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Revamping underway as Colombia privatizes its ports.

The Colombian government has a problem: What is it to do with an over-manned, inefficient and corrupt state port system?

Answer: Abolish it and start again. The solution, draconian though it may seem, has been adopted in the teeth of union opposition by the Thatcherite Cesar Gaviria administration which has launched an ambitious plan to modernize Colombia's antiquated transport infrastructure.

The modernization plan is being implemented within the framework of the government program to liberalize the economy generally and to throw it open to foreign competition. As a direct consequence of the program, Colombian imports soared 47% last year, and they are expected to continue rising in 1993.

But the rapid growth in imports has placed a heavy strain on the country's harbors--and so much so that the country's largest port, Buenaventura on the Pacific coast, was all but paralyzed for a time by the influx of cargo last year. Warehouses were inundated with merchandise and, in the absence of sufficient handling equipment, long delays resulted.

Emergency steps were adopted to clear the cargo backlog, and the port has now returned to normality. Similar problems, though of a lesser magnitude, were experienced in some other ports. But the youthful technocrats who advise President Gaviria are unrepentant. The Colombian economy, they stress, has for years been the beneficiary of state protectionism. Customs tariffs were kept high to safeguard local industry, while the ports and railways were government preserves, run by bloated bureaucracies which amassed evermounting losses.

Radical surgery, decided Gaviria's technocrats, was the only cure. Import tariffs were slashed to force local industry to shape up in the face of foreign competition and, in a parallel process, the role of the state was dramatically reduced.

The woefully inefficient state rail system, which barely functioned has been dismantled, and it is being replaced by mixed-capital corporations that will run on strictly commercial lines. Basically the government will remain responsible for essentials such as track maintenance while the private sector will administer the railroad's commercial operations.

Similar developments are now being pushed through in the equally inefficient port sector, a rigidly centralized state corporation that allowed the longshoremen's unions to exercise a stranglehold in the docking sphere. Ports, formerly mismanaged by Colpuertos, were overmanned, worked short hours, lacked equipment and cargo space, and were as expensive as they were low on productivity

As a result, shipping conferences slapped punitive surcharges on Colombian ports for their long cargo-handling delays The competitive standing of Colombian exports was threatened.

So the decision was taken: Colpuertos had to go. Like the railways before it, the entity's now being replaced by mixed capital, regional administrations which already are proving their worth. Thousands of redundant Colpuertos workers have been laid off, though many of them have secured new employment with private port agencies.

Port privatization has advanced most at Santa Marta, on the Caribbean coast. There, cargo-handling times have been cut from days to hours under private management. Theft from warehouses has been reduced, and adequate wharf equipment is now available.

In addition, some cargo-handling charges have been cut. There has been similar progress in other ports, though the modernization program has still some way to go, particularly in Buenaventura.

One problem has been technical. The government has had to enact special legislation to enable it to dismantle Colpuertos and lay off surplus workers. Further legislation has been required to pave the way for the new commercial entities that are substituting Colpuertos. All this has taken time.

Nevertheless, the results are beginning to show. The volume of cargo handled by Colombian ports rose nearly 37% in January-October, 1992. The biggest increase was registered at Barranquilla where imports soared 127% and exports 54%.

Colombia's largest shipping line, Flota Mercante Grancolombiana, has benefited from the trade liberalization program. Its cargo tonnage last year increased some 15%. Also, significantly nearly three-quarters of the freight transported on its vessels was shipped in containers, compared to only 50% the previous year--testimony to the continuing strides Colombia is making in containerization.

For importers of Colombian Milds, the port modernization program should reduce shipping delays-and not merely because of increased efficiency on the wharves. A regular new rail service, linking Buenaventura with plantation zones, is expected to be inaugurated shortly. This should ensure prompt coffee deliveries while at the same time diminishing road congestion in the port zone-- one of the principal causes of shipping delays in the past.

The government has supplemented its port modernization program by streamlining foreign trading formalities. Red tape is being cut and the role of the once notoriously corrupt Customs Service is being trimmed to the minimum.

As for the future, development is now under way at Buenaventura to augment the port's container storage capacity from 2,000 units to 6,000. Long-term, the government is studying the possibility of seeking World Bank backing for a $37-million modernization project to amplify wharfage facilities and to improve navigational access to the port.

Even longer-term, western Colombian investors, in conjunction with local authorities, are considering plans to build a new $214-million port, across the bay from the present facilities at Buenaventura. It would have more than 20 quays.

More immediately, the aim of the ongoing port development program is to prepare the ground for a concerted export offensive by Colombia which, perhaps oversanguinely, hopes to emulate exporting giants such as Taiwan and South Korea.

Whether the Colombians will fulfill their export aspirations remains to be seen, but by revamping their creaking ports, they have at least taken the first step down the road.
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Author:Nares, Peter
Publication:Tea & Coffee Trade Journal
Date:Mar 1, 1993
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