz. These goals were fully achieved with thislaw, stated the lawyer.Even though Cruz has criticized reforms, herecognizes that the law required modifications.Nevertheless, reforms go against the original spiritof the law. It will terminate the opening of the portsector to private investment, as was contemplatedby the original law; it is a counter reform, heemphasized.Specialized magazine T21, in its June edition,highlights the reform to the Law of Ports, subtitlingthat After 19 years without amendments, thelegislature issues changes to the Law of Ports thataccording to legislators with four substantial changeswill modernize the port system with the participationof the public and private sectors. Below is theopinion of private operators in the article:Do the reforms to the Law of Ports favorpresent operators?The Opinion of the Operators 30. Mayo - Agosto 2012Jaime Aguilar, director of the Association ofTerminals and Port Operators ATOP, assures thatthe investor now benefits with 20-year extensionsof the contracts: Those certainty conditions wereto be given, but now the law facilitates this evenmore, being one of the greatest achievements.He adds that the reform is not going to provideautomatic extensions, but now, requirementsare much clearer for those who believe havingthe right to request a postponement. Finally, togrant extensions or not will be the power of theauthority. But the modification will reinforce thelegal certainty of who have bet for investment,he states. Also, Article Seven of the new Law ofPorts authorizes for only one time the extensionof the area of the terminals and public use portfacilities, up to one additional berthing positionwith a maximum length of 350 meters and itscorresponding ground surfaces, provided there areat least two terminals or port facilities of the samekind for different operators at a port.On the other hand, Len Fregoso, presidentof ATOP, states that this also gives certainty tocurrent investors with already 20 years at the ports.For Germn Tirado, Coordinator of InstitutionalRelationships of Hutchison Port Holdings (HPH),the size of current vessels would require extendingport terminals: This is something exponential, asterminals are a physical structure that may not bestretched. The idea is not seeking concentration atonly one terminal, as previous terminals will competein equal circumstances with new ones, and that isvery relevant.Prior to the new Law existed the figure of theOperations Committee, an organization that had theentire responsibility to approve the Master Plan ofDevelopment in charge of the Port Administrator,who would submit it to the Committee, andmany ports adopted that assignees would have arepresentative, that is, only one vote. We hope thatnow the right of seniority will be really recognized toassignees, an important part of the port community,being the one that invests the larger part in theport, comments Germn Tirado. It was a problemof justice, adds Jaime Aguilar. With this PlanningCommittee, the first thing we will see is an order inthe system of ports.Jaime Aguilar, Executive DirectorAssociation of Terminals and Port Operators 31. Mayo - Agosto 2012Summarizing, he ends stating that in the article ofT21 many organizations coincide that the reformto the Law of Ports encourages productivity andcompetitiveness of Mexican ports, faces internationaland regional competition that might displaceMexico from the main sea routes, promotes andlegally ascertains investment of private resourcesfor modernization, expansion and technologicalupgrading of Mexican ports, and promotes theexploitation of national infrastructure so the differenttransportation modes used in the logistics chain mayconverge in portsInvestment in infrastructure during the governmentof president elect of Mexico, Enrique Pea, willbe much more than that of present administration,stated in a press conference Csar Duarte, presidentof the National Conference of Governors (Conago,in Spanish) as reported the end of August byBNamericas. The infrastructure investment triggerthat might be seen in the country by PresidentEnrique Pea may be three or four times more ofwhat we have seen in the past years, stated Duarteduring the meeting of the Conago of the centralregion of the country.Governors of the central region of Mexicogathered to define infrastructure projects thatwill be incorporated in the next budget and toanalyze strategic initiatives for the National Plan ofInfrastructure for 2013-2018. Resources are nowavailable to triple current infrastructure budget, whichwill come mainly from private parties investmentof Public-Private Partnerships (PPP), according toDuarte. A perfect example of the importance ofthe PPP corresponds to the construction of theDurango-Mazatln highway for US$1,880 million,which materialized without using one penny ofthe federal budget, and using private investment ofconcessionaries, informed Jorge Herrera, presidentof the area of infrastructure of Conago (see Inter-oceanic Highway Mexico-United States at thebeginning of this article).Although the national PPA law was approved inJanuary of this year, all governors attending themeeting emphasized the importance of approvingregulations, situation that is still pending. Otherchallenges faced by the sector consider introducingplural-annual budgets to reduce uncertaintysurrounding long-term projects, and a law to assurethat works being developed may continue, despitegovernment changes, concluded Herrera.Investment in Infrastructure will Triple Duringthe New GovernmentEnrique Pea, Elected President of Mexico 32. Mayo - Agosto 2012 33. Mayo - Agosto 2012CHILE: LOGISTICS ANDCOMPETITIVENESS LEADERIN LATIN AMERICAChile has been mentioned as the country with thebest logistics of Latin America, followed very closelyby Brazil and Mexico, according to a report of theWorld Bank. Chile moved to place 39 among155countries, whereas Brazil moved to place 45 andMexico to place 47, as per the report Connectingto Compete 2012: Commercial Logistics in WorldEconomy. The list is based on six factors: efficiencyof the process to dispatch goods through customs,infrastructure quality in relation to trade andtransportation, facility to organize competitive priceshipments, competence of logistics services, andthe frequency of shipments arriving on time to theirdestinations.Chile, Brazil and Mexico also positioned within the10 nations of medium-high income obtaining thebest results, altogether with South Africa and China;however, during the last three years improvementsin countries logistics have been stagnant. This willprobably reflect in certain conditions that have leftaside logistics reform priorities of governments, as isworld recession and the crisis of the sovereign debtof Europe, states the report.The infrastructure related to trade, especially roads, isstill an obstacle for the logistics performance and thesame occurs with the quality of railroads and portinfrastructure, according to the report. Infrastructureis the principal motor for progress, as well as aclose cooperation between public and privatesectors, stated in a communication Mona Haddad,sector director of the Department of InternationalCommerce of the World Bank.An article of El Tiempo of Bogot of the end of Julystates that Brazil, in the last 15 years has become oneof the seven largest economies of the world (todayis the sixth) and, after the United States, is the powerof the continent, registering according to severalanalysts a stagnancy because of internal and externalfactors that may even cause a revision of its growthmodel based on its natural resources. And the factis not that the South American giant is falling. Whatconsulted economists agree is that the scarce tenthsThis country suffers because of the European crisis but,according to analysts, the upturn will come in 2013.Brazilian Economy Decelerates 34. Mayo - Agosto 2012of growth it will has in 2012 and 2013 are bad newsfor a country that has been an advantaged studentin relation to what was happening with mortgage andfinancial crisis in the United States and afterwardswith several European countries.Sebastin Briozzo, director of sovereign ratingsof Standard and Poors, said to EL TIEMPO thatBrazilian economy was never as extraordinarilygood as affirmed, but also has not been as bad asthey want to make it appear in the last months. Theanalyst considered that a growth around 3 percentin the last 10 years and an upturn of 7.6 percentin 2010, Brazilian landing has been given in adeceleration environment of partners such as China,but also because of the accelerated adjustments ofits economic authorities. In this respect, AlfredoCoutio, director for Latin America of MoodysAnalytics, stated to this paper that the stagnancy ofBrazil in the first two quarters of 2012 is explainedmostly by the aggressive monetary policy of thefirst half of 2011, including strong increases inthe rates of the central bank, added to restrictivemonetary conditions that affected industry andcredit. Therefore he says that for the time being,the patient must be alleviated and then savingsand investment will generate to give course to theeconomy, which may last several months.According to Portafolio of Colombia, the U.S.newspaper states that currencies are solid and stable,inflation is controlled, credit ratings are high andGovernments know how to act in difficult times.And the fact is that Brazil after being the pretty girlin economic matters does not have today manyreasons to smile: less employment generation,expressed in the creation of 1,04 million jobs in thefirst semester, 25.9 percent less than during the sameperiod of last year; a 70 percent average fall in the useof installed capacity during the four first months ofthe year, a growth in the Gross Domestic Productof only 0.2 percent for the first three months ofthe year compared to previous quarter, and a fall of0.2 percent in industrial production up to last April.However, one