This article was published in the November 2010 issue of World Port Development. To receive a pdf of the article in its original format including charts and pictures please send an email to archive@worldportdevelopment.com
Uruguay’s Ports in 2010
Uruguay’s economic development began around its main port – the Port of Montevideo. Over half of the country’s population lives in the Montevideo metropolitan area, and the region still relies heavily on the port for its economic health. Gordon Feller explains…
The port of Montevideo is well positioned on the Rio de la Plata and is the deepest natural harbour of the River Plate area. It receives sea carriers from around the world and handles most of Uruguay’s foreign trade.  Since its construction, the port has played a key role in the development of the country and the region due to its strategic location, its competitive advantages in terms of natural characteristics and infrastructure, and its services and investment opportunities. The port has become a catalyst for integration in the region due to its immersion in the area of influence of almost 200 million inhabitants with the highest per capita income of Latin America.  The port has also become an important trans-shipment site for merchandise bound for neighbouring countries. Over 50% of containerised merchandise has a regional destination.  The operations of the Port of Montevideo have been in the hands of the private sector since 1992, when law No. 16,246 ended state control. The law promoted a remarkable transformation in the port’s activity; commercial competition propelled growth in activity, improvement of services, and an increase in new traffic. It also created opportunities for service providers working with goods bound for other places in the region. Infrastructure improvement has accompanied this new momentum. Docks have been reinforced, obsolete warehouses have been demolished, new container terminals have been created, and high-resistance pavement and circulation routes have been refurbished. Power, water, sanitation, security and communications installations and equipment have all been updated and modernised.  The “Free Port” system, created under the same law, allows for the free circulation of goods within the port premises exempt of all import-related duties and tariffs. Activities which do not alter the nature of merchandise but increase value added (such as consolidation, classification, and re-labeling) are also permitted within this system.
River Transportation System
The governments of Uruguay, Argentina, Brazil, Paraguay, and Bolivia are jointly working together on what has become the largest Latin-American “regional integration” project – the joint use of the 2,500-mile long Parana-Paraguay-Uruguay rivers for the transportation of goods from the five countries to the Atlantic Ocean. The ongoing project calls for investments on the order of USD935 million including civil construction (around USD120 million), dredging and maintenance (USD150 million), ports (including cargo handling equipment – USD115 million), and fleet (USD 550 million). Further opportunities for foreign involvement lie in the development of the administration of the waterways. Major international investments in Uruguay’s forestry sector have also created the need for new and modern ports along the Uruguay River (Fray Bentos and Nueva Palmira) and on the Atlantic Ocean (La Paloma). Nueva Palmira is the terminal port of the 2,200 mile-long Paraná-Paraguay river transportation system flowing through Uruguay, Argentina, Paraguay, Bolivia, and Brazil. The development of smaller commercial ports along the Uruguay River should provide significant opportunities for foreign suppliers. As Uruguay positions itself as a major logistics hub for the region, service providers may find an attractive niche in this sector.
Port of Nueva Palmira
Located 170 miles west from Montevideo on the left bank of the Uruguay River close to the limits with the River Plate and facing the mouth of the Paraná Bravo, it is the second largest port in Uruguay. It is at the origin of the navigation waterway knows as the Paraná-Paraguay waterway that reaches up to Puerto Cáceres in Brazil. It is the main port of the waterway system, which provides great possibilities for the efficient development of cargo transfer operations, from river boats to ocean-bound vessels. The port is currently used mainly for the shipment of lumber and citrus fruits (82% of Uruguayan citrus exports leave through Nueva Palmira as well as 88% of the soybeans). US-based Navios Corporation and Archer Daniels Midland operate grain terminals at the port. In 2008, Nueva Palmira handled a total of 3.9 million tonnes of cargo and has a depth of 32 feet. Part of the port is located within a bonded warehouse system and has a 5,500-pallet capacity refrigerated warehouse owned by a joint venture between Uruguayan, Danish and Swedish investors.
