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Staying afloat? Opportunities in the Maritime Transport Sector in the Americas

June 13, 2017 by Sergio Deambrosi - Krista Lucenti - Iván Corbacho - Erick Feijóo 3 Comments


In the first quarter of 2017, global trade experienced an uptick in the value of goods being traded. This rise, the first since 2014, is the result of higher commodity prices and slightly stronger demand from emerging economies. Prior to this – between the great recession and 2014 – global trade expanded robustly both in terms of value and volume.

This volatility in global trade created economic consequences on ports and their operators, as well as on maritime and shipping networks. The industry is facing overcapacity and an acute drop in freight rates. Bankruptcies – such as that of Hanji Shipping – and the consolidation of the shipping industry into a few companies has reduced competition in the market for maritime services – in fact, these new alliances will represent almost 75 percent of global market.

The effects of this new supply and demand scenario are even more remarkable in Latin America and the Caribbean, where connectivity limitations and below-average logistics performance are considerable barriers to integration and growth in maritime trade. Infrastructure shortcomings, operational inefficiencies, high port costs, lack of integration in logistics platforms (e.g. electronic single windows) result in higher regional maritime transport costs. In addition, the increase in vessel capacity following the Panama Canal expansion will have unintended consequences: a reduction in maritime services, a rerouting of smaller vessels towards other regions requiring lower freight volumes, and the use of a few, smaller ports able to handle higher transfer volumes. It is expected that the region’s smaller ports will operate as feeders for nearby ports, as a kind of hierarchy between secondary and main hubs.

Opportunities should be seized both by governments and the private sector to jump-start the sector’s performance and mitigate volatility.

The maritime transport industry has both the challenge and opportunity to adapt its services in order to improve its competitiveness. The solution is not only to increase investments in infrastructure, but also to focus on improving port efficiency and better regional planning. It is necessary to seek more efficiency by improving port operations and customs processes, promoting inter-modality, developing logistics platforms, easing regulations, and strengthening coordination among institutional actors.

In countries in the Caribbean region – where 90 percent of imports and exports is transported by sea, with small internal markets and low trade levels, and in many cases with obsolete port infrastructure and inadequate logistics equipment –, solutions must be “tailor-made.” It is important to promote intraregional trade through short-sea shipping networks and services, with smaller vessels and with more frequency. Existing infrastructure and operations must adapt in order to move less-than-container load (LCL) more frequently between neighboring islands.

The Trade and Investment and the Transport Divisions of the IDB are executing a technical cooperation project entitled Increasing Maritime Trade and Transport Efficiency and Connectivity in the Caribbean: Short-Sea Shipping Networks, in which seaborne trade flows, infrastructure, and existing services will be analyzed in order to provide recommendations that may address the region’s specific needs.

For those interested in the areas of trade, transport, and logistics, as well as for academics and experts who may want to deepen their knowledge of these issues, the IDB offers a Community of Practice on Port and Trade Logistics in the Caribbean, where participants can exchange information and best practices via discussions forums, webinars, and other tools.

An earlier version of this blog (in Spanish) was published in December 2016. 


Filed Under: Innovation and Technology, Investment Attraction, Regional Cooperation, Regional Integration, Trade Promotion Tagged With: Foreign Direct Investment, International trade, Regional Integration

Sergio Deambrosi

Sergio Deambrosi es especialista en Transporte del BID. Nacido en Argentina, Sergio tiene un Ingeniero Hidráulico de la Universidad de La Plata y un postgrado en Ingeniería Sanitaria y Ambiental de la Universidad de Buenos Aires. Ha sido capacitado en Financiamiento de Infraestructura Público Privada (Escuela de Gobierno, Universidad de Harvard), Regulación Económica de los Servicios Públicos (UADE), Planificación y Evaluación de Proyectos Hidráulicos (CIDIAT, Venezuela) y Planificación de la Movilidad Urbana ( Universidad Católica Argentina UCA). Ha trabajado en proyectos de Transporte, Agua y Saneamiento y Desarrollo Urbano en varios países de América Latina durante 30 años. En Argentina, fue Jefe del Departamento de Estudios y Proyectos y Gerente Técnico de National Water Works.

Krista Lucenti

Krista Lucenti is a Senior Trade Specialist in the Trade and Investment Division of the IDB based in Trinidad and Tobago. She coordinates the Division’s Caribbean operational portfolio which consists of projects focused on maritime transport and ports, trade facilitation, logistics and global services exports. In recent years, she has coordinated the Caribbean Strategic Agenda on Integration, undertaken research in the areas of trade and maritime transport, and coordinated regional policy dialogues. Prior to joining the Bank, Krista worked at the World Bank in Geneva where she supported work on the Integrated Framework, trade facilitation, and diagnostic trade and integration studies. She holds a PhD in Economics from the University of Bern, Switzerland as well as degrees from both the School of Oriental and African Studies, London and McGill University, Montreal

Iván Corbacho

Iván Corbacho holds a Master's Degree in Civil Engineering from the Polytechnic University of Catalonia . He collaborates with specialists in the preparation of projects and deepening in the areas of knowledge, especially in the fields of Urban and Sustainable Transport. He has worked in the private sector and in other Multilateral Banks. He was a consultant at the World Bank, the European Investment Bank, researcher at the Transport Innovation Center, assistant professor at the Department of Infrastructure and Territory of the Polytechnic University of Catalonia and engineer at the company Inypsa.

Erick Feijóo

Erick Feijóo is an international economic policy consultant based in Berlin, Germany. Over the past 10 years, Erick has been focusing on policy and regulatory issues related to trade, energy, the environment, and digital technologies. Erick worked on these areas at international organizations, think tanks, the public and private sectors in the United States, Europe, Latin America and the Caribbean. He holds a bachelors from the University of Buffalo and a masters from Georgetown University’s School of Foreign Service.

Reader Interactions

Comments

  1. Craig Sanders says

    April 5, 2018 at 10:23 am

    Countries in the Caribbean have to seize these opportunities in growing economies and work together both the government and the private sector in order to jump start their markets and compete.

    Reply
  2. Darryl says

    May 21, 2018 at 1:14 pm

    Great insight on the transport sector in america. Thanks for the write up.

    Reply
  3. Henry Collins says

    May 29, 2018 at 11:57 am

    Very interesting article.

    Reply

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Productivity and Trade

This space explores how trade, investment and sustainable development in strategic sectors can boost productivity and strengthen more dynamic, inclusive and resilient economies in Latin America and the Caribbean. From trade facilitation and export and investment promotion to entrepreneurship, the development of public-private synergies, agri-food systems and tourism, we address challenges and opportunities for growth in the region.

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