of the most worrying indicators ofBrazilian economy is the deterioration of its creditsportfolio, as the number of unpaid debts grew 19.1percent in the first semester, compared to the sameperiod of 2011.In the meantime, the recent announcement byBrazilian President, Dilma Rousseff, of reducingtaxes and maintaining investments and allowancesfor the poorer gives hope that, unlike the austerityrecipe applied in Europe, will enable the regionalgiant to retake its course.Colombia and Peru are the New EconomicTigers of Latin America: The Wall StreetJournal 35. Mayo - Agosto 2012INTER-OCEANIC CANAL INNICARAGUA?At the close of this Edition, the last day of August, in the firstpage of the newspaper El Tiempo of Colombia, appeared aheadline based on an interview with the outgoing Minister ofFinance of the country: The Colombian Economy Surpassedto the Argentina. Explains the important official that thegross domestic product of the country currently is US$362.000million and Argentina US347.000 million, which becomesColombia the third Latin America economy after Brazil andMexico.It also refers to the political and social situation ofColombia. The confrontation with FARC continuesactive, as well as drug trafficking. But thanks to thestrengthening of the army, the decrease in terroristacts and kidnapping, and the persecution to the drugcapos, Colombia seems to have convinced foreigninvestors that changes are here to stay, concludesWSJ.The U.S. newspaper recalls that some years back theonly investment possibilities considered viable werein Brazil, Mexico and Chile. This has changed: anew group of countries in the region is emerging asa viable alternative, states the paper. According toThe Wall Street Journal and WSJ, both Colombiaand Peru are in a growth boom. Last yearColombia grew 5.9 percent and Peru 6.9 percent.For 2012, Colombias GDP is expected to expand4.7 percent and Perus 5.5 percent, according to theInternational Monetary Fund, it states. Likewise,the WSJ report brings forth the fact that Colombia,and also Peru, have investment grade from the threemain rating companies of the world. Only Chilesurpasses them within the region and its ratings placethem on a par with Brazil and Mexico, and someother countries, it adds. 36. Mayo - Agosto 2012Approved by the National Assembly, PresidentDaniel Ortega signed in July the law for theconstruction of a great inter-oceanic canal inNicaragua, an alternative to the Panama Canal,informed AFP. The project a dream pursuedby Nicaragua since its independence proposesopening a canal by any of the six possible routes ofmore than 200 km that are to be determined by thefeasibility study.According to the government, the canal will costabout 30 billion dollars that will be financed bycountries that have shown an interest in executingworks, such as Russia, China, Brazil, Venezuela, Japanand South Korea. The purpose of this monumentalwork is to encourage a sufficiently rapid progressof the nation to eradicate poverty. The initiativealso foresees the creation of the Authority of theGreat Canal, with a board of directors sitting sixmembers appointed by the president and ratified byParliament, who will be elected at first for a periodno longer than ten years, the term foreseen for thedevelopment of works. The entity will be financiallyand administratively autonomous to manage fundswith countries or interested foreign firms and also tomanage works.Latin Business Chronicle, quoting La Prensa of Panama,informed that the government of Nicaraguaauthorized the Dutch consortium Royal Haskoning-DHV and Ecorys to develop the prefeasibilitystudies for the construction of an inter-oceanic canalthrough the San Juan River, in limits with Costa Rica.The agreement was signed between the recentlyappointed minister president for the Authority ofthe Great Canal, the vice-chancellor Manuel Coronel,and the Dutch consultants, who stated to La Prensathat funds for the feasibility study were donated byHolland and that the consortium of said countrywas chosen as it offered the shortest time todo it. This study will enable the Authority of theCanal to make a final decision on the route to beused to promote this ambitious project, stated thechancellors office. Although the San Juan River isof Nicaraguan sovereignty it is the borderline withCosta Rica, thus its right margin is Costa Rican andthe San Jos authorities have warned that a project ofsuch size may not be developed without the approvalof Costa Rica, based on existing border treaties.Publimetro of Colombia highlighted that accordingto the Nicaraguan government, the project would becomplementary to the Panama Canal and thereforenot merely a competition. The publication adds thatthe most optimist estimates of the government statethe canal could be ready in 2019 and would have acapacity to receive 416 million tons, thus representingalmost 4% of world cargo. As of 2025 the canalcould receive 573 million tons, that is, 4.5% of worldsea