Market Insights Report: Americas

Moving continents: project cargo in the Americas A Market Insights report

by ITE Exhibitions and Breakbulk Media

July 2017

North, South, and Central: three distinct regions of Americas – all with their own unique cultures, economies and business environments. From globe spanning superpower the United States to the compact economy of Belize, the diversity of the region is breathtaking.

It is an area rich in business opportunity. A combination of economic growth, expanding industrial output – including significant development of the energy industries – and government-backed infrastructure programs is fueling big changes in the Western Hemisphere.

For the breakbulk and project cargo sector, the Americas holds multi-million dollar contract potential. Across both North and South America, from Alaska’s furthest reaches to the tip of Tierra del Fuego, largescale developments requiring specialist transportation services are appearing with encouraging regularity.

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The big bucks are going toward oil and gas exploration and production, with new production sites under construction, increased activity in the Gulf of Mexico and Canada’s oil sands regions.

Offsetting this is a continentwide mission to exploit the Americas’ untapped renewables potential.

Elsewhere, we find billions in investment infrastructure construction and upgrades – including ports, logistical centers, railways, roads, and more essential public utilities.

Increased volumes of outof-gauge and super heavy cargoes are now poised to enter the region.

Breakbulk Events and Media is pleased to bring you this report detailing the project cargo environment in the Americas. Inside you will find lots of information on the region’s major industries, the Americas’ business climate, and the fruitful opportunities available for project cargo handlers.

Contents

Contents REGION FOCUS: NORTH AMERICA...........................................5 The industries of North America............................................. 6 Oil & Gas in North America..................................................... 7 Renewable Energy in North America...................................... 8 Manufacturing in North America............................................ 11 Mining in North America......................................................... 13 Major Projects Requiring Breakbulk Transport Services in North America...................................................... 14 Shell Chemicals Ethane Cracker............................................ 15 Bruce Power Refurbishment................................................... 17 Port of Freeport LNG Terminal Expansion............................... 18 Fort Hill Oil Sands Mine.......................................................... 19 Opportunities and Challenges for Breakbulk Cargo Handlers in North America..................................................... 20 Opportunity: Natural Gas Export Liberalization...................... 20 Challenge: Ex-Im Charter Instability....................................... 21 Challenge: West Coast Bottlenecks........................................ 22 The Factfile: Doing Business in North America....................... 23

COUNTRY FOCUS: MEXICO......................................................26 Mexico at a Glance................................................................. 26 Industries of Mexico............................................................... 27 Oil & Gas................................................................................ 27 Renewables........................................................................... 28 Manufacturing....................................................................... 30 Mining.................................................................................... 31 Major Projects Requiring Breakbulk Transport Services in Mexico.................................................. 32 National Infrastructure Program............................................ 33 Eรณlica del Sur Wind Farm....................................................... 34

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Opportunities and Challenges for Breakbulk Cargo Handlers in Mexico ...................................................... 35 Opportunity: Development of the Renewable Energy Sector........................................................................ 35 Opportunity: Energy Industry Reform .................................... 35 Challenge: Corruption............................................................ 36

REGION FOCUS: LATIN AMERICA

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Latin America at a Glance...................................................... 37 Central America .................................................................... 38 South America ...................................................................... 39 Industries of Latin America ................................................... 40 Oil & Gas ............................................................................... 40 Mining ................................................................................... 43 Renewable Energy................................................................. 45 Major Projects Requiring Breakbulk Transport Services in Latin America ...................................................... 47 Porto Central ......................................................................... 48 Toromocho Mine .................................................................... 49 Atacama-1 Concentrated Solar Plant ................................... 51 Opportunities and Challenges for Breakbulk Cargo Handlers in Latin America ........................................... 52 Opportunity: Region-Wide Development of Renewable Energy Sector.................................................. 52 Challenge: Economic & Societal Instability ........................... 52 The Factfile: Doing Business in Latin America ....................... 53 Latin American Countries by Competitiveness ...................... 53 Ease of Doing Business in Latin America ............................... 55 Economic Freedom of Latin American Countries ................... 59 Government Transparency in North America ......................... 60 Credit Ratings of Latin American Countries ........................... 61 Breakbulk Events & Media – Your Best Source for Project Cargo News & Exhibitions ..................................................... 62

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Region Focus: North America

Image: Berard Transportation

NORTH AMERICA AT A GLANCE United States

Canada

GDP (estimated): $18.56 trillion

GDP (estimated): $1.53 trillion

Population: 323,995,528

Population: 35,362,905

Annual GDP growth: 1.6%

Annual GDP growth: 1.2%

Industrial production growth: 2.1%1

Industrial production growth: -0.3%2

https://www.cia.gov/library/publications/the-world-factbook/geos/us.html https://www.cia.gov/library/publications/the-world-factbook/geos/ca.html

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Please note: For the purposes of this report, North America refers to the United States and Canada. Mexico has been given its own in-depth look in next section of this report.

Please head to page 26 for “Country Focus: Mexico” for an involved review of the prospects for project cargo across the country.

Region Focus: North America

THE INDUSTRIES OF NORTH AMERICA North America has been at the forefront of major industry for over a century. The United States holds massive sway, turning out millions of tons of goods and billions of dollars in revenue annually. And, while it might not be able to match its southerly cousin, Canada more than holds its weight when it comes to industrial output.

OIL & GAS IN NORTH AMERICA United States

Canada

Oil reserves: 48 billion barrels

Oil reserves: 171.5 billion barrels

Oil production 2016: 12.4 million barrels per day

Oil production 2016: 4.5 billion barrels per day

Gas reserves: 8.7 trillion cubic meters

Gas reserves: 2.2 trillion cubic meters

Gas production 2016: 749 billion cubic meters

Gas production 2016: 152 billion cubic meters

(all statistics 2016, BP 2017 Energy Review)

(all statistics 2016, BP 2017 Energy Review)

With global oil prices reaching stabilization, exploration and drilling is expected to increase in both countries as the decade progresses. Canada is expected to drill 5,150 oil wells in 2017 –

23% higher than its original November 2016 estimates.3 US natural gas output is predicted to rise too, thanks to the shale boom, to as much as 2.1 billion cubic meters per day.4

Shale gas production will drive much of the US oil and gas activity going forward. The country is home to 7 shale formations: Bakken, Niobrara, Permian,

http://globalnews.ca/news/3214575/optimism-in-oil-and-gas-industry-drives-canadian-drilling-forecast-higher-in-2016/ https://www.forbes.com/sites/judeclemente/2017/01/08/u-s-natural-gas-production-in-2017/#5fc1bc0c683b

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Region Focus: North America

Eagle Ford, Haynesville, Utica, and Marcellus5 – all expected to witness development going forward. Major downstream projects are taking place around these sites, such as Shell’s $6 billion ethane cracker plant in Pittsburgh.

For Canada, its oil sands regions hold the bulk of its mineral reserves. Canada has roughly 171 billion barrels of recoverable oil. 165 billion barrels of this is located in the

oil sands in Western Canada, mostly in Alberta but also straddling Saskatchewan.6 Some $40.6 billion is expected to be spent on oil sands projects between 2016 and 2025, increasing Canada’s incremental oil supply by 715,000 bpd by 2023.7 Elsewhere, major pipeline projects are underway – not least the controversial Keystone XL pipeline. The Trump administration awarded

TransCanada a permit to begin building work in early 2017, meaning this huge project, previously stalled under Barack Obama’s government, is back in action.

