Megaships and Megahubs: Latin American and Caribbean ports race to become the biggest. (Trade Lanes).

The first 10,000 twenty-foot equivalent unit (TEU) ship has not yet set sail, but the mere possibility of these enormous sea monsters has launched a debate about global megaports. At the Terminal Operations Conference in Lisbon, Belgian transport economist Gustaaf de Monie predicted only five ports will make the cut. Said De Monie: "Everyone wants to be a hub port."

In Latin America and the Caribbean, the coming super-ship simply reinforces the ongoing drive for size. Ports are bulking up volumes with transshipment, moving cargo to a port to be reloaded onto often-smaller ships. At the same time, deregulation, privatization and increasing port investment are boosting productivity.

A group of companies is beginning to develop regional strategies. The region's leading shipping lines Maersk Sealand and Hamburg Sud are taking a more active role beyond simply occupying berths. Hamburger Hafenund Lagerhaus, Hutchison Whampoa, International Container Terminal Services, and Stevedoring Services of America, along with domestic partners, are pushing port development throughout the region.

LATIN TRADE is tracking the latest developments at the region's largest container ports:

1 COLON, PANAMA

Even amidst slowing cargo shipments, Manzanillo International Terminal at Colon on the Atlantic side of the Panama Canal is still growing. Executives at terminal operator Stevedoring Services of America say the port is now ready to receive ships that carry 4,000 or more 20-foot containers. Negotiations are underway to add a second 200-meter railroad berth to facilitate increased container transshipment, which currently accounts for about three quarters of the port's activities. In part, Manzanillo is growing to match competition from Colon Container Terminal, where Taiwanese transport giant Evergreen is pumping in US$80 million, as well as from Cristobal, where Hong Kong-based shipping company Hutchison-Whampoa is plowing in cash. When all is said and done, Colon capacity at the three terminals will soon approach 3 million containers a year.

2 BUENOS AIRES, ARGENTINA

Terrorism, foot-and-mouth disease and economic recession--times could hardly get more difficult for Argentina's leading port. However, port investors show no signs of slowing down. U.K. transportation group Peninsular and Oriental Steam Navigation Company (P&O) appears determined to continue full speed ahead with $250 million in investments to boost capacity to 1.4 million containers. Its planned merger with Terminal 3 in Buenos Aires has met resistance in the local courts. The issue is market control and the upset players are backing the new container Terminal Zarate on the Parana River north of Buenos Aires. But P&O, as well as Hamburger Hafen-und Lagerhaus (an investor in nearby container port Exolgan), Manila-listed International Container Terminal Services (Terminal 5 in B.A.) and shipping giant Maersk Sealand (Terminal 4) have all recently committed more money to the Buenos Aires area. Indeed, 19 cranes with annual capacity of 80,000 containers each could soon be in operation. Most analysts predict that expansion and falling cargo volumes will breed more mergers.

3 SANTOS, BRAZIL

Brazilian President Fernando Henrique Cardoso is calling for his country to "export or die." The real's value is falling like a rock. And exports are surging. The results? Santos, the nation's largest port, appears poised to retake the Latin American cargo crown. Through the first eight months of the year, the port handled more than 700,000 TEUs and 32.26 million tons of cargo, up 15% and almost 17%, respectively, compared to the same period in 2000. Port authorities broke a bitter union strike earlier in the year to set the stage for reduced labor costs. According to the government-run Foreign Trade Board (Camex), container terminals' turnaround times for ships have been cut from two days to 10 hours. Still, Santos remains an expensive place to operate. Gang sizes for handling cargo remain fixed and authorities recently hiked duties 36%.

4 KINGSTON, JAMAICA

One of the fastest-growing ports in the Americas, Kingston is reaping the returns of transshipment growth in recent years. The 1998 negotiations with labor unions to reduce gang sizes from 21 to eight people and the introduction of flexi-week and flexi-start times have sparked major new investments. The recent $100 million expansion is expected to double the port's capacity. The government's plan to hire new management for the Kingston Container Terminal has been delayed, but port officials were confident that a team would be installed before the end of the year. Faced with rising competition from around the Caribbean, Kingston's challenges go beyond cargo and contracts. Drug trafficking is the port's most pressing problem, and the mysterious violent deaths of divers searching for drugs on ship hulls are stirring nasty speculation. Meanwhile, new customs rules are aggravating brokers.

5 FREEPORT, BAHAMAS

Would the United States ever agree to a Caribbean port receiving the bulk of its cargo with smaller ships redistributing goods to, say, New York? If so, Freeport, only 100 kilometers from Florida, would be the most logical port to service the U.S. east coast. The Grand Bahama Port Authority and Hutchison Port Holdings are already moving to expand capacity to 950,000 TEUs at this cargo port. The big business, of course, has been cargo transshipment, with six major shipping lines now providing the service in Freeport. Part of the Bahamian allure is cabotage restrictions in the United States that prevent foreign-flagged carriers from moving cargo between U.S. ports. Instead, shipping lines bring cargo to Freeport and redistribute from there. The port authority hopes the relaunching of its renamed Grand Bahama Shipyard will attract growing business in repairs and maintenance.

6 PURERTO LIMON-MOIN, COSTA RICA

The Costa Rican government is finally looking for port investors. Under a plan devised with the help of Hamburg Port Consulting, a subsidiary of German terminal operator Hamburger Hafen-und Lagerhaus, the government is putting up for bids $65 million in contracts to upgrade Caldera and Puntarenas, the country's two major Pacific Coast facilities. The government is seeking to award operation concessions for cargo and passenger terminals; it also is opening to bids the construction and operation of a dry bulk facility. In preparation, authorities have hammered out agreements with unions to cut about 1,000 jobs. Next up will be the Atlantic coast ports of Puerto Limon and Mom. Labor unions have still not signed on to the modernization program, and cargo is falling in tandem with banana shipments. Some experts speculate that reform may not reach Puerto Limon and Moin until 2003.