cargo.President Ortega, according to Publimetro, expressedthat Nicaragua is the best place to build a canalbecause the environmental impact would be less andthis country has extensive availability of waters andlow lands. Regarding the Panama Canal, Nicaraguaconsiders it is saturated despite its expansion, becauseit will not be capable of receiving the ever largervessels of the market.Complement rather than Competition to thePanama Canal 37. Mayo - Agosto 2012MODERN LOGISTICS OFINLAND TERMINALSHistorically, the waterway system has been seen asa transportation artery with terminals strategicallylocated along its route. These terminals tend to belocated at points where they may provide supportservices to the local neighborhood or regionalindustries. However, requirements for the 21stcentury have changed this approach.Modern dispatches require fully integratedtransportation systems that may quickly andefficiently respond to the requirements of local,regional and global services. Instead of operating asisolated terminals, port facilities are ever more beingseen as elements of an integrated system. They mustoperate as regional logistics centers, inland ports or,sometimes, as virtual ports.A regional logistics center positions itself as anessential link for the general transportation system,supporting producers, shippers and recipients,using the integration of waterway, railway and airtransportation systems to provide their services. Aninland port slightly differs as it complies with someof the functions of a deep-water port, althoughbeing located on a navigable route or at a location onthe coast, and among its benefits it allows having thetime to classify commodities to be delivered near toregional distribution centers and far away from busyseaports, providing value added services to goodsbeing moved through the supply chain.Latinports wanted to supplement this article with one of theconclusions of the first specialized event in container logisticsheld by the National Association of Entrepreneurs ofColombia ANDI, the month of July:Daniel Negron, Vice-presidentThomas Miller Inc. 38. Mayo - Agosto 2012LEGAL CERTAINTY IN CONCESSIONCONTRACTS: A CALLTO GOOD SENSEThe lack of ports connectivity with other modes of transportsuch as the river and rail, affect access to several areas ofproduction and consumption of goods, what is required todevelop viable alternatives to mass transit than the truck whichA virtual port, on the other hand, does notoperate form a specific location but rather uses theinternet to facilitate regional domestic trade andinternational trade, supporting exports and importsoperations by using technology to improve the useof transportation systems. This provides users asimple virtual location for all related services such ascommerce, logistics, security and other transportationactivitiesBeing considered of interest, we hereby transcribe the articleentitled Land of Opportunities, written for ContainerManagement Latin American supplement by Johnny J.Medranda, Regional Manager for Latin America and theCaribbean of RAM Spreaders and former CommercialManager of TIDE, failed concession of Hutchison in Manta,Ecuadorallow an integration of logistics processes and strengthen themultimodal transport, the mobilization of goods to facilitate theforeign trade in terms of competitive prices. 39. Mayo - Agosto 2012involved in the decision-making process forconcession contracts may have interests in other,competing concerns, causing serious conflicts ofinterest. In the initial business development stageof a project, the developer must identify the mainplayers and find out as much as possible aboutthem, to avoid subsequently having to deal withfifth columns that may prejudice the investment.Another issue to be aware of is dirt swept underthe carpet that has not been properly addressedat the time of drawing up the contract. Thisincludes potential sticking-points that have nothingto do with the signatories themselves, but whichsubsequently can become real problems thatcan lead to costly legal battles. Examples includeoutstanding stevedore or labor disputes involvingshipping lines or their agents. If such issues are notresolved or properly addressed in the concessioncontract, the developer may be exposed later on tounforeseen financial scenarios. Unresolved disputesof this nature can frighten off shipping lines,making the business unsustainable. The developermust explicitly ensure as part of the contract thatthe port authority or the local government willmake all efforts necessary to end any such dispute.If a dispute is not resolved within a specifictimeframe, the developer can cite it as a fair cause towithdraw from the contract and claim indemnities.Like the conquistadores who sought the mythical cityof El Dorado, adventurers are still pouring into LatinAmerica and the Caribbean this time not in searchof a golden city but of development opportunitiesin the regions ports industry. However, they shouldbe aware