Keystone XL could herald a wave of fresh pipeline development across North America. Canadian oil producers are eyeing seven other pipeline construction or renovation projects, which represent over $25 billion in capital investment.

PROJECT CARGO CASE STUDY: MOVING MHCE IN LOUISIANA Location: Baton Rouge, Louisiana, United States Cargo: Main cryogenic heat exchanger unit

Transport Company: Mammoet Date: April 2017

Heavy-lift firm Mammoet moved and installed a main cryogenic heat exchanger unit as part of a large liquefaction project in southwest Louisiana in April 2017.

The MHCE unit weighed 261 tons and was transported using 40 axle lines of self-propelled modular transporters. The MHCE measured 45 meters long and 5 meters wide and was the second of three planned MCHE unit installations. “[The MCHE lift] was a tandem lift utilizing a Terex-Demag CC2800 crawler crane as the main crane and a Liebherr LR-1300sx crawler crane on the tail,” said Randall Fox, Mammoet USA Senior Project Manager.

Image: Mammoet

https://www.eia.gov/petroleum/drilling/#tabs-summary-1 http://www.capp.ca/canadian-oil-and-natural-gas/oil-sands/oil-sands-development 7 http://theogm.com/2016/07/12/6-new-oil-sands-projects-you-need-to-know-about/ 5 6

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Region Focus: North America

RENEWABLE ENERGY IN NORTH AMERICA

The United States is a world leader when it comes to spending on reneweables. China leads the world, allocating over $100 billion to overseas clean energy projects in 2016, but the US came in in second place, investing $59.6 billion. Further cash injections are in the pipeline for 2017 and beyond.

Image: Highland Logistics

Renewable energy is quickly becoming an integral part of North America’s power supply networks.

The share of renewables in the US’ energy mix is set to rise over the coming decade.

In 2011, clean energy provided around 14% of the US’ power supply. In 2016, this had risen to nearly 20%.

Construction company Blattner installed 5 gigawatts (GW) of

renewable energy infrastructure throughout North America in 2016 alone – preparing the continent for a cleaner, greener energy future.8 Of course, this is some way off, but renewables are gaining prominence in both North American countries – paving the way for more projects and a greater degree of oversized freight needing to be transported to, and around, both the US and Canada.

Canada, while not able to invest as heavily in renewables as its southern neighbor, still pours billions into clean energy production. In 2014, it spent a record CAD$11 billion ($8.1 billion) on sustainable energy projects.9 This dropped to CAD$3.5 billion ($2.4 billion) in 201610 – but companies such as Enercon are keen to keep cash flowing into Canada’s renewable energy sector.

Recent projects put in place in the United States include the $560 million 400 megawatt (MW) Grande Prairie Wind Farm in Nebraska11, the 99.1 MW Redbeard Plains wind farm in Oklahoma12, and Southern Power’s 102 MW South Texas Solar Project.13 In the electricity generation stakes, Canada outperforms its southerly neighbor by quite some way. 66% of its electricity came from hydroelectric power

http://www.windpowerengineering.com/featured/business-news-projects/blattner-energy-installs-5-gw-renewables-2016/ http://www.cbc.ca/news/business/11b-invested-in-renewable-energy-in-canada-in-2014-report-1.3232581 10 http://www.nationalobserver.com/2017/02/06/news/why-canadas-clean-energy-investment-plummeted-2016 11 http://uk.businessinsider.com/us-2015-renewable-energy-investments-2016-5?r=US&IR=T 12 http://wind.cleantechnology-business-review.com/news/res-begins-construction-of-redbed-plains-wind-farm-in-us-5822657 13 http://www.power-eng.com/articles/2017/05/southern-power-begins-operations-at-102-mw-texas-solar-project.html 8 9

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Region Focus: North America

stations in 2016. In the US, this was just 13% – although by 2025 clean electricity will account for 23% of the US’ total energy supply. According to the US Energy Information Administration, Canada receives 80% of its power needs from clean sources.14 With billions in the bank to play with, Canada is looking to expand its solar and wind operations. Borea Construction, the Canadian branch of Blattner, installed over 700 MW of wind farm capacity in 2016, including sites in British Colombia, Ontario, and Quebec.15 In total, Borea has built over 4000MW of wind infrastructure in Canada.16 Enercon Canada, German wind turbine manufacturer Enercon’s Canadian subsidiary, is also installing more equipment at Canadian renewable project sites. For example, in 2017 it will be supplying the 69MW Welsch wind farm in Alberta with new turbines.17 Additionally, it will also be supplying equipment to a 230MW farm planned for the Niagara region in Ontario.18

In short, renewables represent a growing and important energy sector for North America.

The above is but a microcosm of the ongoing and planned activity, but its in-tandem development with gas and oil projects represents a wealth of logistics expenditure and transportation contracts – happy news for breakbulk operators.

Nuclear power is a thorny issue for both countries. Although the US is building five times fewer nuclear reactors than China and other Asian powers,19 it is still the world’s largest producer of nuclear power, accounting for 30% of the world’s nucleargenerated electricity. 20% of all electricity generated in the country comes from its 100 nuclear reactors.20 Four new reactors are expected to come online by 2021. This follows a 30-year drought in new nuclear plant construction.

There has been sixteen license applications to build 24 new reactors since 2007.21 Floating power plants are also currently being explored as a potential energy source in the US.22

Canada is recognized worldwide as a leader in nuclear research and technology, coming from a strong nuclear power base.

16% of Canada’s electricity is generated by nuclear power plants.23 There are five plants located in three Canadian provinces, but most of the activity is found in Ottawa.

The city itself is home to 19 out of Canada’s 22 nuclear reactors24.

While new plants were being lined up for construction, these have since been deferred. Now, Canada’s nuclear prowess is turning toward refurbishment of existing sites. These are huge undertakings, requiring complete reactor replacements in some cases.25 The two largest projects, the Bruce Power and Darlington Nuclear refurbishments, represent over CAD$25 billion ($19 billion) in capital investment.

https://www.eia.gov/todayinenergy/detail.php?id=27332 http://www.windpowerengineering.com/featured/business-news-projects/blattner-energy-installs-5-gw-renewables-2016/ 16 https://boreaconstruction.com/services/wind-energy/ 17 http://renews.biz/106198/enercon-plans-canadian-date/ 18 http://sndevcorp.ca/2016/11/22/enercon-canada-inc-international-consortium-banks-complete-financing-230mw niagara-region-wind-farm-project/ 19 http://dailycaller.com/2017/05/08/nuclear-power-is-thriving-overseas-but-collapsing-in-the-us/ 20 http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx 21 http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx 22 https://www.wsj.com/articles/the-idea-of-floating-nuclear-power-plants-gets-a-new-look-1495418400 23 http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/canada-nuclear-power.aspx 24 https://www.cnsc-ccsn.gc.ca/eng/reactors/power-plants/index.cfm 25 http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/canada-nuclear-power.aspx 14 15

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Region Focus: North America

PROJECT CARGO CASE STUDY: LOAD-OUT OF WIND TURBINE BLADES Location: Port of Longview, Washington, US Cargo: Vestas wind turbine blades Transport Company: Port of Longview

During April 2017, authorities at the Port of Longview handled the load-out of wind turbine blades for turbine manufacturer Vestas – the longest blades to be discharged at Longview since 2003.

