January 20, 2018
Monday, October 3, 2016

Argentina’s Merchant Navy eyes a quiet revival

Work is carried out on the crank of the Juana Azurduy,one of the two oil tankers commissioned by Venezuela’s state-run oil company PDVSA, at the Buenos Aires Province state-run Astillero Río Santiago shipyard.
By Guillermo Háskel
Herald Staff

Government officials, businesses, unions adopting less ambitious approach to refloat sector

With a new administration in command, officials, legislators, businesses and unions are once again seeking to refloat Argentina’s dismantled Merchant Navy and shipbuilding industry, albeit this time via less ambitious initiatives than the ones supported by the previous government.

All parties involved are now focusing primarily on river and domestic navigation, deferring dreams of recovering a seafaring merchant fleet such as the one the country boasted a half century ago.

Initiatives are being cautiously supported by the administration of President Mauricio Macri, who took office last December after 12 years of the successive Peronist presidencies of the late Néstor Kirchner (2003-2007) and his widow Cristina Fernández de Kirchner (2007-2015).

The aim is for Argentina — which accounts for 11 percent of the global grain trade — to recover at least a humble piece of the freight cake that it lost when president Carlos Menem dismantled the national fleet which had received a strong boost from three-term president Juan Domingo Perón.

The new drive comes after a Kirchnerite deputy presented an ambitious bill just two years before Fernández de Kirchner was due to leave power. Her administration backed it, although some sources say with not enough enthusiasm. In the end, the bill stalled in Congress.

Tripartite dialogue

Now the Macri government is leading tripartite talks with businesses and unions to re-establish a merchant fleet, according to Under-Secretary for Ports and Navigable Ways Jorge Metz, who reports to Transport Minister Guillermo Dietrich.

The prevailing mood, however, is of prudence, in sharp contrast with some grandiloquent arguments of two years ago.

The parties involved expressed their views last week, during the Admiral Storni 2016 Seminar held at the Defence Ministry and sponsored by the Argentine Naval League NGO.

Naval League Vice-President Fernando Morales said that one of the seminar’s aims was to create maritime and riverside awareness in a country that has nearly 5,000 kilometres of coastline and owns half of the 3,400-kilometre Paraguay-Paraná river waterway it shares with Bolivia, Brazil, Paraguay and Uruguay.

An example of the existing lack of awareness was reflected in the name of the Blue Pampa Atlantic Ocean research programme launched by the government in 2014, he said.

“It is paradoxical that we should resort to a land parallel to describe the sea.”

Lost freight

Argentina is losing billions of dollars a year in export and import freight. But estimations of the loss vary widely from US$3 billion to US$6 billion, and even US$7 billion.

Addressing the seminar, Metz said: “We have been working for years on a plan to re-establish a competitive merchant navy and to solve symmetries. One of the leading challenges we face is the lack of an Argentine-flagged fleet. The freight business is not in our hands but in international hands. We are not competitive.”

Lucas Aparicio, the Transport Ministry’s labour relations coordinator, said that Argentina’s merchant fleet was once the fifth largest in the world.

However, by the reckoning of the British Chamber of Shipping’s 1965/66 report, which took into consideration lower tonnage vessels, Argentina actually ranked 19th.

Aparicio said that after once controlling 70 percent of the LA Plata Hidrovía basin trade, Argentina currently does not even have five percent. “We want to boost the Hidrovía fleet to transport an expected strong increase in agricultural production. But every party involved must make a patriotic effort. We have found the sector in a deep state of decay.”

The Hidrovía is now overwhelmingly controlled by Paraguay.

Kirchner’s decree spirit

Mariano Gendra Gigena is an adviser to Renewal Front leader Sergio Massa but made it clear that he was addressing the seminar as a member of the MUNA shipping table which is drawing proposals for the sector.

He said that in the face of the lack of a definitive legislation, the sector is still regulated by Decree 1010 issued by Néstor Kirchner in 2004 which was initially expected to be in force for just two years. He said that MUNA’s proposal follows the spirit of Decree 1010 but envisages expanding benefits for ship-owners, shipyards and workshops, including tax breaks, and the creation of a project fund. It is also seeking to offset the advantages favouring Paraguay.

Marcela Passo, the deputy chairman of the Lower House’s Maritime Interests Committee, said that the Renewal Front, to which she belongs, is proposing a US$250-million annual budget for the sector.

There are several other related bills under consideration in Congress.


Horacio Domínguez, chairman of the Chief Engineers and Engineer Officers Union, said: “The tripartite talks are crucial. However, we also have to face reality. We are the world’s breadbasket but we don’t have a single grain carrier.”

The international freight sector has undergone a “Copernican change,” mostly since the end of World War II, he said.

“As the US needed ships to transport its cargo, it invented a country in Africa, Liberia, with its rotating dictatorships. It was just interested in a flag and this allowed it to develop not just a competitive Merchant Navy, but a unique one, as it had tax and labour regulations different from the US’ own.

“That was when the seafaring merchant navy was born. Today, 99.9 percent of sea cargo is done by ships hoisting flags of convenience such as those of Panama or Bermudas. You will never see sea-faring vessels hoisting the flags of Britain, Germany, France or Italy, save, of course, for inland rivers. And guess which is one of the leading flags of convenience hoisted on super-tankers serving the former Soviet Union? That of Paraguay. They have low taxes and their wages are practically slave labour.”

He went on to say: “There is a lot of talk about a merchant navy, but, of what kind? Domestically there are no doubts. We don’t have to compete against anyone. Our crude carriers go to Comodoro Rivadavia, and bring the fuel from terminals and refineries. Nor do tug-boats compete with anyone. They work in a pool, practically all of them doing the same task.

“But there is a tremendous challenge in the Hidrovía. Moving to Paraguay is good business. About 60 percent of ship-owners using the Paraguayan flag are actually from Argentina. We have to defend the Hidrovía, become competitive and work on national and regional cabotage. We have already taken steps in that direction with a mix of Argentine legislation and ITF (International Transport Workers’ Federation) accords. And we have jobs for our people.”

He added: “Lots of sailors worldwide have been abandoned by groups which use them and then discard them and hire cheap manpower from poorer countries and countries at war. This is the way these monopolies work. Maersk, MSC, Evergreen, Hamburg ... and are we going out to fight against them? Of course all this about the fatherland is good. We have to defend our interests fiercely but let’s not think about creating a sea-faring merchant navy under these conditions.”

The seminar will meet again on October 7, in Mar del Plata, and for a third and final time on October 21, again at the Defence Ministry.

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