that all that glitters is not gold. Someglobal port developers have already found their owngolden opportunities in the region. Such is the casewith HPH in Mexico, Panama and Argentina; DPWorld in Peru, Brazil, Argentina and the DominicanRepublic; APM Terminals in Brazil, Costa Rica,Peru and Argentina; SSA Marine in Mexico, Panamaand Chile; and ICTSI in Mexico, Brazil, Colombia,Ecuador and Argentina. Likewise, regionalpowerhouses such as Agunsa and SAAM from Chileare rapidly expanding their successful operations.These global and regional port operators andinvestors have developed world-class port operations,bringing with them the competitiveness requiredto thrive and survive. However, not everything thatshines from afar means gold. There are cases whereport developers have signed long-term concessioncontracts in good faith, only for their dreams to turninto nightmares. At the time of signing, both partiesmay indeed have intended to achieve whateverobjectives they set in terms of infrastructure andvolumes. However, initially exciting prospects andwarm feelings of good faith can in some cases turnto blind optimism that leads the parties to overlookreal threats to the viability of the business.Investors should beware of some of the commonchallenges affecting the Latin American andCaribbean region when it comes to public contracts.To begin with, no country in the world is immuneto public corruption. Some government officials 40. Mayo - Agosto 2012Another major challenge, and one that is verydifficult to anticipate, is that of local media playersand their relations with the local community andthe government. Some unscrupulous media outlets,including TV, radio and newspapers, will want aninvestors advertising business, whether the investorneeds to advertise of not. If they decline, no matterhow politely, they may be demonized in the eyes ofthe public. This does not apply to all media. Someorganizations are very professional and understandthat they cannot expect a great deal at the outset.Port developers must understand the behavior oflocal media or hire a local expert who can deal withthem appropriately. They should be ready to establishwith port authority partners a common front in theeyes of the community and the government. Usuallya good strategy is for the port authority to take caseof local media while the developer handles publicrelations in national and international media.The relationship between the port authority andthe port developer is absolutely critical. If for anyreason this relationship sours after the contract hasbeen signed, the developer must step back, reflectand change course if required. Unless the developerhas already created a substantial business and hasstrong relationships higher up the public chain ofcommand, they stand no chance against the portauthority in any internal dispute. The developer mustalways be proactively ahead of the game and shouldlet no issue come between it and its partner. Therelationship resembles a marriage, or a family bond.The developer must understand that a concessionmay last for 20 or 30 years while governments usuallychange every five years or so, and governmentofficials come and go.Another issue to consider is the infrastructure inthe ports hinterland linking it to the wider market.If this is not adequate, a government may promiseto improve it in reasonable time. However, thedeveloper must ensure that this is written into thecontract, and if shortcomings are not remediedwithin a specific timeframe, this can become anotherreason to withdraw and claim indemnities. Never letthe word reasonable be part of the contract: thiswill only lead to ambiguities in the future. Be veryspecific as to what the other party must do, and bywhen. If a developer finds itself in this situation,it should watch out for local authorities awardingcontracts for the construction of critical hinterlandlinks to companies owned by groups that also owncompeting ports. Call it conspiracy, corruption orconflict of interest: this is a real risk and does actuallyhappen.A port developer must also check local anti-narcoticsand customs regulations, which can cripple abusiness before it gets going. Imagine an inboundcontainer going to its primary zone in the port. It ischecked by anti-narcotics authorities and then placedin the container yard. Before the container vesselarrives, anti-narcotics decide randomly to take backthe container and check it again, and this becomes aroutine. It adds unnecessary costs for the exporter,who may decide to send their containers through adifferent port. The developer should check the levelsof anti-narcotics inspections in the port and have theauthorities commit to a reasonable regime.Critical Relationship 41. Mayo - Agosto 2012internships in the port, donating beds to localhospitals, supporting sports teams, etc. Of course,there has to be a plan and a budget for such activities.The developer should not be viewed as a charityeither. It should work closely