The blades measured 54 meters long and were lifted using the port’s Liebherr mobile harbor cranes. The blades were then placed on railcars and transferred via the port’s on-dock rail system.

“I don’t think there is any other port on the West Coast that has that ability so that’s a major selling point,“ Steven Cullen, Manager at Longview-based stevedores Jones Stevedoring. “This is a huge cost saving to the customer.”

Date: April 2017

A total of 25 longshoremen worked over three and half days to unload the cargoes.

According to the Port, both Libherr cranes were used to lift the blades off their carrying vessel and place them onto the rail lines. The blades were then secured to specialised swivelling bases that lock turbine blades in place, but allow them to rotate with each turn of the rail line.

The Port of Longview says this “quick lock” method allows the port to send wind products further distances.

The Port of Longview has eight marine terminals, and waterfront industrial property spanning 835 acres, on the deep-draft Columbia River, in Southwest Washington state. It’s facilities allows it to specialize in handling wind energy, project and heavy-lift cargoes as well as breakbulk cargoes of steel, lumber, logs, grain, minerals, fertilizers, pulp and paper.

Image: Port of Longview

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Region Focus: North America

MANUFACTURING IN NORTH AMERICA

Image: Ports of America Each North American nation has a strong industrial base, with manufacturing accounting for large chunks of both respective countries’ GDPs. For the US, manufacturing is a $2 trillion sector, representing almost 12% of the nation’s total economic output.26 Canada’s fabrication efforts contribute roughly 10% of its GDP. In terms of breakbulk cargoes, each of these countries builds and exports a variety of products that often require specialist notably in the aerospace, automotive, and shipbuilding industries.

26 27 28 29

30 31 32

Canada’s shipbuilding industry alone is expected by 2022, creating up to 5,500 jobs and remaining a major manufacturing sector.27 In the US, shipbuilding and fabrication yards employ over 100,000 people28 and contributes around $37.3 billion to the economy29.

Home to Boeing, Lockheed, and plenty of other significant aviation manufacturers, the United States is the aerospace industry’s spiritual birthplace. in exports for the US annually.30 Canada’s aerospace sector compares favourably against the US’, worth around $28.5 billion in 2015, with manufacturers

such as Bombardier leading 31

In the same way the US pioneered powered flight and aeroplane construction, so too did it give birth to mass vehicle industry is one of the world’s oldest and most well established. Since its inception, it has annually contributed 3-3.5% towards the US’ national GDP. Canada, on the other hand, is less well known as a vehicle manufacturing hub, yet vehicle exports made up 13% of the nation’s total export values in 2014 for a total of $66 billion. 32

http://www.nam.org/Newsroom/Top-20-Facts-About-Manufacturing/ http://www.tpsgc-pwgsc.gc.ca/app-acq/amd-dp/mer-sea/sncn-nss/rapport-report-20151231-2-eng.html http://www.maritime-executive.com/article/us-shipbuilding-industry-tops-110000-jobs http://www.prnewswire.com/news-releases/marine-diesel-engines-market-to-hit-7bn-by-2024-global-marketinsights-inc-624030063.html https://www.selectusa.gov/aerospace-industry-united-states https://www.ic.gc.ca/eic/site/ad-ad.nsf/eng/h_ad03964.html https://www.unifor.org/en/what-auto-industry-means-canada

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Region Focus: North America

PROJECT CARGO CASE STUDY: SHIPPING AUTOMOTIVE PRESS FROM GERMANY TO CALIFORNIA Location: Shipping Automotive Press from Germany to California

Breakbulk carrier Wallenius Wilhelmsen Logistics (WWL) transported industrial presses for a production line from southern Germany to California in May 2017.

Cargo: Schuler automotive press

The Schuler press consisted of a core unit weighing 208 tons and four 137-ton components. They were transported on behalf of German freight forwarder Karl Gross Internationale from the manufacturing site in southern Germany to the automotive plant in California.

Transport Company: WWL

“After working on planning and preparations, WWL decided to transport the components in three loads from its hub port in Bremerhaven to Port Hueneme in California,” a spokesperson for WWL said.

Date: May 2017

The first shipment went on WWL’s MV TULANE, with a ramp capacity of 320 tonnes. The second load was transported on MV THEBEN and the final shipment went on the MV Porgy end-February.

The 208-tonne piece was towed onboard by a self-propelled modular transporter (SPMT) and then stowed on blocks and beams for the ocean voyage. The four 137.5-tonne press components were stowed on WWL’s special heavylift Samson trailer, which has a capacity of 220 tonnes.

These dedicated trailers are based at WWL’s hub ports.

The consignment weighed 2,765 tons and included 49 breakbulk pieces destined for the facility producing a new electric car model.

Karl Gross chose the RoRo option because of WWL’s short transit time and reliable, regular sailings. WWL could offer its weekly shuttle service between Bremerhaven and Port Hueneme of just 25 days transit.

Image: WWL

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Region Focus: North America

MINING IN NORTH AMERICA

Image: Shutterstock

North America is rich in natural minerals and resources. Mining is very much an important sector for both Canada and the US, as each sits atop vast tracts of recoverable minerals and ores.

Mining is not restricted to any singular state or region in the United States. Every state has some form of connection to the mining industry, according to a report by the United Mining Association.35

Mining in the US accounts for 1.7 million direct and indirect jobs, and contributes around $100.4 billion towards total domestic output.33 Overall, there are around 13,312 mining operations across the States, including underground and surface mines.34

Amongst the minerals mined throughout United States are coal, copper, gold, iron, silver, uranium and zinc.

For Canada, its economic importance is a little larger.

Some 20% of its total exports are mined minerals. In terms

of value, mining covers $52.6 billion of Canada’s $1.53 trillion GDP. All told, it is the world’s third largest supplier of mineral products, including the world’s largest potash producer. It also holds substantial shares of worldwide aluminium, cobalt, nickel, titanium, uranium, and zinc supplies. Roughly 60 different ores, metals, and minerals are extracted by Canadian mining operations.

http://nma.org/wp-content/uploads/2016/09/Economic-Contributions-of-Mining-in-2015-Update-final.pdf http://nma.org/wp-content/uploads/2017/01/msha_number_operations_by_sector_2015.pdf 35 http://nma.org/wp-content/uploads/2016/09/Economic-Contributions-of-Mining-in-2015-Update-final.pdf 33 34

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Region Focus: North America

MAJOR PROJECTS REQUIRING BREAKBULK TRANSPORT SERVICES IN NORTH AMERICA In both the United States and Canada, there is a real drive to develop the energy industries and perform nationwide infrastructure upgrades.

The ongoing recovery of oil prices, plus further development of shale gas sites and Canadian oil sands, means a newly confident energy sector is returning to exploration and production.

Shale gas exploration; cracking; pipeline construction; new drilling sites; these are just some of the oil and gas related projects underway across North America at present. More capital investment in exploration and drilling is coming, prompting a possible rise in demand for transportation of oversized cargoes.

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Elsewhere, we find billions ready to be plunged into infrastructure. We all know of current US President Donald Trump’s proposed $25 billion Mexican border wall. Yet, while this incredibly controversial development has gathered momentum, there are more real, more tangible works going on throughout the US. In 2017, the Trump administration announced it intends to spend $1 trillion on essential infrastructure upgrades. This includes construction of new airports, port expansion, road building, and power-supply projects.

