Logistics
Small changes crate big waves across Latin America
When various media outlets released footage of the Francis Scott Key Bridge collapse in Baltimore (US) in March 2024, many of us had flashbacks to the 2021 blockage of the Suez Canal in Egypt, which lasted six days. Although the consequences of the bridge collapse will not mirror those of the canal blockage, it highlights how vulnerable different industries and regions are to logistical disruptions on the other side of the world.
More locally, in mid-2023, the Panama Canal Authority had to adjust the daily transit capacity due to a drought that lowered Gatun Lake’s water levels. Although the canal was returning to normal levels by mid-2024, authorities are already warning about the long-term impacts of climate change and the challenges of securing water for the canal, as explained by Gabriel Mariscal, business manager at CB Fenton, during the APLA logistics meeting held in Santiago, Chile, in June 2024.
Considering this interconnected mesh that represents the world in a globalized economy, the factors leading to disruptions, and trends such as nearshoring, one might wonder if these trends are beneficial for specific regions.
For example, Grupo Puerto de Cartagena operates the Port of Cartagena, which has an installed capacity of 5 million TEUs and is currently handling around 3.7 million TEUs daily—a figure that has been steadily increasing. According to Giovanni Benedetti, CCO and head of marketing and sales at Grupo Puerto de Cartagena: “While growth might seem positive, it is essential to recognize that it does not always indicate a beneficial situation; the increase in container traffic does not necessarily reflect a booming market; rather, it is a result of ongoing disruptions in maritime routes. I believe everyone would like to grow, but not for all the wrong reasons.”
Collaboration and interest between foreign and Latin American ports and governments are gaining momentum, particularly in the areas of best practices for infrastructure development—an area Latin America should prioritize, according to the latest APLA Logistics meeting—and energy transition.
The Port of Antwerp-Bruges International (PoABI) has a partnership with Prumo Logística at the Port of Açu in Brazil. Matheus Dolecki, representative for Latin America, commented that PoABI has another partnership with the Port Management Company of Suriname, and has more recently signed an agreement with the Mexican Navy and the State of Sonora to enhance the Port of Guaymas’ energy transition.
Ports can drive decarbonization and improve efficiency by optimizing infrastructure for energy projects and sustainable alternatives. As owners and investors, they can support low-carbon regulations, enhance environmental and safety standards, and facilitate alternative fuel production, storage, and transport.
PoABI has experience in energy transition efforts, having signed and ratified a MoU with Chile’s Ministry of Energy to advance green hydrogen initiatives: “Beyond Chile, we are also exploring opportunities in Latin American countries with solar and wind resources, particularly Brazil and Uruguay, where we have concrete projects underway while remaining open to other possibilities,” added Dolecki.
Unlike Puerto de Cartagena, PoABI experienced a 5.5% drop in total throughput at the end of 2023 due to geopolitical tensions and slower global economic growth. However, as Dolecki noted, 2024 is showing signs of improvement: “Thanks to the added value of the merger, 2024 has been more positive. In the year’s first half, our throughput rose by 3% to 143.2 million tons. The container segment stood out, with a 4.1% increase to 6.66 million TEUs and our market share climbing to 30.8%.”
In terms of infrastructure, the Port of Houston, where Latin America accounts for around 32% of the Houston Ship Channel’s business, has been developing Project 11, which, according to John Moseley, CCO of Port Houston, is “one of the largest waterway projects in the US, with more than a US$1 billion investment”.
The Houston Ship Channel, currently 530 feet wide, will be expanded to 700 feet by the end of 2024, allowing it to simultaneously accommodate both a Suezmax liquid tanker and a Neopanamax container vessel. While the scale of this investment and the ability to handle such vessels is undoubtedly impressive, what truly stands out is the attention it has garnered from Brazilian authorities: “Project 11 has attracted significant interest from international governments, like Brazil, keen to learn from Port Houston and apply similar best practices to its infrastructure projects.
“A significant challenge lies in understanding how the market and clients will adapt to the ongoing increases in maritime freight rates, which necessitate clients to absorb these costs into their production chains—a process that takes time, especially in the large-scale chemical industry.”
Fabiano Machion, General Manager, NewPort Tank Containers South America
Brazil urgently needs to enhance efficiency and streamline regulatory processes to support the development of rail and port infrastructure projects, overcome existing bottlenecks, and foster a more dynamic and efficient logistics network,” concluded Moseley.
Another company investing in infrastructure, though on a smaller scale, is Carboclor in Argentina. According to Eugenia de Fazio, general manager, and Nicolás Spinelli, president, the company has been putting much effort into distancing itself from its previous image as a producer to become a logistics service provider, leveraging its knowledge of petrochemical production: “We are repurposing a large portion of our old pre-industrial area assets, previously used for petrochemical production, into expanded logistical facilities. This involves dismantling old infrastructure and completing engineering work to improve storage capacity. Our goal is to build versatile storage tanks and develop infrastructure to support a broad range of logistical services, including barge and truck handling,” commented Spinelli, to which de Fazio added: “Our technical infrastructure is flexible, enabling adjustments to tank configurations, internal coatings, and safety measures to accommodate the specific needs of various products, including chemicals and fuels. We manage around 80 tanks of varying sizes, which helps us meet a broad spectrum of client needs. In addition, we have eight independent loading lines and a dedicated LPG installation with a direct dock connection.”
