Buenos Aires And Montevideo Competition Heats Up

Argentina's decision to effectively ban Argentine goods being transhipped through Uruguayan ports is a reaction to Montevideo's growing role in Argentina's supply chain. The development of Montevideo's transhipment role has placed pressure on Argentina's main container port of Buenos Aires. Argentina's resolution therefore seeks to curtail Montevideo's competitive edge, and offers upside risk to throughput at the port of Buenos Aires.

Uruguay has criticised a resolution passed by Argentina that effectively prohibits Argentine exports from being transhipped through Uruguayan ports. The resolution states that exports can only be transhipped through Argentine territory or to ports within the jurisdiction of Mercosur countries that are signatories to the group's maritime shipping agreement. Argentina's resolution does not mention Uruguay explicitly. However, Uruguay is the only Mercosur nation that has not signed the maritime and shipping agreement.

Uruguayan officials spoke out against the decision at a Mercosur subgroup meeting. A foreign affairs spokesperson said: 'All the measures taken by Argentina directly harm our country. They are violations of Mercosur norms under the commercial services protocol.'

Montevideo Closing The Gap
Ports Of Buenos Aires & Montevideo Container Throughput, 2001-2012 (TEUs)

Argentina's decision to effectively ban Argentine goods being transhipped through Uruguayan ports is a reaction to Montevideo's growing role in Argentina's supply chain. The development of Montevideo's transhipment role has placed pressure on Argentina's main container port of Buenos Aires. Argentina's resolution therefore seeks to curtail Montevideo's competitive edge, and offers upside risk to throughput at the port of Buenos Aires.

Uruguay has criticised a resolution passed by Argentina that effectively prohibits Argentine exports from being transhipped through Uruguayan ports. The resolution states that exports can only be transhipped through Argentine territory or to ports within the jurisdiction of Mercosur countries that are signatories to the group's maritime shipping agreement. Argentina's resolution does not mention Uruguay explicitly. However, Uruguay is the only Mercosur nation that has not signed the maritime and shipping agreement.

Uruguayan officials spoke out against the decision at a Mercosur subgroup meeting. A foreign affairs spokesperson said: 'All the measures taken by Argentina directly harm our country. They are violations of Mercosur norms under the commercial services protocol.'

Buenos Aires and Montevideo, the largest container ports by volumes in Argentina and Uruguay respectively, share a long rivalry. Though just over 130 miles apart, Montevideo is better placed for ships to pull into than Buenos Aires, which is situated further along the Rio de la Plata waterway.

Montevideo Closing The Gap
Ports Of Buenos Aires & Montevideo Container Throughput, 2001-2012 (TEUs)

Montevideo's relative closeness to the major trade lanes has enabled it to develop a transhipment role, catering for goods bound for Argentina, thereby placing it in direct competition with Argentina's main box port of Buenos Aires.

Between 2001 and 2012, Buenos Aires' container throughput expanded by 67.7% from 2001 levels of 0.65mn TEUs to reach 1.09mn TEUs in 2012. In contrast, Montevideo's container throughput expanded by 149.9% from 2001 levels of 0.30mn TEUs to reach 0.75mn TEUs in 2012. Montevideo's big leap in container throughput figures between 2001 and 2012, relative to Buenos Aires, demonstrates the threat that Montevideo poses to the Argentine port.

Upside Risk To Buenos Aires
Buenos Aires Container Throughput, 2008-2018 (TEUs & chg y-o-y)

Montevideo's fast growth appears to have spurred Argentina's resolution as it looks to negate the competitive threat from the Uruguayan port. Argentina's decision also comes at a time when the port of Buenos Aires registered a decline of 5.3% y-o-y in 2012, with BMI predicting a further decrease of 7.0% y-o-y in 2013.

Argentina's resolution will likely result in political tensions with Uruguay. It will have a negative impact on the port of Montevideo's container throughput outlook over the medium term (2013-2018), but offers upside risk to our box throughput outlook for the port of Buenos Aires. We predict container throughput at the port to expand 36%, an annual average increase of 4.2% y-o-y, to reach 1.38mn TEUs in 2018.

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This article is tagged to:
Sector: Freight Transport, Shipping
Geography: Argentina, Uruguay
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