Canada, under the leadership of Prime Minister Justin Trudeau, is also keen to replace its aging infrastructure with modern utilities. In June 2016, Trudeau announced his government’s intention to spend CAD$125 billion ($92.5 billion) on upgrading infrastructure around across Canada. As much as CAD$616 billion ($455 billion) could be in Canada’s infrastructure funding reserve too so it should not be short on funding for major developments.

In this section, we take a look at some of the biggest projects happening in North America now, or in the future, and what they mean for the project cargo industry.

Region Focus: North America

SHELL CHEMICALS ETHANE CRACKER WHAT: A petrochemical complex converting ethane in ethylene and polyethylene WHERE: Potter Township, Pittsburgh, Pennsylvania, United States COST: $6 billion TIMEFRAME: 2020

Image: Pittsburgh Regional Alliance

The United States is on the cusp of becoming a net exporter of natural gas and its associated products. Projects such as this $6 billion ethane cracker 30 miles northwest of Pittsburgh, Pennsylvania, are helping achieve that goal. Pioneered by Shell, this development has the potential to drastically boost the local economy and regional gasrelated exports.

Ethane, a natural gas liquid, will be extracted at this site by a process known as cracking, which will occur in seven furnaces at the plant to produce ethylene. The ethylene will be further processed to create different types of polyethylene.

Polyethylene pellets will then be shipped from the site to end

users for use in manufacturing, with some products assigned for fuel too.

The scale of this 780-acre site is truly huge. At full capacity, it is expected to produce 1.6 million tons of ethylene a year.38 Construction of the plant alone is expected to create 6,000 jobs.

Patty Horvaitch, Vice President Business Development at the Pittsburgh Regional Alliance said that, “at its peak the construction phase of the project will provide jobs for up to 6,000 workers, with full time employment of 600…

Engineering, procurement, and construction companies think in terms of man-hours, [and] that’s a lot of man-hours”.39

Apart from the cracker unit proper, the plant requires extensive heavy equipment.

The nature of machinery needed on site suggests it will depend on project cargo specialists to get it there. When built, the facility will include: • An ethane cracker with a rough annual capacity of 1.6 million tons • Three polyethylene units with a combined annual production capacity of 1.6 million tons • Power and steam generation, storage, logistics facilities, water cooling and treatment, plus offices and warehouses.40

http://www.shell.us/about-us/projects-and-locations/pennsylvania-chemicals-project/about-the-appalachian-petrochemical project/_jcr_content/par/textimage_3.stream/1434018601265/ b8816c4d076bf159c9c226a3099c9c702d02fb045ffb399e1837dbca2264254d/shell-generic-brochure-edited-lo-res.pdf 39 http://www.breakbulk.com/wp-content/uploads/2017/04/Breakbulk-Magazine-Issue-2-2017.pdf 40 http://www.shell.us/about-us/projects-and-locations/pennsylvania-chemicals-project/about-the-appalachian petrochemical-project.html 38

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Region Focus: North America

Matt Smith, President of the Pittsburgh Chamber of Commerce, has pointed out how Pittsburgh’s rail and maritime infrastructure will offer great advantages for freight handlers. In particular, the Port of Pittsburgh sits at the confluence of three rivers (Allegheny, Monongahela, and Ohio) – making it feasible to ship cargoes all the way down the Ohio and Mississippi rivers to the Gulf Coast.41

Bechtel is one of the most respected global engineering, construction, and project management companies. It is a market leader on EPC activity for the oil, gas and chemicals industries.

Ed Gore, Vice President, Marketing & Business Development, Bechtel Oil, Gas & Chemicals, will be leading BreakBulk Americas 2017’s keynote speech: “EPC Outlook for Oil & Gas Projects.”

Be in attendance to catch Mr Gore’s insights into North America’s energy sector and the promise it holds for breakbulk cargo contractors.

The steamcracking tech which will be installed on-site will be supplied by Houston, Texasbased Linde Engineering North America, Inc. Engineering, procurement, and construction

(EPC) activity will be handled by Bechtel, Oil, Gas, and Chemicals.

Linde and Bechtel had previously been chosen by ExxonMobil to build their olefin recovery units at the ExxonMobil Baytown Olefins Plant in Baytown, Texas.

Importantly, it is estimated that this area of Pennsylvania is suitable for up to four more crackers like this.42 This would create a real need for specialist cargo services in the region – creating something akin to a captive micro-market for specialist freight companies to enter and exploit.

EXPERT OPINION:

Jake SWANSON, Global Logistics Director, CB&I

Jake Swanson leads the Logistics Group for CB&I Oil & Gas Americas region. He has worked in transport and logistics for over 10 years, and has experience with both the shipper and carrier sides of the industry. Mr Swanson will be at BreakBulk Americas 2017 as part of the “Deep Waters: Rivals, Regs and Carrier Risk” round table.

Providing a wide range of services including design, engineering, construction, fabrication, maintenance, and environmental services, CB&I is focussed on complete energy infrastructure solutions. With 125 years’ experience, and expertise of around 54,000 employees, CB&I provides reliable solutions without compromising on safety or quality.

“The main challenges on this Shell project are quite similar to what you might see on any project: working closely with suppliers to ensure that they are keeping their commitments and ensuring the project says on schedule. The modules moving into the pretreatment facility have proved quite challenging to transport.

“Working with the utility company to bury lines and drop lines has also been challenge. We had to work with our heavy-hauler/barge operator to identify a special roll-off area that we could use that would minimize the amount of power line work required.

“We contract directly with project ocean carriers, barge operators and heavy haulers. We are very involved in the process and operations.”

http://www.breakbulk.com/wp-content/uploads/2017/04/Breakbulk-Magazine-Issue-2-2017.pdf http://www.bizjournals.com/pittsburgh/news/2017/03/21/study-state-could-support-up-to-four-more-ethane.html

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Region Focus: North America

BRUCE POWER REFURBISHMENT WHAT: Refurbishment of Bruce Power nuclear power station WHERE: Tiverton, Kincardine, Ontario, Canada COST: CAD$13 billion ($9.7 billion) TIMEFRAME: 2015-2030

Image: Wikimedia Commons

Canada is amongst the world’s foremost exponents of nuclear power with a decades-long position as a leader in research and technology. While it has deferred from building new plants and reactors recently, Canada’s existing nuclear infrastructure is in need of an upgrade at some key sites.

Bruce Power is one of these.

Located in the township of Tiverton, close to Kincardine in the Province of Ontario, the station is North America’s largest nuclear power plant.

Some 30% of Ontario’s electricity is generated here at less than 30% of standard market prices.43

However, six of the plant’s eight reactors are reaching the end of their service lives. With the plant’s vital importance in the energy mix of Ottawa and Ontario, Canada’s most populated province, Bruce Power announced it would be undertaking a complete overhaul of the site – including installation of new reactors.44 This will be a huge undertaking.

Just examine some of the numbers involved. The 15-year long project, announced in 2015 and expected to be finished by 2030, is set to cost up to CAD$13 billion ($9.7 billion). It is expected to generate CAD$6.8 billion ($5.1 billion) for the local economy, as well as create 23,000 jobs. For the breakbulk cargo community, however, the site offers extremely lucrative transportation contracts.

Part of the ongoing refurbishment programme is what Bruce Power calls the “Major Component Replacement Project.” Due to kick off in 2020, at Bruce Power Unit-6, signalling a complete overhaul of the plant’s sixth reactor and its necessary components.