A worthy investment
The Panama Canal’s drought issues and Iranian-backed Houthi attacks on vessels in the Red Sea have prompted companies to reroute via the Cape of Good Hope. Fabiano Machion, general manager for South America at NewPort Tank Containers, explained that these factors, along with early purchases, have led to a shortage of ship space and increased competition for available slots: “Consequently, prices surged due to limited ship space, particularly affecting the iso tank sector and heavily impacting Brazil, which accounts for over 90% of South America’s volume in this segment,” he explianed.
HOYER, the world’s second-largest tank container operator, shares a similar perspective on Latin America. During an Regional director Paco Koudstaal said: “The region is mainly an import region for chemicals, which is where we at HOYER can serve our customers and their flows of goods, while simultaneously delivering exports from Latin America. The key is to look at the region from a broader perspective, —both the profitability of imports and the challenges of exports, as well as to which region should we position our tanks out of Latin America,” he added.
Iso-tanking up for tomorrow
Echoing Koudstaal and Machion, Silvia Ohara, general manager for South America at Bertschi Group, the fourth largest tank container operator, noted that, despite Latin America’s smaller size compared to markets like Asia, it is strategically important to invest due to the rising trend of nearshoring: “Global crises like Covid-19 and geopolitical conflict have shifted sourcing dynamics, making it critical to have consistent service levels across regions and shown the importance of reliable logistics partners who can swiftly adapt to changing needs. Flexibility has been particularly valuable in the isotanks market. When one region faces supply issues, another can step in to fill the gap,” she added.
According to GlobeNewsWire, the global isotank container market is projected to reach US$355.7 million by 2030, up from approximately US$243.6 million in 2023, with an annual growth rate exceeding 5.6%.
Bertschi views isotanks as an emerging opportunity, mainly as ship capacity decreases. This likely explains why the company has been adding 2,000 tanks annually over the past five years, as noted by Ohara: “They offer an alternative storage solution without bulk storage facilities, addressing multi-sourcing issues. The biodiesel sector is booming in Brazil and globally, and greenfield developments support it. As a significant producer, Brazil will import and consume substantial amounts of catalysts transported via isotanks, producing biodiesel and glycerin as by-products,” she asserted.
While Bertschi sees potential for isotanks in Brazil, Suttons identifies growth opportunities in Peru and Chile, particularly for exports. The company also observes early signs of improving demand in Mexico, as noted by Alessandra Torazan, managing director for Brazil: “Overall, Latin America presents substantial growth opportunities, and we view the region as a key area for expansion. Mexico has experienced significant challenges recently, particularly concerning Pemex and the resulting shortage of raw materials. This situation led to a notable decline in isotank usage despite major companies’ active market presence. With recent political changes and elections there is optimism that the new government’s plans might enable companies to resume exporting their products.”
After reading so much about isotanks, you might wonder what it is that drives the strong demand and positions them for future growth? According to Jean Felipe Albuquerque, Den Hartogh’s Latin America general manager, it is the sustainability component: “In the Americas, we face significant competition from other packaging types, such as drums, IBCs, and flexitanks. Despite potential shipping cost differences, isotanks provide superior environmental and safety benefits over flexitanks, typically disposed of after use, leading clients to increasingly prefer isotanks for their environmental advantages,” he explained.
“Many companies either outsource their demurrage management or manually handle it on spreadsheets, leading to a lack of detailed understanding within the company. When this data is structured, it can provide valuable insights and patterns that are crucial for planning and predicting future demurrage costs.”
Matthew Costello, CEO, Voyager
A(I)-strolabe: the modern starts
So far, we have covered key points: logistical disruptions, port infrastructure gaps, freight rates, limited ship space, and sustainability. Many of these issues are interconnected, which is why companies are investing in new digital tools to address future challenges. “A recent survey highlighted that 81% of our chemical customers view trade wars, political instability, and data gaps as top risks in their supply chains. Recent examples include the floods in southern Brazil and drought conditions affecting the Panama Canal. These challenges push companies to invest in advanced analytical and insight capabilities for improved risk management, and predictive analytics has become essential in navigating this turbulent environment,” commented Helio Coelho, PSA BDP’s director of global chemicals sales in Latin America.
The company introduced Risk Monitor, a digital tool providing proactive risk management insights for navigating supply chain disruptions and climatic events. Additionally, My Navigator leverages AI to enhance the customer experience. “My Navigator improves customer control with predictive ETAs, using AI to account for factors like port congestion and global disruptions, similar to how Waze updates travel times based on real-time conditions. This predictive capability aids in better planning and reduces inventory costs,” added Raquel Loanda, managing director of PSA BDP.
Matthew Costello, CEO of Voyager, noticed inefficiencies in maritime operations, especially with data sharing and analysis. He founded Voyager Portal, a software company designed to help commodity traders and manufacturers manage and predict voyage and demurrage costs to address these issues. The platform provides flexible solutions that can be purchased individually or as a bundle.
Costello, through Voyager, sees a solution for the freight market’s consolidation and rising costs: collaboration between companies on similar trade lanes with non-competing products, focusing on sharing space rather than competing for it: “Companies often miss opportunities to optimize their shipping operations by bundling cargoes or combining contracts with other companies. Voyager tool can suggest optimal bundling scenarios by consolidating shipments into fewer voyages,” he explained.
Header image courtesy of Carboclor