A company in Guatemala that exports food chose to send its products through the port of El Salvador, through the Pacific Ocean, rather than using the usual route in the country. Daniel Chajón, commercial manager of said company, calculates that it is 30% cheaper to export this way, since “Guatemala’s freight is the highest in Central America” and, therefore, it is not profitable. The route they take from El Salvador it is towards Puerto Barriosin Guatemala, to continue towards the port of Cuba and then to the Dominican Republic.
The lag that the ports have in the country already affects the connectivity of the routes, and joins long-standing challenges such as efficiency and loading capacity. “Although the country has opted for a model oriented toward foreign trade, when one analyzes Quetzal, Santo Tomás de Castilla or Puerto Barrios, They are very far from the efficiency shown by ports such as Lázaro Cárdenas and Manzanillo in Mexico, or Balboa and Colón in Panama.”, claims Hugo Maúl, director of Economic Research at Cien.
And in the same context, red numbers are beginning to be seen: last year, national ports moved 3% less than the previous year—going from 29.8 billion metric tons in 2022 to 28.8 billion.
The figures raise a red flag if one takes into account that three quarters of foreign trade (74.89%), according to the National Port Commission) use seaports as exit, and that “89% of our foreign trade is transported by sea, So where more money should be injected is in investing in ports,” according to Mariano Díaz, former vice minister of Transportation.
Release dredge
Although ports are that “key link in the logistics chain that connects Guatemala’s trade with the world,” as seen by the Association of Shipping Companies of Guatemala (Asonav), the ships that arrive at the ports have a capacity of “between 1 thousand and 3 thousand 400 containers, while in the countries of the region they have advanced to larger ships that move 4 thousand up to 12 thousand, and even more, containers”comments Claudia Del Águila, Competitiveness Manager of the Guatemalan Association of Exporters (Agexport).
An administrative obstacle limits the port company to dredging in the proportion required for ships that have that capacity to reach Santo Tomás de Castilla. Fernando Turciosmanagement advisor at said company, assures that “the State Contracting Law is the one that currently prohibits dredging in rivers, so there is a problem there, since it does not allow dredging in ports.”
Dredging is related to the depth of each dock, i.e. The larger the ship, the greater the depth required to enter the channel. The depth (or draft) of the docks in Guatemala averages between 9 and 11 meters, while other countries have at least 14 or 15 meters deep.
Both the port company and the private sector agree that dredging is key to maintaining and improving the capacity and operational efficiency of the port. “The world has evolved to the use of much larger ships like Post-Panamax, with capacity of more than 9,500 up to 12,000 containersexplains Del Águila.
Add: what’s happening in Santo Tomas? Those big ships come and they have to make a transfer, either in a port in Mexico and leave there with a smaller ship to come here. Another route they take is that they first go to Puerto Cortés in Honduras to unload the cargo, they come to Guatemala to load, they pass through what they left in Cortés and from there they resume their route.” This logistics impacts freight, both import and export.
For Turcios, Guatemala is at a key moment to “make this improvement to the law, so that dredging can be done in the ports to maintain the access channels and that we can have navigation security for these vessels, as well as bring in larger vessels. draft.”
Increase capacity
But dredging is not the only pending task in terms of port infrastructure, there is also a pending task in one of the docks in Santo Tomás. “The port has areas that we need to expand, for example, we have the patio known colloquially as “The Arenal”. We want to build this yard in a specialized container terminal area; in fact, with that we would almost double the size of the port at this time. And it is something that the private sector has also been asking us for,” Turcios points out.
El Arenal can be developed as an expansion of the port’s current commercial dock, according to shipowners. If this area is expanded as a specialized terminal for container ships, Asonav estimates that a mobilization capacity of 329 thousand containers per year would be reached. In addition, the possibility of serving larger vessels, which is the international trend.
Díaz considers that building a dock in this area can be done in 18 months if the 600 meters are worked in that time and the average cost of this infrastructure is around US$600 million”. For Del Águila, if this work is not carried out, “the cargo will migrate to other ports. In the case of the cargo from Santo Tomás, it is going to migrate to Honduras,” he warns.
Not very competitive
The numbers are still below the break-even point. For example, Turcios clarifies that one of the achievements of 2023 Santo Tomás de Castilla National Port Company was the increase in crane movements per hour, since “we had around 10 dock crane movements per hour and we have doubled it. Today we have 20 movements per hour in cranes“This makes us much more efficient when it comes to caring for ships.”
However, for Del Águila this is not enough, since Guatemala barely reaches “20 movements per hour, which is 50% of what the closest port with which we compete, which is Puerto Cortés (Honduras), does. There they perform 40 movements per hour”. It is worth mentioning that, in 2023, the cargo moved by the port system totaled 28,892 million metric tons, a figure lower than the 29,809 million in 2022, which represents a drop of 3%.
In the case of Santo Tomás de Castilla, the problem is the efficiency of operations. Maúl determines that this “inefficiency is attributed to the competitiveness of exports and then, even if the dock were empty, if it is totally inefficient, Guatemalan products are not competitive internationally and cannot reach the markets under competitive conditions.” He adds that “when one looks at the efficiency criteria of international indicators, Guatemala does not appear in the first places.”
Along these lines, the Logistics Performance Index (LPI), published by the World Bank, analyzes 139 countries through six components, among which stand out the efficiency of customs clearance and border management, as well as the quality of infrastructure related to commerce and transportation. In this index, Guatemala is located in position 88.
National port policy
“Although ports are autonomous, we consider that a Port Authority law is needed to ensure port development at the national level, to dictate guidelines and policies,” explains Del Águila. One of the issues that he considers most relevant in this law is the investment issue, since master plans must be promoted that respond to the medium and long-term vision regarding the growth of foreign trade.. In his opinion, this should be promoted by the Legislature, where “there is an initiative (5545, Regulatory Law of the National Port System) to which it is only necessary to make a few amendments.”
For its part, Asonav considers it necessary to have a National Ports Lawbut this must be “a country policy, under the leadership of the Executive Agency in coordination with the different port companies, taking into account the technical contributions that can be provided by the different actors of the public-private sector that are involved in the logistics chain with “the purpose of generating strategies that allow us to have efficient logistics and service capabilities.”
“When we work as a country in this type of logistics corridors where the private sector and the public sector come together, I think we can make Guatemala a very interesting country in terms of logistics, where we can truly be the gateway country to Central America. “Adds Turcios. For now, according to the CPN, the Santo Tomás de Castilla National Port Company (EMPORNAC) registered a cargo movement of 6 million 932 thousand, less than the 8 million 787 thousand in 2022, which is equivalent to a decrease of 21%.
Find more from Guatemala No Se Detiene on our Prensa Libre and Guatevisión video channels, alliance content focused on solutions journalism.
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