with local chambers ofcommerce and forge links with social leaders. Thedeveloper is part of a picture larger than the portitself. Sometimes, and unluckily for the developer, theport and the city are closely intertwined and so thingsbecome political. The game must be played wisely.Governments and port authorities, equally, mustbe aware of issues that may limit their ability tomaximize opportunities created by the port business.Most often than not, they own the infrastructure andtherefore possess an important strategic asset, butunfortunately they do not always exploit it effectively.They may invest millions of dollars in infrastructureand then let other benefit from it, leaving very littlefor themselves, sometimes not even enough to covermaintenance.Port authorities should regularly send technical andcommercial personnel to industry conferences andfor off-site training. They should have staff ready andprepared to seize new opportunities if they managethe port or, if it is concessioned, ready to take overoperations should the occasion arise. Port authoritiesmust truly understand the value of their own port,should they decide to concession it. They need well-briefed personnel to avoid any potential exploitationby consultants, investors or developers. In order forthem to determine the ports current and potentialfuture value, they must fully understand the business,its dynamics, the links in the logistics chain, localThe developer must also check customs regulationssuch those relating to where goods in transit canbe nationalized (clearing customs, paying any dutiesand being given permission leave the port). Iftransit goods are nationalized at the port of entryand not at their final destination, this creates alogistics problem for the importer, increasing costsand reducing incentives to ship goods throughthe terminal. Again, the relevant authorities mustcommit to modify regulations that can lead to a lossof business.Another, more subtle, issue is the relationshipbetween the port developer and the localcommunity. The community must be educated tounderstand that changes to the port will not happenovernight and that ships will not be lining up theday after the concession contract is signed. Mostimportantly, the community must understand thatthe developer does not own either the cargo andcontainers or the shipping lines. It must know thata port developer/operator and the terminal arejust tools that facilitate national and internationalcommerce. Expectations must be set reasonable.The developer must not let the port authority runwild, claiming that miracles will happen immediately.This is especially important in greenfield or smallterminals. The developer should aim to integrateitself into the community. It should considercontributing to community programs: for example,offering scholarships at local schools or universities,donating computers to schools, giving local studentsMaximizing Opportunities 42. Mayo - Agosto 2012LATIN AMERICA & WORLD TOPCONTAINER PORTS 2011Latinports wishes to add to the above the importance ofclearly defining conditions and opportunities for contractextensions, since many times this negotiation is too complex andattempts against port and/or terminals efficiency for duringthe negotiation period especially when done at the end of theconcession medium- and long-term investments are postponedbecause of lack of guarantees for its recovery in case contractsare not extended.Below you will find the fifteen major container portsin the region, most of which ammounted in theworld rankings where Panama leads in transhipmentand Santos in foreign trade (in parentheses the globalposition):Extension of ContractsLatin American Rankingand regional competition, economic trends, potentialalliances, and so on. This is not a job for the faint-hearted.When a concession contract is signed, and bothparties understand their rights and obligations, theymust both endeavor to establish simple yet clearcommunications in terms of reports, statistics, audits,etc. The port developer should not let itself be tiedup in bureaucracy or be coerced into constantlyreinterpreting contract clauses. Should a breakdownof the partnership occur, the contract should be veryspecific as to how long the port authority will beallowed to use the developers port equipment. Thecontract cannot say the minimum or reasonable timeto maintain the port as operational. Intentionally ornot, this minimum time will become permanent.Another contract issue relates to the jurisdiction forlegal action should a dispute occur. Some countriesin the region no longer submit to internationaltribunals for the resolution of disputes but resort totheir own domestic justice systems. If this happens,the developer may feel a terrible sense of insecuritybecause the case may not be handled impartially.Developers must ask themselves beforehand, even ifa contract is signed with the best of intentions, whatwould happen if there was a change of governmentinimical to their own interests. To secure the successof any project, a port developer and its partneringport authority must take the time to set out clearlyand explicitly every last detail, obvious or otherwise,to minimize the potential for conflict. That said,Latin America and the Caribbean are indeed the newland of opportunities, an El Dorado for those whodare to lead the way. 43. Mayo - Agosto 2012Noteworthy positively that within the hundredmain ports of containers of the world ladder ofContainer Management, almost 10% are LatinAmerican (three are part of the first fifty: PanamaAtlantic and Pacific, and Santos).