Much-Needed Investment Coming To Ports
BMI View: In a recent re-election pledge, victorious Venezuelan incumbent President Hugo Chávez stated that his government would invest in developing the country's freight transport network in order to better facilitate Mercosur (Common Market of the South, the Latin American trade bloc) trade. While this may be welcomed by the sector, we maintain that the need for investment is perhaps more pressing in the country's existing maritime facilities, which have a reputation for being poorly operated. The setting up of commissions to improve port operations, and specific projects such as a new terminal for Puerto Cabello, should help restore the ports' standing.
As part of his victory speech, Chávez laid out how his third six-year term would see a 'greater advance' towards the goal of socialism, with 'greater efficiency in this transition from capitalism.' One of the key stratagems towards this goal is to develop trade with the Mercosur countries - Argentina, Brazil, Paraguay and Uruguay (Venezuela's membership is pending ratification, and Bolivia, Chile, Colombia, Ecuador, Peru are associate members of the bloc). This aim will be aided by the development of Venezuela's freight transport infrastructure, with railways and deep-water ports to be constructed in order to export products to the Mercosur states: 'There is an extremely important project to convert La Ceiba, Tujillo state and the Lake of Maracaibo into international ports. Further, we should start at once to begin the construction of the railway line between the Orinoco and the Caribbean.' The president added that 'this is the power of Latin America. This is the historic project.'
Although we support the view that transport network projects are necessary if Venezuela is to fully take advantage of its 2012 accession to the Mercosur bloc, we caution that the existing Venezuelan ports are in dire need of investment also. In 2009, the country's ports were nationalised, and there followed a spectacular fall in tonnage throughput of 58.9% at the primary container-handling facility, Puero Cabello, followed by a further 7.7% drop in 2010. While some of this decline can be attributed to the economic headwinds of the time, the poor running of the port played its part.
|Return To Slow Growth|
|Puerto Cabello TEU (LHC) & Tonnage '000 (RHC) Throughput|