It is commonly recognized that ocean freight in Central America is a logistics sector with great potential.
One of the region’s main competitive advantages is its geographical position. With the exception of El Salvador, all of the countries in Central America have access to two oceans, as well as have direct access to large markets on both the North American and South American continents. Additionally, Central American countries have made improvements by investing in infrastructure, incorporating new technologies, and attracting more shipping companies to their port facilities. This has resulted in increased volumes of trade.
Experts opine that, if ocean freight in Central America is to continue its positive growth trajectory, service providers must persist in offering competitive rates, invest more in cutting-edge equipment and information technologies, coordinate effectively and efficiently with all parties involved in shipping by sea Central America, and work to establish an adequate and consistent legal infrastructure that governs trade.
According to the report entitled, “Cargo Logistics in Latin America and the Caribbean: An Agenda for Improving Performance,” written by Jose Barbero, a specialist with the Inter-American Development Bank (IDB), many of the ports that are handling ocean freight in Central America have achieved an acceptable performance in the ship loading and unloading functions and have improved the coordination of processes involved in executing international trade.
The Movement of Ocean Freight in Central America
Between the northern and southern coasts of Central America, there are a total of 34 ports that process imports and exports to and from a multitude of destinations. In 2017, these ports moved over 152 billion tons of cargo. Panama is at the forefront of the movement of ocean freight in Central America. Ninety percent of Panamanian logistics consists of transshipment. This means most of the cargo there is in transit and does not stay in the country. On the other hand, in the rest of the region, more than ninety percent of the loads are local. Guatemala and Costa Rica report the most movement.
The expansion of the Panama Canal which reopened in June of 2016 was one of the largest, if not the largest, infrastructure project in Latin America. This is the case because of the amount of investment that it took to finance it, as well as the impact that it will have on ocean freight in Central America, in the United States, and in the entire world’s maritime markets. The IDB specialist, Barbero, informs that vessels that pass through the canal can now carry up to three times more than what they could ship prior to the expansion. Panama’s success in its canal’s expansion has motivated other countries of the isthmus to act to improve their port facilities. They recognize that the passage of goods via ocean freight in Central America provides opportunities to further develop value-added activities in logistics, as well as in the area of manufacturing production.
Port Improvements Benefit Ocean Freight in Central America
As a part of the improvements in infrastructure in the region, Costa Rica has recently completed the construction of the mega-port of Moin. The logistics company APM holds the terminal concession at the port and completed the construction of a container terminal there in February 2019. The Moin Container Terminal covers approximately 80 hectares with a 650-meter quay and a depth of 14.5 meters. The access channel is 18 meters deep. The terminal is equipped with 29 electric container cranes and six Super-Post Panamax gantry cranes. Additionally, the terminal is capable of handling container ships of up to 8,500 TEUs, 24 hours a day, 7 days a week, and 365 days a year. The new facility to expand ocean freight in Central America represents an investment of $1 billion dollars, and APM will be in charge of the administration of the port for the next 30 years.
Improvements to promote ocean freight in Central America are also being pursued in Honduras. Both the Ports of Castilla and Cortes project the construction of cruise ship piers, the expansion of cabotage, and the construction of modern port terminals. Both ports will be dredged in order to be able to receive larger vessels, as well as will have improvements made in technological equipment that is necessary for their improved operations.
Nicaragua is currently proposing projects for increasing its participation in ocean freight in Central America. US $130 million is to be invested in increasing the capacity of berths, constructing silos for bulk products and a terminal for cruise ships, among other projects. However, advancement in bringing these investments to fruition has been delayed by a recent political crisis in the country.
In El Salvador, the country’s Executive Port Commission (CEPA) has put into place a “Program of Modernization and Management of Strategic Assets.” In this plan are provisions to make improvements to the country’s two shipping trade facilities: The Port of Acajutla and the Port of La Union. CEPA intends to make Salvadoran Ports prominent logistics platforms in the region by developing infrastructure projects and rehabilitating facilities and equipment.
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