Evolution, strategies and expectations of the maritime market in Latin America. Implications and regulatory opportunities for the maritime port sector
The maritime market and port sector is experiencing profound changes in its organization (concentration of supply, strategic alliances, vertical integration between terminal operators and shipping companies) and technology (greater supply capacity of ships and ports, automation and electrification of port terminals, greater efficiency in ship propulsion, etc.). These changes are global and have already begun to arrive in our region.
Are public, private and civil society actors ready to respond and manage these challenges in the maritime and port sector?
As an example, the expansion of existing ports and the development of new terminals in traditional port sites has generated significant positive economic impacts for the development of the region and restructuring the economic geography of port cities. However, in many cases it has also negatively impacted the city-port relationship and generated an increase in negative externalities (noise, NOx emissions, SOx, particulate matter). Likewise, the sector is behind in the incorporation of technology, as an example, the operation of terminals in Latin America continues to be diesel, the electrification reaches barely 35% of equipment in terminals.
In Latin America and the Caribbean, there is still no profound understanding of the political and social structure of maritime transport given the interdependence of different scales, from the local to the global in the same location. At present, the system implicitly accepts negative effects: blockages, inefficiencies, delays, waste of resources and negative externalities.
The region has a long history of responding to the needs of the maritime sector regarding port infrastructure to handle increasingly large container ships. The development of these infrastructures requires significant financial resources, which in some way must come from our societies. The company is willing to pay for the development of port infrastructure for increasingly larger ships, which arise from a supposed need for economies of scale from a few global companies. No doubt there is a need in the region to continue improving the port infrastructure and its performance, but the structure, quantity and quality of this development should be better reflected.
Imagine, for example, a regulatory agreement among all the countries of the region regarding the maximum size of container ships to operate in the ports of the region, for example equal to the size and capacity of Neo-Panamax vessels. Such planning certainty could free resources for the development of structural change initiatives, such as the incorporation of autonomous vehicles, digital infrastructure, electrification of terminals, development of railway infrastructure and improvement of access, etc.
Concentration of the maritime market versus regulation to encourage its sustainability
In this last decade there has been a concentration of activity in the maritime sector. Containerized cargo capacity globally and new generations of terminals are legally or operationally linked to a small number of actors. This is the result of the consolidation trend of the maritime industry and the geographical expansion of terminal operators during the last decade. Beyond the traditional horizontal integration, vertical integration between shipping lines, terminal operators and other actors within the logistics chains has advanced and will continue to advance.
This process often does not contemplate the efforts of the countries of the region; The new global environment has altered the traditional concepts, policies and strategies in the maritime sector. Until now, countries focused their strategies on the decentralization and privatization of ports in search of greater capacity and efficiency. In this context, it seems necessary to reflect on the need to improve the regulation of the maritime sector and the regulation of the participation of the private sector in port infrastructure and services. So far there is no critical reflection on the new organization of the sector to identify winners and losers in this new global environment.
How can it be guaranteed that a local or regional authority can exercise the necessary control over a global player? Is the current regulatory framework still adequate to guarantee the continuous development of port infrastructure in the future? This doubt is pertinent insofar as it is not clear, for example, that the model is succeeding in incorporating parameters towards a more sustainable development. Why does not there exist a SECA Emission Control Zone at a Latin American level like those in force for transport? Maritime on the coasts of Canada, the USA, the North Sea and the Baltic Sea?
Current regulatory frameworks in the region lack mechanisms to evaluate the performance of port infrastructures and maritime services in the dimensions of emissions, energy efficiency and social responsibility. There are some individual initiatives at the company level, however a joint effort between the public, private sector and society is absent.
The region has not yet addressed the need to adopt regulations for the maritime and port sector that improve the sustainable performance of the logistics chains and that encourage contributions from maritime transport and ports to the goals of being more sustainable. The region has reached the point where it is necessary not only to say but to begin to do with respect to sustainability in the sector.
The competitiveness of ports and the efficiency of maritime transport are strongly related to their sustainability. Technological changes that deliver greater operational efficiency, but in turn also lower environmental externalities and at the same time a reduction in spending on mitigating external effects.
An incentive policy that promotes leadership and best practices has the potential to provoke fundamental reconfigurations in the sector that will lead the region towards a better future. It is necessary to review and advance the current regulations, we must move beyond the discussion of sustainability as a reformist concept and approach an approach that proposes and is not exclusively reactionary to demands.
* Gordon Wilmsmeier holds the Kühne Logistics Chair at the Universidad de los Andes, Bogotá, Colombia. He is an honorary professor in Maritime Geography at the University of Applied Sciences in Bremen, Germany, and a visiting professor at Goteborg University, Sweden and at the National University of San Martin, Argentina. Gordon leads the Port Performance Research Network (PPRN), and is a member of the International Association of Maritime Economists (IAME), of the Sustainability Working Group in the Forum of European Leaders of Merchandise and Logistics (F & L), and an associate member of PortEconomics.
“Regulatory challenges of the transport sector over the next decade” was the central topic of the 7th Regional Policy Dialogue of the Transportation Network 2017, a meeting with representatives of Latin American and Caribbean countries and IDB experts. This link includes the agenda and the presentations of the event.