Ship shape: five years offer privatization, Chile's ports are ready to take on the world.

Chile's ports have become much more efficient in the wake of government reforms in 2000 that opened up the sector to private investment. It seems everyone is happy; the government certainly is. It takes in more tax revenues from heavier traffic at the country's ports. Private companies are happy, too. Those that operate the ports via concession have seen profits rise year after year, as have exporters, who are happy to see an end to the bottlenecks that once hampered shipping out of the country.

Contrary to what one might think, portside development has not required heavy investments in infrastructure from private operators. Most of the improvements have gone towards upgrading technology and improving operational efficiency. Under the new laws that opened the sector up to private investment, the government spun off the country's 10 largest ports and opened one or more of their terminals at each to private management companies.

"We have become much more efficient, reaching levels better than those in the United States and Europe, and we are getting to the point that we are among the best in the world, including Asia," says Alvaro Espinosa, general manager at the San Antonio Port Authority, 100 kilometers southwest of Santiago. Espinosa has numbers to back up his claim: Terminal Molo Sur is one of San Antonio's dock facilities; private maritime company STI runs it. The port moved an average of 43 containers per hour last year, beating the U.S. and European average.

The Port of San Antonio says the volume of goods coming in and out is growing, too. In 2004, it moved 10.8 million tons, up from 9.16 million in 2000. San Antonio's biggest competitor is not in Chile but the Port of Callao, in Peru, which is a heavyweight among Pacific ports in South America. "In 2002, they outdid us and in 2003, they moved more and they beat us again in 2004," says Espinosa. The Chilean port, however, says it has more room to grow. In the first half of 2005, general cargo traffic grew 16% compared with the same period a year earlier, while container traffic grew 25%. By the end of the current fiscal year, San Antonio expects to move 12 million tons of goods through its facilities.

The Port of San Antonio earned US$8.7 million in 2004, a 122% increase from 2003. Bustling port activities have meant more revenues for the government. Shipping taxes grew to $42 million in 2004 from $23 million a year earlier. STI reported profits of $4.9 million in 2004 compared with $3.1 million a year earlier.

Upgrades at San Antonio's facilities have improved service to the point that global shipping companies are beginning to call. That, Espinosa says, is good for Chilean exporters, as more ships coming to the port with greater frequency makes it easier to get goods out of the country. Juan Carlos Sepulveda, general manager of Fedefruta, a trade association of 1,500 fruit exporters, couldn't agree more.

"If we had never developed port infrastructure in line with growth of the fruit sector, considering that the bulk of our shipments are maritime, we would not have been able to meet our export potential," he says. There are 22,000 hectares producing fruit across the country, and most of the country's harvest is bound for foreign markets. Shipments by land to markets such as Argentina as well as those by air account for 20% of the total fruit headed abroad, according to Sepulveda. "But the rest-more than 180 million boxes a year--all goes out on maritime fleets," he says.

For Sepulveda, better ports have helped his industry in other ways as well. Last year, fruit producers rejoiced when exports reached a record 200 million boxes. Yet growth in the fruit industry is not new. In 1991, Chile's fresh-fruit exports hit $992 million. "This year, we hope to report more than $2 billion," says Sepulveda.

The Port of Valparaiso is the country's largest fruit exporter, claiming a 62% market share. Located 120 kilometers west of Santiago and 113 kilometers north of San Antonio, Valparaiso is busy, although less so than San Antonio, now the busiest in Chile. Gabriel Adoney, president of the Port of Valparaiso, is not worried. He says the more the competition, the better off his port will be. "From my point of view, we have more than met our objectives," says Aldoney. Valparaiso's average waiting period to berth is 30 minutes and the port can handle 23,000 TEUs [twenty-foot equivalent units, an industry metric] per hectare in transfers. "In the meantime, overseas that average fluctuates between 15,000 and 18,000 TEUs," he says. As for costs, Valparaiso operates in line with the rest of the country's ports. "[Tariffs] come to around $90 per container. If we compare that with cargoes that are getting hit with $300 tariffs in the United States, this figure is quite low," he says.

Terminal operators at San Antonio and at Valparaiso are investing to increase their capacity and handle more cargo. STI will invest $100 million by 2020 to build a new dock and related infrastructure. Valparaiso has set aside $200 million on a new logistics and concessionaire support zone designed to increase cargo to 40 million tons over 40 years. There appears to be demand. Economists forecast that port activity in Chile will grow above 5% a year as long as gross domestic product rates grow as expected.

Expansion. Like the economy, private port operators are growing too. Saam, the country's largest private port concessionaire and part of the powerful Grupo Claro maritime dynasty, which also owns Compania Sudamericana de Vapores, is one of the world's 15-largest shipping companies. Saam manages terminals in the Chilean coastal cities of Arica, Iquique, San Antonio and San Vicente.

Chile isn't the only place you'll find this company, which declined to comment for this story. In July 2005, the company won a concession to operate in Port Everglades in Fort Lauderdale, Florida. Initial investments there by the concessionaire should exceed $5 million. The deal marks Saam's strategy of expanding from its traditional base in Chile, Peru and Ecuador.

EDUARDO CORONADO * SANTIAGO