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November 26, 2014
Monday, February 24, 2014

BA port private terminals sign pre-accord to invest US$737 million

Containers piled up at the Buenos Aires City port. Photo taken on June 7, 2013.
By Guillermo Háskel
Herald Staff

The plan envisages the state extending the terminals’ concessions about 20 years after their current ones expire in five years, AGP harbour authority says

The state company running the port of Buenos Aires City has signed a preliminary accord for the three international terminals operating in it to invest a total of over US$700 million to adapt the harbour to the new, larger 360-metre-long vessels in line with the capacity of the expanded Panama Canal.

The accords signed the week before last require now the final approval from the administration of President Cristina Fernández de Kirchner, merchant navy captain Sergio Borrelli — the trustee of the General Ports Administration (AGP) authority — told the Herald in an interview on Friday.

Terminals 1, 2 and 3 TRP (operated by Dubai Ports International, from the United Arab Emirates), Terminal 4 (operated by APM Terminal, from Denmark) and Terminal 5 Bactssa (operated by Hutchison, from Hong Kong), “showed readiness to continue betting on Argentina’s foreign trade and to Buenos Aires City port as a fundamental part of its logistics,” Borrelli said.

The preliminary accords envisage the extension of their concession of about 20 years after their current ones lapse in a five-year term, “giving contracts 25-year foreseeability and companies more time to mortgage their investments,” he said.

The works would demand between two and five years.

“This means zero cost for the state, something that is not happening in any other port of the country,” Borrelli said.

Under the accords, the terminals would be required to carry out an expansion of Buenos Aires to fluidly berth 360-metre-long, 53-metre-wide ships, in line with the new capacity of the Panama Canal, which is undergoing expansion works expected to be completed next year or in 2016.

Today Buenos Aires port is berthing ships of a maximum of 335m by 48m, Captain Borrelli said, adding that in some docks the port is operating at its limit and that it aims to berth many ships to operate simultaneously in an efficient way.

"Buenos Aires port has been designed for 180m by 25m vessels and now we are talking double that size," he said.

Borrelli added that the port had successfully carried out simulations to berth 400m by 60m ships but that it decided to adopt the Panama Canal parameters to have an operating and security margin. Regarding draft, he said that the ports foresees a deepening to 40 feet from the current 33.

The nation has to decide the draft of the channels of the River Plate, he said.

“Buenos Aires — which requires permanent dredging — and the rest of the ports of the Metropolitan Area (Dock Sud, in Avellaneda, in Greater Buenos Aires) and La Plata (the capital of Buenos Aires province), must adapt to receive the ships forming an itinerary with the ports of Uruguay and Brazil. Different from bulk cargo ships, container vessels call in different ports as if they were cruisers. If the whole itinerary has a draft of 40 feet, the port having less than that is left out.”

Montevideo is going now to 40 feet and it has its own access channel which does not depend on the Paraguay-Paraná rivers waterway (Hidrovía).

“With time, the issue is how many terminals Montevideo will be able to attract. That is why they are thinking about expansion plans and a deep-water port. They have no more capacity to expand Montevideo docks.”

Borrelli said that Brazil is also adapting to 40 feet.

“Brazil has many sea ports which virtually do not need an access channel.”

A total 1,800,000 TEUs come in and go out to and from Argentina every year, including the activity of the Exolgan container terminal in Dock Sud, Borrelli said. Of that total, Buenos Aires City’s port accounts for about 1,200,000 TEUs.

 ‘BA a Feeder Port?’

Asked whether — in line with what many private experts have been warning — Buenos Aires runs the risk of becoming just a feeder port for the Southern Brazilian ports, he said: “The risk is there but is not inevitable. Argentina must make an effort to prevent that because that means greater logistics costs for both Argentine import and export cargoes.”

Besides, he added, if Buenos Aires reaches the 40-feet draft and manages to have a water area large enough for large ship to manoeuvre, “it will continue to be the cheapest way to transport cargo.”

“For example, if a company unloads cargo in Río Grande, in South Brazil, and later on it anyway has to move to Buenos Aires, that means an additional freight cost which had already been paid. Over very long distances, short distances make no difference. Freight to a port near Buenos Aires costs almost the same as to Buenos Aires itself. Trans-ocean ships will charge the same fee for unloading containers in Montevideo or in Buenos Aires. The transfer from Montevideo by truck or feeder ships would be very costly, while bringing the container ship with tug-boats to Buenos Aires trims costs markedly. Paranaguá, Río Grande or Santos (all in Brazil), require feeder ships to bring cargo to Buenos Aires. But any transfer increases costs. It is true, however, that there may be some cost differences due to other issues besides freight.”

Investment breakdown

Borrelli said that roughly speaking TRP accounts for about 50 percent of the port’s whole volume while Terminal 4 and Terminal 5 account for about 25 percent each.

Under the preliminary accords TRP would invest US$186 million in docks and US$109 million in cranes, creating some 1,100 new jobs; Terminal 4 would invest US$137 million in docks and USD$55 million in cranes and also create 1,100 jobs, and Terminal 5 would invest US$162 million in docks and US$88 million in cranes., for a grand total of US$737 millions. (Figures have been rounded out.) Among other works, TRP would build two docks 470 metres and 360 metres long, Terminal 4 a new 400-metre long dock with a 40-metre (49 feet) draft, and Terminal 5 a new 400-metre-long, 32-metre-wide dock.

Basin E Revamp

Separately, Borrelli said, the AGP had conducted a revamp of the state-run E Basin which had been idle for three decades and this month was able to receive 360 wagons and 44 locomotives from China which were unloaded directly on their tracks, saving the sate about 100 million pesos in operational and parking costs. The rolling-stock is part of a total 509 wagons and locomotives Argentina bought last year to renew the Sarmiento and Mitre lines. Previously, those operation were being carried out in private terminals, basically Exolgan, where the 70-tonne wagons were unloaded on trucks and from there taken to private warehouses, sometimes for up to 60 days until the red tape was completed, and then again onto trucks to finally be put on their tracks.

“If you have your own garage, why would you use someone else’s?”, Borrelli said.

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