Port of Montevideo
The Government of Uruguay recently announced plans to call for the construction and operation of a second container terminal at the Port of Montevideo. Port users and operators almost unanimously agree that the ports are in urgent need of further infrastructure improvements and most importantly, increased capacity. The Government of Uruguay recognises the need to continuously renovate and modernise its port equipment. Both the Port of Montevideo and the Port of Nueva Palmira receive regular attention due to their importance in international trade, not only for Uruguay, but as trans-shipment ports for merchandise coming from Bolivia, Paraguay, and Brazil. Transit and trans-shipments account for a little over 50% of cargo movement. As a result of the global economic downturn cargo movement during the first six months of 2009 decreased 12% over 2008 figures. Signs indicate that a recovery is underway starting at the end of 2009 though annual growth is expected to remain at zero. Growth in 2006 (14%), 2007 (15%), and 2008 (13%) far outpaced growth projections made in 2005 of 5%. Trans-shipment of goods has not been affected and continues to increase each year. According to major port operators, the current lack of space and adequate infrastructure are the primary obstacles to increased trans-shipment growth.  Within the Port of Montevideo there are two major container terminal operators, Montecon with a 33% market share (mostly import/export), and Terminal Cuenca del Plata with the remaining 67% market share (mostly trans-shipments). Terminal Cuenca del Plata (TCP), who won a thirty-year BOT concession at an auction in 2001, operates eight Super Post Panamax Portico Cranes, one mobile harbour crane, 15 straddle carriers (Montevideo is the only Port in Latin America to use straddle carriers), and 10 reach stackers. Both TCP and Montecon have announced substantial  investment in infrastructure upgrades and renewal. TCP recently installed four Chinese super post- panamax cranes (from ZPMC) while Montecon announced investments of over USD10 million in 2010 for the purchase of six container handling forklift trucks (five for loaded containers and one for empty containers), and a 24% increase in electrical power for reefer hook-up.  Major purchasers of port equipment are the National Port Administration (ANP), TCP and Montecon. The ANP typically utilises a bidding process while TCP, given its ample experience in administering worldwide terminals generally relies on well-known suppliers. There is no local manufacture of port equipment and supplies.
The National Ports Administration (Administración Nacional de Puertos – ANP) is a decentralised entity of the Executive Branch responsible for the administration, conservation, and development of the Port of Montevideo, Colonia, Fray Bentos, Nueva Palmira, and Juan Lacaze. It also advises the Executive Branch on port matters. As of 1992, private operators are permitted to offer services to cargo and passenger vessels under a free competition system. Commercial competition propelled growth in activity, improvement of servi
ces, and an increase in traffic.
The main projects currently under consideration or implemented are:
New container terminal
A proposal is currently in Parliament that calls for the construction and operation of a new 80-acre container terminal to be built in the middle of the Bay of Montevideo. The thirty-year BOT concession will likely be auctioned in the second half of 2010 among interested operators. There will be no government participation in the project. The terminal is expected to be fully operational by 2015 and the investment to estimated to be USD270 million.
Dock C
Construction of a new dock – estimated 1,100ft long and 147ft wide. Estimated cost is USD62 million and IADB financing has been secured. Construction is expected to begin in the near future.
Dock D
This project offers a 30-year BOT initiative principally for the use of industrialised forestry products such as sawn wood, planks and cellulose. The project will be a deep-water extension of Dock C and is expected to cost around USD24 million.
Forestry Terminal
The proposed project suggests a full private-sector initiative to reclaim land from the sea. The terminal which will be created will be used exclusively for forestry products such as logs and chips. Expected investment is USD50 million.
North Port Access
The North Port Access will see a land fill of 25 hectares gained from the bay to serve as a truck parking area and offering cargo related services. When the project is completed the fence around the port perimeter has to be relocated. Estimated cost of the project is USD10 million.
Capurro Fishing Terminal
This project calls for the construction and operation of a new fishing terminal in two stages. The first to handle the local fishing fleet and the second, of deeper draught, to handle the international South Atlantic fishing fleet based in Montevideo. Estimated investment for the first segment is USD3 million and USD37 million for the second. Sea-bed exploration is currently underway but land still needs to be expropriated so commencement of works remains uncertain.
Puntas de Sayago
This project consists of modernising existing, and adding new infrastructure to the premises formerly used by a major slaughterhouse across from the Port of Montevideo on the other side of the bay. The project had formerly been adjudicated to a foreign consortium that lost all rights for failing to carry it out during the stipulated timeframe. The area has approximately 250 acres and will include free port areas and a free zone. The Port at Puntas de Sayago will be considered a natural extension of the Port of Montevideo.
Railway Interconnection
The proposed project will utilise the former railway parking spaces for the storage of containers in an area of 10 acres. Furthermore, intermodal activities are expected to take place in this area.
Dredging Projects
Port access channels and the Montevideo Bay itself are often dredged to allow for the easy passage of ultramodern container ships. Formerly dominated by Dutch and Belgian companies, the ANP has lately contracted Chinese companies mainly due to costs.
La Paloma Port
At the beginning of 2009, Spain’s BENEL/Iberinsa began feasibility studies for the construction of a deep-water port at La Paloma on the Atlantic Ocean. The Port will require a USD1.2 billion investment and be fully operational by 2020. Portugal’s giant paper conglomerate Portucel has been indicated a possible partner in the project, as well as Rio Tinto Mining Company to use the port to ship iron-ores from Bolivia and Brazil. The project includes the port, a re-gasification plant, and the construction of a gas pipeline and railway from La Paloma to Montevideo. Other interested parties are a Chilean group to introduce Nigerian coal, and the Spanish South Atlantic Fishing Fleet. Expansion projects include deepening the draught to 72 feet.
Cruise facilities
In October 2008, Royal Caribbean International expressed an interest in constructing a 12-acre yacht and cruise port (in addition to other facilities including a hotel, shopping mall, etc.) Major cruise ships call on Uruguayan ports on average a 180 times each year from December through March creating major congestion problems in the main port. This problem is expected to worsen as the number of ships increases each year.