Once completed, the Major Component Replacement Project will be rolled out to Units 3-8 before completion by 2030.

Bruce Power’s end goal is to extend the life of the station until 2064 with this project.45 Nuclear components are often oversized and very bulky – especially reactors – suggesting that this project will require a substantial level of cooperation with dedicated freight handlers in order to move project critical components to Bruce Power.

http://www.brucepower.com/bruce-power-congratulates-ontario-power-generation-as-it-begins-first-refurbishment/ http://top100projects.ca/project-details/?id=229&yr=2017 45 http://www.brucepower.com/about-us/life-extension/ 43

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Region Focus: North America

PORT FREEPORT LNG TERMINAL EXPANSION WHAT: Expansion of a Liquefied Natural Gas (LNG) terminal at Port Freeport

M.V. Heino discharging 1 of 25 units (Propane Superheater/ Condenser) that are needed for the Expansion of the Freeport LNG facility. Each unit is 60ft long, 27 ft wide, 13 ft, and weigh 54 metric tons. Gulf Stream Marine handled the discharge, while Mamoet coordinated transport. Courtesy of Port Freeport.

WHERE: Freeport, Texas, United States COST: $14 billion TIMEFRAME: 2014-2019

Upcoming liberalization of natural gas exports, coupled with the boom in US shale gas exploration and extraction, means more and more US ports are beginning to build LNG terminals, and supporting infrastructure. Port Freepor, one of Texas’ deepest sea ports, is one such location.

Freeport’s LNG terminal. CB&I alone has been awarded $9 billion in contracts – almost four-fifths of the entire project costs. Infrastructure currently being built at Freeport include three liquefaction trains, and a double-walled, full containment, 165,000 cubic meter LNG storage tank.48

Freeport has been home to an LNG terminal since 2005.

Rather than being a liquidation center, the port’s extant facility is for regasification. Its current output capacity stands at 2 billion cubic feet per day via seven vaporization trains.46 With natural gas production and exports set to soar, however, the go ahead to begin building an expanded terminal was given in 2014.47

Some of the major components have already been delivered to the site, highlighting the kind of cargoes in demand at Freeport. A cryogenic heat exchanger, measuring 50 meters high and boasting an empty weight of over 320 tons, was shipped there in December 2016.

Following the delivery of this was the initial compressor for the LNG’s first liquefaction train49, indicating the scale of project cargoes required to complete this development.

Construction firms CB&I, Zachry and Chiyoda, are handling the actual building work at

48

49

50

51

46 47

http://www.freeportlng.com/Regas_Terminal.asp http://www.freeportlng.com/Project_Status.asp http://www.cbi.com/What-We-Do/Project-Profiles/Freeport-LNG https://www.lngworldnews.com/usa-freeport-lng-project-moves-ahead/ http://www.freeportlng.com/Project_Status.asp http://www.cbi.com/What-We-Do/Project-Profiles/Freeport-LNG

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The first two trains are expected to go online by September 2018 and February 2019, repesctively. Train number three is likely to enter operation approximately six months later in August 2019. Once built and running up-to-speed, Freeport’s LNG terminal is estimated to pump out 13.9 million tons of LNG per year ready for export.51 Freeport’s expansion efforts are not limited to building this terminal. It is already one of the deepest ports in Texas, at 45 meters, allowing it to accommodate larger vessels. Port authoties say this is not deep enough.

Subsequently, Freeport is deepening its port channel to a depth of 55 meters, and widening it to match.

Region Focus: North America

FORT HILL OIL SANDS MINE WHAT: Open pit oil sands mine WHERE: Wood Buffalo, Alberta, Canada COST: CAD$16.5-17 billion ($12.2-12.6 billion) TIMEFRAME: 2013 – 2018

Image: Mammoet Fort Hill is a 194,000 bpd capacity oil sands mine coowned by Suncor Energy Limited Inc., Teck Resources Limited, and Total E&P Canada Ltd.53 Despite construction being a long and laborious process, with some partners pulling out along the way, and building work affected by 2016’s wildfires in Alberta, Fort Hill looks ready to begin production by the end of 2017 after an original commencement date of 2013.54 Construction at the site was estimated to be around 76% complete at the end of 2016 with the final completion year earmarked as 2018.55 This particular project represents two areas of interest to breakbulk cargo operators.

First, it demonstrates sustained investment in development of

55

56

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53 54

Canada’s oil sands resources.

Additionally, Fort Hills acts as a barometer toward the kind of oversized components and machinery required at this type of project.

Oil and gas engineering specialist Fluor, for example, provided CAD$1.3 billion ($970,000,000) worth of utilities infrastructure at the site, including pipe racks, structural assemblies, equipment modules, and complex electrical and instrumentation assemblies.56 In fact, fabrication of key extraction and production facilities lay in the hands of many multinationals. South Korea’s SK E&C built and supplied $2.5 billion worth of extraction modules at Fort Hills.

Alongside SK E&C was Belgium

based Cofely Fabricom, which supplied essential extraction trains to the site, alongside Malaysia’s KNM Process Equipment.

The Malaysian wing of Germany’s KNM has built 6 Froth Settling Units for Fort Hills, which measure 10 meters wide by 30 meters tall. KNM Process Equipment is also fabricating 6 Tailings Solvent Recovery units and other project-critical components.57 As the oil sands contain the vast majority of Canada’s oil wealth, the development of sites such as Fort Hills is likely to continue way into the next decade, even if renewables and nuclear power gain prominence in Canada’s energy mix.

http://majorprojects.alberta.ca/details/Fort-Hills-Oil-Sands-Mine http://www.oilsandsmagazine.com/news/2016/4/04/the-curse-of-fort-hills-is-finally-lifted http://www.canadianminingjournal.com/news/oil-sands-fort-hills-track-production-late-year/ http://www.fluor.com/projects/engineering-fabrication-construction-fort-hills http://www.oilsandsmagazine.com/news/2016/4/04/the-curse-of-fort-hills-is-finally-lifted

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Region Focus: North America

OPPORTUNITIES AND CHALLENGES FOR BREAKBULK CARGO HANDLERS IN NORTH AMERICA OPPORTUNITY: NATURAL GAS EXPORT LIBERALIZATION Part of the Trump administration’s proposed energy plans include liberalization of the US’ natural gas exports. The US is gearing up to both increase natural gas production and exports in one fell swoop. The advent of shale gas exploration and extraction means the US is sitting on abundant reserves – and it wants to start exporting these overseas.

Its exports are primarily concentrated in the Americas, supplying mainly Canada and Mexico – and these have been growing steadily. 2015 saw the US export 1.7 billion cubic feet of natural gas. By 2016, exports had risen to 2.3 billion cubic feet.58 Larger gas reserves means the US will soon become selfsustaining in its gas supply, opening up larger volumes for export. And, according to Fatih Birol, Executive Director of the International Energy Agency, US gas could provide attractive alternatives to coal in Asia.