(*) If we exclude San Juan, which is Latin Americanbut belongs to United States, Montevideo (Uruguay)occupy 15th place (118 in the world), with 861.164TEUs.Eleven Asian ports (nine Chinese) within the firstfifteen ports of containers worldwide as we shall seebelow:Mundo Martimo prepared the end of August thefollowing extract of Global Container Terminal OperatorsAnnual Review & Forecast 2012 published by DrewryShipping Consultants of London:During the last decade, the port industry has seenimportant changes, thus showing a solid growthand global expansion. The entry of China to theWorld Trade Organization (WTO) in 2001 andthe corresponding boom in volumes thanks tooutsourcing and global economic rise, the globalfinancial crisis of 2008 that resulted in the first fall intraffic of containers in 2009, the dramatic increase ofthe containerships and the rise of the Asian ports especially Chinese ports as important actors in theworld scenario are just some of the components thathave changed the face of the global port industry.Some of the principal changes encountered by theWorld Ranking:Global Container Terminal Operators AnnualReview & Forecast 2012 44. Mayo - Agosto 2012port industry during the last decade are the trafficincrease of containers at ports, which has morethan doubled since 2002, while the participation ofChinese ports has reached 30%. Almost one third ofthe TEUs handled worldwide correspond to Chineseports and regarding total TEUs handled, more than75% are handled by global (*) port operators, a figuresignificantly greater if compared to 58% that werehandled by said large firms in 2002. Another changemay be seen in the size of vessels: in 2002 the largestvessel in service reached 7 thousand TEUs, whereasat present there are lots of ships of 15 thousandTEUs and coming closer those of 18 thousandTEUs.While some things change, others remain unaltered.The report shows that the main actors of theindustry ten years ago continue being at presentmostly the same. Taking the total movement ofTEUs, Hutchison Ports (**) continue way ahead,while PSA (**) and APM Terminals interchangedthe second and third places. The fourth place is forDP World, place previously occupied by P&O Ports(acquired by DP World in 2006). A new participant,Cosco Group, occupies the fifth place in 2011reflecting the emerging importance the Chinese havebeen gaining in the industry.In a globalized industry, merges are inevitable.Shipping lines have consolidated alliancesvoluminous in size but short in quantity, especiallyin the Asian-European routes currently under thedomain of four large groups.Looking one decade back is equally interestingconsidering how the industry will be in the future10 years to come. We have forecast in this yearsreport that global container handling will exceed 800million TEUs in 2017. According to these estimates,within 10 years the industry may easily exceed onebillion TEUs per year and this is only based on aone-digit growth each year. Also, it is highly possiblethat only vessels of more than 20 thousand TEUswill be operating in the east-west routes. However,due to uncertain existing economic conditions, theindustry faces a great challenge in terms of growthin more than one front, stated Neil Davidson, PortConsultant of Drewry.(*)Without much explanation Drewry suggests that in 2012total containers handled by global operators has substantiallydecreased (Latinports)(**) Port of Singapore Authority PSA owns 20% ofHutchison Group (Latinports) 45. Mayo - Agosto 2012PRIME MINISTER OF CHINA PROPOSEDAT ECLAC A FORUM FOR HIGH LEVELCOOPERATION WITH LATIN AMERICA ANDTHE CARIBBEANTo strengthen the strategic relationship with theregion, the Chinese Prime Minister, Wen Jiabao,proposed the creation of a Chinese-Latin AmericanCooperation Forum and the establishment of aperiodical dialogue mechanism with the troika ofchancellors of the Community of Latin Americanand Caribbean States (CELAC) summoning thefirst meeting for 2012. Last June 26 the ExecutiveSecretary of the Economic Commission for LatinAmerica and the Caribbean (ECLAC), AliciaBrcena, welcomed Wen Jiabao in the name ofthe institution, who addressed a message fromthe headquarters of the organization to the LatinAmerican and Caribbean regions on the occasion ofhis official journey that took him to Brazil, Uruguay,Argentina and Chile.In his dis