7 PUERTO CABELLO,VENEZUELA

Since heavy rains flooded Venezuela's traditional main port, La Guaira, Puerto Cabello has not looked back. The port recently lifted the 15,OO0-TEU transshipment business of Maersk Sealand from nearby Port of Spain, Trinidad. Maersk has also purchased 49% of container yard Conacentro. Earlier this year, CSX World Terminals, which is fighting with Dominican port authorities over land at Rio Haina, purchased half of Terminal Port Services from local transportation group H.L. Boulton & Co. The Venezuelan port authorities plan to take bids on the construction and operation of a container terminal to double the port's container capacity within the next three years. Officials canceled a similar project last year, reportedly because of a land dispute with local shipyard Dianca.

8 VERACRUZ, MEXICO

Cargo is piling up at the docks in Veracruz, Mexico's busiest port, thanks to the government's anti-corruption campaign. President Vicente Fox's team is pumping pesos into sophisticated monitoring equipment--including Latin America's first high-tech cargo X-ray machines. The government also gave lie detector tests to customs officials across the country. As a result, 41 of 48 regional administrators and nine of 10 in Mexico City were fired. With bribes no longer so easy, confiscated loot accumulates. In Veracruz in September alone, at least 75 containers sat idle, many of them hiding footwear, electronics and other goods from Asia. The cargo went from Asia to the United States then entered Mexico with bogus "U.S.-made" designations that allowed it to evade tariffs. Separately, Hutchinson Ports Holdings, a subsidiary of Hong Kong-based Hutchinson Whampoa, bought half of local construction company ICA's terminal.

9 RIO HAINA, DOMINICAN REPUBLIC

The port's dramatic growth in recent years seems headed for rocky waters. CSX World Terminals has bold plans to build and operate a huge container terminal at nearby Caucedo, but the former terminal operating arm of container line Sealand is now embroiled in a berth-and-crane battle with Rio Haina authorities. The lease for the terminal and equipment is set to expire in 2004, according to CSX officials; local port officials claim the contract ran out July 24, 2001. Not surprisingly the matter has gone to court. The port authority is also grappling with customs craziness over new reporting standards and ongoing productivity problems. If the port wants to continue challenging Kingston for cargo, the focus must be on attracting increased business.

10 SAN ANTONIO, CHILE

Private ports are popping up all over Chile, where the privatization of four of the government's 10 ports has generated $265 million in investment commitments for the next 20 years. At San Antonio, Stevedoring Services of America and Sudamericana Agencias Aereas y Maritimas, the port services arm of Chile's Compania Sudamericana de Vapores, paid $121 million to operate a container terminal. But the new operators complain that the nearby state-run terminal is undercutting them on price. In response to the alleged unfair competition, Stevedoring and Sudamericana are moving bulk cargo to make ends meet. Perhaps the biggest winner in the process is the local Claro group, which owns Sudamericana and has acquired rival shipping line Compania Chilena de Navegacion Interoceanica and its port services arm, Agunsa.

TOP 20 PORTS

(Twenty-foot equivalent units)

   PORT               COUNTRY                 1998       1999       2000


 1 Colon (1)          Panama             1,117,035  1,175,673  1,353,727
 2 Buenos Aires (2)   Argentina          1,139,730  1,076,102  1,126,712
 3 Santos             Brazil               799,478    774,959    987,708
 4 Kingston           Jamaica              671,070    709,442    894,779
 5 Freeport           Bahamas              470,000    549,993    572,224
 6 Puerto Limon-Moin  Costa Rica           454,584    590,259    571,957
 7 Puerto Cabello     Venezuela            486,774    496,315    550,807
 8 Veracruz           Mexico               427,415    484,523    534,010
 9 Rio Haina          Dominican Rep.             -    415,629    460,185
10 San Antonio        Chile                415,001    374,945    455,604
11 Manzanillo         Mexico               276,542    319,570    426,717
12 Guayaquil          Ecuador              407,434    380,470    414,088
13 Callao             Peru                 378,013    385,820    413,646
14 Cartagena          Colombia             316,530    356,590    378,188
15 Rio Grande         Brazil               224,577    261,929    317,718
16 Montevideo         Uruguay              265,892    250,227    287,298
17 Port of Spain      Trinidad & Tobago    231,213    278,660    282,487
18 Valparasio         Chile                255,687    278,142    256,386
19 La Guaira          Venezuela            302,333    237,782    237,782
20 Puerto Cortes      Honduras             369,235    273,336    184,839

   PORT               1999-2000
                       Growth

 1 Colon (1)             15%
 2 Buenos Aires (2)       5%
 3 Santos                27%
 4 Kingston              26%
 5 Freeport               4%
 6 Puerto Limon-Moin     -3%
 7 Puerto Cabello        11%
 8 Veracruz              10%
 9 Rio Haina             11%
10 San Antonio           22%
11 Manzanillo            34%
12 Guayaquil              9%
13 Callao                 7%
14 Cartagena              6%
15 Rio Grande            21%
16 Montevideo            15%
17 Port of Spain          1%
18 Valparasio            -8%
19 La Guaira              0%
20 Puerto Cortes        -32%

Notes: (1)Includes MIT, Evergreen, Panama Port

(2)Includes Exolgan

Estimates: Colon, Santos, Rio Grande and La Guaira

SOURCE: Eclac