60

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“It could also provide a very attractive alternative to Russian pipeline gas in Europe. It may change the gas prospects in the US and, more importantly, the world,” Birol said.59 Birol also adds that, if the Trump government succeeds in “de-bottlenecking” US gas regulations, production could expand beyond 2015’s already impressive 769 billion cubic meters output total.60 For breakbulk cargo carriers, the ramping up of US gas production activities is good news. Currently, the United States holds an output capacity of 9 million tons. IHIS Markit, a UK-based research firm, suggests as much as 55-60 million tons of production capacity infrastructure is under construction.61 Huge multinationals are getting in on the action, as you might expect for such a cash-rich industry. “We are looking at the next wave of LNG projects in the United States,” construction

titans CB&I’s Global Logistics Director Jake Swanson informed Breakbulk Media earlier in 2017.

That points towards a lot of oversized and bulky cargoes – particularly as oil and gas industries are moving toward fully embracing modular production site construction.

A great deal of gas-related construction projects are underway, and these are likely to continue as long as the US pursues a natural gas-centric energy policy.

Ultimately, Fort Hills is emblematic of multitude of potential contracts for breakbulk operators to snap up over the coming years. The two projects detailed in this report, Shell’s under-construction ethane cracker in Pennsylvania and the Port Freeport’s LNG expansion development, represent $20 billion in capital realisation – and that is only a slice of the investment action going on in the US.

https://www.eia.gov/dnav/ng/ng_move_expc_s1_a.htm http://www.cnbc.com/2017/03/07/the-trump-game-changer-that-can-soon-turbocharge-the-us-gas-industry.html http://www.cnbc.com/2017/03/07/the-trump-game-changer-that-can-soon-turbocharge-the-us-gas-industry.html http://www.cnbc.com/2017/03/07/the-trump-game-changer-that-can-soon-turbocharge-the-us-gas-industry.html

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Region Focus: North America

CHALLENGE: EX-IM CHARTER INSTABILITY The Export-Import (Ex-Im) Bank of the United States is an independent federal agency that bridges the gap in private export finance, helping US exporters make overseas sales and supporting US jobs. US exporters say its trade financing solutions – acting as an Export Credit Agency, working capital guarantees, and commercial loan guarantees for foreign buyers – are necessary for them to compete globally. Yet, despite its high standing, the Obama government failed to completely re-instate the Bank’s charter in late 2015 – rather than being closed completely, the Ex-Im Bank was servicing its existing portfolio of clients, instead of engaging in new business, at the tail end of 2015.

This has put the Ex-Im Bank’s future in jeopardy, sending a wave of consternation through the United States’ business community. Given it is involved in the US’s worldwide trade, the status of the Ex-Im Bank has knock-on effects for the breakbulk industry too.

Lori Baer, Vice President National Ports & Marine at worldwide engineering and construction compnay AECOM says the Ex-Im Bank is fundamental to US economic growth. “It gives confidence and support at the highest level of our government. It provides a comfort level globally. There is a dependence on it. We can’t let that falter. Why would you erode a vital service?”

As of July 2017, the Bank’s full Board of Directors has yet to be filled. According to its acting head, Charles Hall, these will be selected before fall. Yet the entire process is currently holding up the Ex-Im Bank from operating. A backlog of $30 billion in funding applications stands is in place at present.

As the US exports and imports billions of dollars of heavy machinery, oversized cargoes, and more items requiring breakbulk cargo handling, the status of the Ex-Im Bank is of utmost importance. If US companies are cut off from export funding, then it is likely that the nation’s exports will drops – resulting in less demand for specialised project cargo services.

EXPERT OPINION: Captain William G. Schubert was unanimously confirmed as the U.S. Maritime Administrator in 2001. During his tenure as Maritime Administrator, his leading accomplishments were reforming EX-IM Bank and Maritime Administration policies and procedures, and eliminating trade barriers through the successful negotiation and implementation of bilateral maritime agreements with China, Brazil, and Russia.

William G. SCHUBERT, former US Maritime Administrator

Captain Schubert now provides ECA finance, maritime transportation and U.S. government relations consulting services through his company International Trade & Transportation, Inc. (IT&T). The services provided

by IT&T have been utilized on over 85 major US EX-IM Bank transactions, including the top five Capital Project transactions approved by the US EX-IM Bank Board within the past 5 years totaling $15.5 billion.

The failure to reauthorize the Ex-Im Bank would have left U.S.-domiciled companies virtually defenceless to compete for capital projects that require some level of ECA support.”

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Region Focus: North America

CHALLENGE: WEST COAST BOTTLENECKS The West Coast can pose cargo operators when it comes to transporting loads to its various ports. This can lead

contractor/client relations.

Historically, these have been caused either by disputes with longshoremen or through increases in freight traffic, leaving ships offshore until for example, shipping rates to the west coast shot up, negatively affected by delays 62

Another issue is ailing port infrastructure. The $5 billion

expansion of the Panama Canal has doubled its capacity and thrown out the rulebook when it comes to Panamax-ship dimensions. Bigger, wider cargo ships are coming to US ports.

And without the necessary infrastructure, such as supertall cranes, stronger wharfs to accommodate them, and deeper port channels to handle bigger vessels, many ports are struggling to cope with freight traffic.63 Another issue facing the US West Coast ports is underperforming multi-modal transport links. With increased cargo flows from the growing number of a new style of

Panamax carriers, there is less and less room to build supporting infrastructure. For trucking and rail companies, that means their networks are creaking under the weight of higher load volumes, unable to cover all bases, resulting 64

There does appear to be other inland water routes.

Dennis Mottola, Traffic & Logistics Corporate Process Owner Manager at Bechtel Global Logistics, said that his company is increasingly turning to the Western US’ waterways for load transportation.

EXPERT OPINION: Before becoming Corporate Functional Manager of Traffic and Logistics and General Manager of Bechtel Global Logistic, Dennis Mottola served in a variety of roles during his nineteen-year career with the company.

Dennis MOTTOLA , Corporate Functional Manager, Traffic & Logistics, and General Manager, Bechtel Global Logistics.

62 63 64

These have included Corporate Manager of Expediting and Supplier Quality, GBU T&L Manager, and responsibility for Bechtel’s Export/Import Compliance Program.

Mottola has spent his professional career in the global logistics and supply chain management field, including managing mega-project logistics, marine shipping, export packing, manufacturing and trading operations.

“As our use of the US inland waterway system increases, we are about to learn if anticipated bottlenecks at certain locks and dams, as well as seasonal traffic flow delays will occur.

“We plan and prepare for disruptions that may occur in the supply chain so as to mitigate risk to our project schedule and associated costs.”

http://worldmaritimenews.com/archives/152360/us-west-coast-bottlenecks-push-up-freight-rates/ http://www.joc.com/port-news/us-ports/us-west-coast-port-strategy-targets-cargo-flow_20170326.html http://www.supplychainquarterly.com/topics/Logistics/20150622-intermodals-big-bottleneck-a-possible-solution/

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Region Focus: North America

THE FACTFILE: DOING BUSINESS IN NORTH AMERICA COMPETITIVENESS OF NORTH AMERICAN COUNTRIES Country

WEF Global Competiveness Ranking

United States

3

Canada

15

Institutions (score)

Infrastructure (score)

Macroeconomic environment (global ranking)

Macroeconomic environment (score)

Health & Primary Education (global ranking)

Health & primary education (score)

United States

27

5.4 11

5.9

71

3.6

39

6.2

Canada

18

5.4 15

5.4

41

5.2

9

6.6

Country

Institutions (global Ranking)

North American Countries’ Global Competiveness Index Performance: Basic Requirements (WEF, 201666)

Infrastructure (global ranking)

North American Countries’ Global Competitiveness Index Performance: Overall Rankings (WEF, 201665)

Global ranking refers to a country’s rank on the WEF 2016-2017 Global Competitiveness Index (out of 138).

