Increased foreign trade spurs port improvements

Having recovered admirably from a financial crisis in the early years of the new millennium, Uruguay is today an economy experiencing sustained growth, with economic policies that favor business and foreign investment.

Uruguay’s Minister of Transport, Victor Rossi, says that the country is ripe for investment and believes the region will play a key role in the global economy in the future: “Uruguay is an easy, predictable, transparent country, where it is easy to arrive, establish links, set up businesses and, above all, it is safe when it comes to the consequences of the activities undertaken”.

“Investors can see our experience and they will serve as an example,” he adds. “They will know from the beginning what the rules are and know they have the guarantee that those are the only rules that will be applied. Of course it will depend on their capacity, their work and their luck perhaps, but there will be no unintended interference that may affect their investment.”

Much of the country’s economic growth can be attributed to port activity, and in one place in particular. Set in the northern part of the Old City of Montevideo, the port is one of the major seaports of South America.

The Port of Montevideo has been the driving force behind the history and development of the country thanks to its rapid growth that has remained consistent at an average annual rate of 14%. This success is in part down to its geographical position and its access to the Atlantic Ocean and also down to an increase in foreign trade in the area.

Alberto Díaz Acosta, President of Uruguay’s National Port Authority, says the port plays an important role in the country’s economy: “The port stands out because of the support of institutions working in the country. There is a common strategy between the Ministry of Economy, the Ministry of Livestock, Transport, and the ANP and Customs.

“The infrastructure that we have is not bad. The returns that are in operation in some cases are even the best in the South Atlantic. There are operations that are done very quickly, very efficiently and there is adequate infrastructure for that dynamic.”

Movements of goods have been growing dramatically since 2004, with 50% of the activities being exports to Argentina and Paraguay, as well as Argentinean, Brazilian, and Paraguayan imports.

One of the leading organizations in the maritime and port business in the region is the Christophersen Group, a company with 14 subsidiaries and an annual turnover of $180 million.

The group first had a presence in Uruguay 118 years ago, before work on the Montevideo port began. The company activity has grown and developed into all Uruguayan ports and operating areas of territorial sea.

Driven by economic growth and by higher freight, Uruguay is moving towards a substantial improvement in terms of ports. There is a push for increasing the operational capacity of the port at Montevideo and plans to add new services in Nueva Palmira. The Christophersen Group is currently working on three projects in La Paloma, Montevideo, and another in Nueva Palmira.

Guillermo Jacob, CEO of the Christophersen Group, says the port continues to be as important today as it has ever been: “The Port of Montevideo has been the core of the development of Uruguay since its foundation, and to some extent remains a cornerstone in the country’s economic activity.”

Through direct government investment and private investment, the upgrading of the Port of Montevideo has continued. The government is now promoting two other projects that are vital for the growth of the area. “One is the Fishing Terminal in Capurro area,” Mr. Jacob explains. “The purpose of this project is to better logistics capacities to all fishing operations of the South Atlantic.

“The other project is the Punta Sayago where the Ministry of Transport and Public Works has assigned 96 hectares for the development of other projects. Simultaneously there is the regasification plant, Gas Sayago, which is under construction.”

These projects will in turn boost Montevideo port by increasing operations at the port and create jobs in several areas that are connected with these projects. Work has also begun on utilizing Puerto de la Paloma to the east of Montevideo. “The port was underutilized,” says Mr. Jacob, “and from the investment effort we have made with state support, we have managed to recover berthing docks so that vessels could operate.”

Another company that has heavily invested is Belgian firm Katoen Natie. The company was initially involved in the cotton industry but it then diversified into jute, coffee, steel, iron, fruit, and tomatoes. It was during the 1980s when Katoen Natie bought SeaPort Terminals, a company specializing in containers and general cargo. This was just the beginning. 15 other stevedoring companies were purchased and integrated in the mother company SeaPort Terminals.

This led to their first investment in Latin America. In 1996 the group began operations in Uruguay, acquiring part of the shares of Zonamerica, a business park operating under the free trade zone regime, and later becoming part owner of Costa Oriental, a logistics services company.

Fast-forward to 2001 and Katoen Natie participated in a public auction and acquired 80% of the shares of Terminal Cuenca del Plata, the company that operates and manages the specialized container terminal of the Port of Montevideo.

From their early days, the company has gradually become a part of the local economic landscape. As Karl Hust, General Manager at the Katoen Natie Terminal Cuenca del Plata, explains, “We have been here for a little over 20 years. Gradually we are becoming more ‘Uruguayan’.

“About 20 years ago, Uruguay was a black hole in logistics in the region. A dirty harbor where you knew when the boat went in, but not when it left (if it ever did). There was a great visionary generation of politicians who wondered how they could turn the table and relaunch Uruguay as a logistics country.”

Katoen Natie’s evolution has helped transform Montevideo into the gateway to the south. The group has invested over $200 million that in turn has created the necessary infrastructure to make Uruguay and its main port the most competitive option for regional cargo and transshipments. The company’s investment in Terminal Cuenca del Plata in particular has helped it become the main specialized terminal of refrigerated cargo in the region.

Mr. Hust says the hope is that the Uruguayan government remains on course with further development. The plan was to create a port to rival Buenos Aires and Rio Grande and be the predominant terminal for handling transshipments of goods by sea, but recently the government has become hesitant about the project.

“Terminal Cuenca del Plata’s goal is clear,” Mr. Hust explains. “Our responsibility was to develop and position Uruguay as a regional hub. Commercially we have done so, we have behaved as a state sales team in that regard, and at an investment level too. From now on, we are at a turning point where the state has to make a decision.”

Having already undergone unprecedented development that has helped transform Montevideo into the gateway to the south and create a promising economic future, Mr. Hust believes Uruguay can be a world player thanks to their partnership with the government. He says, “We firmly believe that Uruguay, through their experience of partnership with Katoen Natie, can show the world an ambitious and successful public-private partnership. It is, undoubtedly, the best way to introduce Uruguay to investors worldwide.”