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Colombia Shipping Report Q2 2011
Business Monitor International, Feb 2011, Pages: 100
The Colombia Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's shipping industry.
The publisher maintains a positive outlook for the Colombian port sector in 2011, against a background of good economic growth and rising consumer demand. Also feeding into our positive outlook is our belief that the country's coal mines and onshore oil fields, some the most attractive in the region, will encourage further investment in the port sector. We are forecasting Colombian real GDP growth to come in at 4.7% in 2011, and 4.9% in 2012. We believe Colombia will be one of the few Latin American economies to experience accelerating real GDP growth over the next few years, which will see its pace of expansion overtake Brazil, Chile and Argentina in 2011.
Headline Data:
- Total tonnage at the port of Cartagena up 6.87% to 9.9mn tonnes after growth of 10.57% in 2010.
- Total tonnage at the port of Buenaventura up 3.97% to 9.3mn tonnes after a contraction of 17.15% in 2010.
- Container throughput at the port of Cartagena up 7.34% to 1,045,559 20-foot equivalent units (TEUs) after 11.14% growth in 2010.
- Container throughput at the port of Buenaventura up 9.9% to 728,416TEUs after 2.39% growth in 2010.
Key Industry Trends:
Colombian Floods Devastate Exports And Shatter Transport Infrastructure - BMI believes that the flooding in Colombia during Q111 will prove disastrous for the country's already beleaguered shipping sector as well as its transport infrastructure, setting the country back considerably in terms of investment. The floods, the worst natural disaster to have hit Colombia in recorded history, are estimated to have claimed 312 lives and cost the country US$5.2bn. BMI notes they have also caused widespread and continued disruption to Colombian exports of bananas, coffee and coal.
Heavy rains interrupted the banana harvest and suspended shipments. In the Magdalena region, 3,000 hectares of banana plantations were under water, while in the region of Uraba 10,000 hectares of crops were destroyed, with the result that Colombia, the world's fourth largest banana exporter, lost business to neighbouring Ecuador. According to Richard Salazar, director of the banana unit of the Colombian Agricultural Ministry, during the rains boxes sold for between US$13.40 and US$16.40, considerably more than the usual price of US$5.40.
Investment Needed To Handle Increasing Coal Output - BMI believes that the Colombian shipping and freight transport sector badly needs investment to expand and modernise so that the country can take advantage of an expected increase in coal output. According to the Colombian Society of Engineers, over the past 40 years investment in transport infrastructure in the country has amounted to less than 0.6% of annual GDP. BMI asserts that if this limited investment in infrastructure is not rectified it will weaken Colombia's competitiveness and restrict the expansion of the country's mining sector.
Colombian Energy Minister Carlos Rodado said on November 9 2010 that the nation would need US$6.8bn in private investment over the next 10 years to hit its 2020 coal production goal of 160mn tonnes, double its current output. Colombia's largest coal exporter, Cerrejon, is trying to expand production some 25% to 40mn tonnes annually by 2014, while its second largest producer, Drummond, plans to expand its El Descanso mine and port infrastructure. The local unit of Birmingham, Alabamabased Drummond Co, is among the miners planning to boost investment in the country, Rosado told journalists at a coal conference in the Colombian capital. Coal production is dominated by big thermal producers with their own port and rail facilities such as Glencore, Drummond and Cerrejon.
Colombia Channels Investment To Magdalena River To Cater For Growing Coal Output - BMI believes Colombia's plan to finance improvements to the Magdalena River through a public-private partnership is good news for the country's shipping and freight transport sector, which has traditionally suffered from a lack of investment. The Colombian government, through Magdalena River regulator Cormagdalena, will invest COP42bn (US$22.6mn) in a project to improve navigability along the river, said Claudia Martinez, an engineer at Cormagdalena's sustainable development and navigability department. Authorities are evaluating the possibility of allowing private-sector participation in maintenance and upgrades to improve the waterway.
Risks To Outlook:
The main downside risk to our forecasts is provided by the flood damage endured by Colombia during heavy rains in Q111. If the country cannot repair its highways and inland waterways, which suffered considerable damage during the rains, quickly enough, there is downside risk to our port forecasts, as exports such as coffee, coal and banana will have difficulty reaching the country's ports.
On the upside, the main risk is the presented by the country's growing mining sector. Colombian Energy Minister Carlos Rodado has said that the country aims to produce 160mn tonnes annually by 2020, double its current output. Colombia's largest coal exporter, Cerrejon, is trying to expand production some 25% to 40mn tonnes annually by 2014, while its second largest producer, Drummond, plans to expand its El Descanso mine and port infrastructure. Growing coal exports will result in an increase in but throughput and investment in the Colombian port sector.
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