Score refers to that country’s performance in specific sectors between 1-7 (1 being the lowest score; 7 being the highest).

65 66

http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/ http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/

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Region Focus: North America

EASE OF DOING BUSINESS IN NORTH AMERICA

Starting a business

Getting electricity

Registering property

Getting credit

Protecting minority investors

Paying taxes

Trading across borders

Enforcing contracts

Resolving insolvency

United States

8

51

36

36

2

41

36

35

20

5

Canada

22

2

108

43

7

7

17

46

112

15

Country

Overall Rank

Ease of Doing Business in North America: Economic Metric Rankings (World Bank & IFC, 201767)

Countries are ranked by the World Bank and International Finance Corporation on their performance in the above metrics against 190 reviewed countries.

Access to financing

Restrictive labour regulations

Insufficient capacity to innovate

Inflation

Tax rates

Tax regulations

Foreign currency regulations

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5.4

11

5.9

71

3.6

39

Canada

18

5.4

15

5.4

41

5.2

9

Country United States

Country

Problematic Factors for Doing Business in North America Table 01: Economic Factors (WEF, 201668)

Policy instability

Inadequately educated workforce

Poor work ethic in national labour force

1.4

11.2

4.9

7.4

7.3

3.5 1.8

2

Canada

7.9

0.3

15.7

5

5.1

2.8

0.2 0.1

0.1

Poor Public Health

Inefficient government bureaucracy

5.2

Corruption

Government instability

United States

Crime & theft

Inadequate infrastructure supply

Problematic Factors for Doing Business in North America Table 02: Infrastructure, Governmental & Societal Factors (WEF, 201669)**

Please note: From the list of factors, respondents to the World Economic Forum’s Executive Opinion Survey were asked to select the five most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5. The score corresponds to the responses weighted according to their rankings.

http://www.doingbusiness.org/rankings http://reports.weforum.org/global-competitiveness-index/ 69 http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/ 67 68

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Region Focus: North America

ECONOMIC FREEDOM OF NORTH AMERICAN COUNTRIES North American Countries by Heritage Foundation Economic Freedom Index Rankings (Heritage, 201670) Country

Economic Freedom Index score

Economic Freedom Index global rank

Economic Freedom Index rating

United States

75.1

17

Mostly free

Canada

78.5

7

Mostly free

Economic freedom scores are rated out of 100 based on their performance in rule of law, property rights, government spending, trade freedom, and so on.

GOVERNMENT TRANSPARENCY IN NORTH AMERICA North American Countries

by Transparency International Corruption Perception Ratings (Transparency International, 201671)

Country

Corruption perception score

Corruption perception rating

United States

74

18

Canada

82

9

Countries are ranked by Transparency International according to their corruption score. A score of 100 means free from corruption.

CREDIT RATINGS OF NORTH AMERICAN COUNTRIES

Fitch rating

Fitch outlook

Crime & theft

Corruption

Poor Public Health

Stable

AAA

Stable

3.5

1.8

2

Canada

AAA

Stable Aaa

Stable

AAA

Stable

0.2

0.1

0.1

Moody’s rating

Stable Aaa

S&P outlook

AA+

S&P rating

United States

Country

Moody’s outlook

North American Countries

by Credit Ratings (Trading Economics, 201772)

http://www.heritage.org/index/ranking http://www.transparency.org/whatwedo/publication/corruption_perceptions_index_2016 72 http://www.tradingeconomics.com/country-list/rating 70 71

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Country Focus: Mexico

Country Focus: Mexico

Image: Shutterstock

GDP (estimated): $1.06 trillion

MEXICO AT A GLANCE

Population: 123,166,749

Mexico holds a unique position in the Americas; geographically Northern, but sharing more aspects of its culture with its Latin American cousins.

Dominating Central America, Mexico forms a crucial link between North and South – particularly in the business and transportation spheres.

Annual GDP growth: 2.1% Industrial production growth: 3.3% FDI Inflows: $27.4 billion73

The conditions are ripe for major developments across all business sectors relevant to project cargo operators in Mexico. Its economy is nudging the world’s top 10, it has

2016 estimate73

https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html

73

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a huge population, and it sits on plenty of natural resources.

Mexico holds great promise for the renewable energy sector too. What’s more, it is also a burgeoning manufacturing power, featuring developing heavy industry.

This section will cover Mexico’s main industries, some major projects to interest breakbulk carries, opportunities and challenges of doing business there, and a set of business statistics to rate the country at a glance.

Country Focus: Mexico

INDUSTRIES OF MEXICO OIL & GAS

Image: Shutterstock

Mexico’s oil and gas market is a new frontier. State-owned oil company Pemex has monopolized the industry for decades, but the world is coming – bringing a wave of increased production and exploration activity.

The first private oil well in Mexican waters for 80 years was drilled in May 2017 by a joint British-AmericanMexican venture, which followed the farm-out in December 2016 of Trion – an $11 billion offshore development that could contain nearly 500 million barrels.

and gas drillers such as Total, Chevron and ExxonMobil, and Pemex is showing it is relishing the competition – the Financial Times reported in May 2017 that the company is looking to licence out a further 52 development blocks to private drillers.

The projects are coming thick and fast. A block auction in December 2016 attracted some of the world’s top oil

This is providing a welcome boost to oil and gas in Mexico, which is already enjoying a recovering oil price and a

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bolstering of the peso. Pemex’s balance sheet has stabilised and the company is back in the black – and this time they have competition from private investors and producers.

With investment also sought to develop Mexico’s decrepit refinery stock, this means project cargo opportunities in the Gulf of Mexico.

Country Focus: Mexico

RENEWABLES of funding in power generation.77 The renewable boom helped Spanish turbine manufacturer Gamesa report a 15% increase in sales to Mexico in 2016, and there is much more room than that for the market to grow.

Image: Liebherr Mexico’s liberalization of its energy market in 2014 blew the sector open for international business. As well as attracting international players to the sector, it also set off a chain of events that led to the Energy Transition Law being passed in July 2015 – setting the country a target of generating 30% of its energy from clean sources by 2021, and 50% by 2050.76 With this goal in mind, the Mexican government has been busy holding renewable energy auctions, inviting power

generators to bid for contracts to supply certain areas of the country with renewable energy.

The third of these bid rounds is scheduled for late September 2017, with the first contracts to be signed in March of the following year.

This, of course, means big spending on the equipment and technology to deliver this renewable power. Chief among them is wind, which is expected to take large parts of the investment – including 23% of a recently-announced $90 million

Achieving these short term targets will require 9.5 GW of renewable capacity to be installed by 2018, according to Renewable Energy Focus78 which represents a massive logistical challenge in importing, transporting and installing the turbines. Needless to say, the project cargo opportunities for Mexico’s wind revolution are remarkable.

