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Colombia Shipping Report Q1 2012
Business Monitor International, Nov 2011, Pages: 135
Business Monitor International's 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 outlook for the Colombian ports and shipping sector is promising, with a backdrop of strong economic growth providing support. There are also encouraging signs of badly needed investment in transport infrastructure, both in the country's ports and in the hinterland that feeds them, on the back of the country's developing mining sector. However, progress has been outpaced by economic growth, and bottlenecks may remain a problem for some time.
Colombia's economic expansion continues to power forward, in line with our forecast for real GDP growth to reach 4.5% in 2012. Private consumption, fuelled by credit expansion and historically low interest rates and fixed capital formation, especially in the energy and mining sectors, will continue to spearhead Colombia's long-term growth, underpinned by a strong performance in commodities exports, all of which bodes well for investment and volumes in the country's shipping sector.
Headline Industry Data:
- The Port of Cartagena will see total tonnage volume increase by 9% to 11mn tonnes in 2012.
- Container traffic at the port will rise by 12% to 1.19mn twenty-foot equivalent units (TEUs).
- Volume at the Pacific port of Buenaventura will be up by a more restrained 3.49% to 9.71mn tonnes, while container traffic will rise 12% to reach 813,029TEUs.
Key Industry Trends:
Badly Needed Investment Coming Barranquilla's Way
BMI sees upside risk to its forecasts for the Colombian port of Barranquilla, which is in line for significant investment in 2012. This is good news for the port, which serves Colombia's main industrial zone but is badly in need of modernisation. The port's operators have welcomed the news that its access channel is to be dredged. The works will be funded by a government investment of COP$25bn. BMI notes that dredging works have become increasingly urgent at Barranquilla, with three vessels having run aground at the port in 2011, resulting in its temporary closure. As well as deepening the access channel, the government aims to deepen the River Magdalena, which leads to the port.
Vertical Integration Trend Continues As Cerrejón Unveils US$1.3bn Investment Plan
The three companies behind Cerrejón (Anglo American, Xstrata and BHP Billiton), Colombia's biggest coal mining project, have approved a US$1.3bn expansion plan for the mine, including significant upgrades to its freight transport infrastructure. The announcement reflects BMI's long-held view that mining companies in emerging markets will invest increasingly in vertical integration of their supply chains as local funding of infrastructure proves inadequate.
Key Risks To Outlook:
The main risk to BMI's positive outlook for Colombia comes from a hard landing for China, which BMI expects to take up the shortfall as US imports of Colombian coal decrease. A severe slowdown in the country would kill Chinese demand for raw materials such as iron ore and coal, leaving Colombia to look elsewhere for an export market.
BMI believes Colombia is set to benefit from its FTA with the US. The country is already in desperate need for improved transport infrastructure to export its coal reserves, and since this FTA is likely to increase US imports it should bring with it some much needed investment into Colombia's port infrastructure.
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