Box Populi.

Buenos Aires port steals the cargo and the No. 1 spot from Brazil's Santos.

BUENOS AIRES' PORT HAS BEEN HELD UP BY SHIPPERS AS A shining example of how to turn a sloppily run public property into an efficient private enterprise. In the first three years after privatization, cranes worked when needed, workers spent more time on the docks than the picket lines and cargo moved on time.

But too little cargo moved. The Argentine port was not deep enough for bigger ships. And with the cargo boom through the middle 1990s, many shipping lines found it easier to call in Brazil, especially at the port of Santos, before sailing south to Argentina.

Things have changed, however. The shipping-by-sea biz follows one iron law: ships can move, ports can't. And ships follow the trade. As South American trade with the United States began to slow in the late '90s, South American trade gained ground elsewhere, including in Asian autos and auto parts. That trade steered ships to Argentina instead of Brazil since many regional automakers are located in Argentina or in southern Brazil close to the Buenos Aires port.

"This has been happening for the past two or three years," says J. Russell Bruner, the head of regional operations in Brazil for Maersk Sealand, one of the biggest shipping lines in the Latin American trade lane. The 1999 Brazilian currency devaluation, too, started to push more traffic to the Argentine port. And government policy played a role, as well. A government initiative that helped consumers buy new cars by giving them money for their aging vehicles led to increased new car imports.

Result: Buenos Aires is now tops in boxed cargo among Latin American ports, according to the American Association of Port Authorities.

There are a number of reasons why it's easier to ship the cars and parts to Argentina than Brazil. As the auto and parts trade picked up, shipping lines started to use bigger vessels--including some too large for the Panama Canal--and they began to slip around South America's Cape Horn because it's quicker and cheaper, says Manny Fernandez, who runs Latin American operations for APL shipping line.

New private terminal operators added another incentive--a deeper draft to allow bigger ships to dock. "The port there is fully modernized," Fernandez says.

African routes. Fernandez adds that shipping lines can integrate the east coast South American service more easily with their African services across the Atlantic. The lines can either run the service as a continual round-the-world trip or transship the cargo for a regular trans-Atlantic service.

"This way, you can serve two markets--South Africa as well as Latin America," Fernandez says.

Buenos Aires may have boosted its cachet, but port officials need to remember that ships could just as easily switch back to Santos or another port if trade trends shift. Many automakers, for example, are leaving Argentina for Brazil because manufacturing is now cheaper there, following a devaluation.

"From an operational standpoint, Santos now has what it takes to be a first-class port," Fernandez says. Or another port could make a bid: Paranagua, for example, lies farther south than Santos on the Brazilian coast and has started to attract more cargo because its customs officials are seen as faster and more flexible. Paranagua ranked 23rd last year in the amount of boxed cargo it handled, but forwarders report that an increasing number of shippers are favoring it over Santos.

Another growing choice for shippers is Montevideo, Uruguay which offers a free trade zone and has become a major port of entry for Brazilian-bound cargo, even for goods as far north as Sao Paulo, a two-day truck ride away. Indeed, if it were not for local politics, it might well have been Montevideo instead of Buenos Aires to unseat Santos. The Uruguayan port has a deeper draft and easier access to the sea.

About three years ago, Montevideo tried to turn its piers over to private owners. It put the dock out for bid and the clear winner was Maersk (which later changed its name when it bought then SeaLand). The Danish shipping line and port operator had its team and equipment ready to roll in Uruguay but local companies lobbied the courts and politicians to overturn the bid decisions.

The port was put on the auction block again--and Maersk won again. Locals fought once more against the move, and Maersk did what shipping lines do when the seas get too rough. It weighed anchor and left Montevideo to its own resources.

The port has failed to attract real international investment. But it is starting to see spillover cargo from Buenos Aires' success and the free trade zone continues to attract shippers, who pay far less to move cargo through the port than they do in Santos or Buenos Aires.

Maybe next year there'll be tears in Argentina as Uruguay's Montevideo takes the crown.