A big growth in solar power is also coming into the mix. For such a sunny country, Mexico does not pull its weight in solar generation, with just 66 MW of generating power available.79 This imbalance has led to great interest in developing new projects in Mexico – over 80% of the last two renewable licensing rounds was secured by companies offering solar projects. While the government’s pricing strategy played a part, the fact remains that there is significant potential for the solar industry in Mexico.

http://www.renewableenergyfocus.com/view/43775/mexican-energy-reforms-mexico-s-path-to-a-clean-economy/ http://globalriskinsights.com/2017/03/mexico-wind-power/ 78 http://www.renewableenergyfocus.com/view/43775/mexican-energy-reforms-mexico-s-path-to-a-clean-economy/ 79 http://carlosstjames.com/renewable-energy/making-sense-of-mexicos-renewable-energy-auctions/ 76 77

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Country Focus: Mexico

Mexico’s renewable targets are not distant pipe dreams. There is a strict, incremental schedule for the industry to hit – 25% by

2018, 30% by 2021, 35% by 2024, and an ultimate target of 50% by 2050. So the industry doesn’t have time to hang around –

meaning the project cargo deals will start to flow sooner rather than later.

PROJECT CARGO CASE STUDY: SHIPPING WIND TURBINES TO MEXICO Location: China, Vietnam, and Spain, to Port of Altamira, Mexico Cargo: Wind turbine blades Transport Company: Kaleido Logistics Date: March 2016

Transport firm Kaleido Logistics delivered a cargo consisting of 43 wind turbines to the port of Altamira in Mexico.

Components for the turbines were shipped from fabrication sites in China, Vietnam, and Spain before final assembly and collection from the port of Dafeng in the Yancheng administration of Jiangsu province, China.

Kaleido Logistics managed nine separate shipments for the cargo between November 2015 and March. In order to minimize pollution from the transport the project team employed Kaleido Logistics’ proprietary emissions reporting tool, Karbon Track. This allowed them to monitor the environmental impact of the entire logistics chain throughout and raise efficiency measures.

The wind turbines were for a new wind energy park in the province of Jalisco in Western Mexico. The park is one of a number of new developments in the country following wide-ranging reforms to Mexico’s energy markets which have attracted billions of dollars of investment.

Kaleido Logistics is headquartered in Spain with offices in Portugal, Angola, Brazil, China, India and South Africa. The firm offers door-todoor logistics services across several industry sectors including, food and retail, automotive, natural resources, industrial projects and wind power industries among others.

Image: Kaleido Logistics

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Country Focus: Mexico

MANUFACTURING There is a strong argument that manufacturing is the industry that Mexico is most famous for.

Decades of enticing production away from its northern neighbor has helped build a vibrant, high-tech and valuable manufacturing sector, which turns out everything from air conditioners to airplanes.

This last sector, aerospace, is particularly exciting for global businesses looking to Mexico – the sector is worth $3 billion, employing over 200,000 people across 200 aerospace

companies. Mexican aerospace is highly integrated with the US and global supply chains, meaning transportation of parts and manufacturing equipment is well established and well in demand. Much of the sector’s production muscle is located in Baja California in the north of Mexico, meaning shippers and operators can benefit from proximity to the project-focused ports of the US’s Pacific coast.

This integration with the North American market, helped by the NAFTA agreement, drives Mexico’s manufacturing in general – other key manufacturing sectors including carmaking, electronic equipment and iron and steel are all thriving. Add in the fact that Mexico’s labour costs are now lower than China’s, and you have a fast-growing sector with a high demand for project cargo, both to equip high-end production facilities and ship what comes out of them.

PROJECT CARGO CASE STUDY: MOVING 25 OVER-SIZED CASES TO THE PORT OF ALTAMIRA Location: China, Vietnam, and Spain, to Port of Altamira, Mexico

May 2016 saw Italian breakbulk carrier Alpha Maritime Services deliver a cargo of 25 over-dimensional cases from Genoa to Altamira in the state of Tamaulipas in Mexico.

Cargo: 25 over-dimensional cases for heating tulips and stems

The consignment included induction equipment for the heating of tulips and stems, and weighed a total of 600 tonnes. The 25 cases encompassed a total volume of 950 cubic meters.

Transport Company: Alpha Maritime

Alpha Maritime Services is headquartered in Genoa and offers air freight, sea freight, trucking, warehousing and logistic services via offices throughout Italy.

Date: May 2016

The firm is a member of global freight network, the Universal Freight Organisation. This network includes members in more 115 countries around the world, employ more than 3,000 staff and cover more than 2,000 air and sea ports.

Image: Kaleido Logistics http://www.napsintl.com/manufacturing-in-mexico/industries-in-mexico/aerospace-manufacturing-in-mexico/ https://www.forbes.com/sites/stratfor/2015/04/08/mexicos-manufacturing-sector-continues-to-grow/#35466d915764

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Country Focus: Mexico

MINING

Image: Shutterstock Mining is a solid contributor to Mexico’s GDP, generating between 5% and 8% of total output. The value of the sector is enjoying a steady rise, and BMI Research expects over 3% annual growth in the sector between 2016 and 2020.82

(17%), zinc (9%) and a collection of other minerals, including a promising lithium mining sub-sector.83 Together with low production costs and a large workforce, this makes Mexico one of the top attractions for mining spending.

Making predictions in the mining sector is a tough game, but Mexico offers something that reassures investors – a broad base. The sector is not dependent on one particular material, spreading production between gold (31% of the total mining industry value of the country), copper (19%), silver

This investment promise has turned into some big projects in recent years. The world’s largest silver miner Fresnillo is spending over half a billion dollars on an expansion of the San Julian gold mine in northern Mexico, where a dynamic leaching plant and a 6,000 tonsper-day flotation plant will

be built.84 Both are enormous projects that will need enormous transportation. Meanwhile, an even bigger project is taking place at the Buenavista copper mine – Southern Copper’s investment in the facility, which lies just south of the MexicoUS border in Sonora, stands at $3.5 billion.85 With over $8 billion invested in mining prospecting in 2016 alone, any project cargo handler looking at Mexico will do well to keep an eye on the country’s healthy, resilient mining sector.

http://www.mining.com/mexicos-mining-sector-to-reach-17-8bn-by-2020-on-the-back-of-silver-zinc-prices/ http://www.mining.com/mexicos-mining-sector-to-reach-17-8bn-by-2020-on-the-back-of-silver-zinc-prices/ 84 http://www.mining.com/fresnillos-output-up-but-san-julian-plant-to-be-commissioned-later-than-expected/ 85 https://www.woodmac.com/reports/metals-buenavista-copper-mine-project-16182391 82 83

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Country Focus: Mexico

MAJOR PROJECTS REQUIRING BREAKBULK TRANSPORT SERVICES IN MEXICO

Image: Tradelossa

From unleashing its renewable energy potential, through to preparing its oil and gas industry for private investment, Mexico is packed with projects requiring breakbulk cargo transportation services.

Fresh from Pemex losing its monopoly on Mexican oil and gas exploration comes a wave of international companies expanding their presence in Mexico’s oil fields. The Gulf of Mexico is already a hotbed of exploration and drilling activity –

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now, it is on the cusp of major expansion.

Around the world, countries are allocating billions of dollars towards infrastructure spending.

Mexico is no different. In May 2014, the Mexican government announced a massive nationwide initiative to upgrade and replace infrastructure links.

Green energy projects large and small are emerging across Mexico daily. Solar, wind, hydroelectric, and geothermal all feature in the future of

Mexican power generation, so it is building the necessary infrastructure to secure a cleaner energy outlook.

Renewables will remain a source of project cargo contracts until well into the 2020s, as Mexico turns to green sources for its power needs.

Here are some of the activities and developments attracting super-heavy freight to give you an idea of how breakbulk handlers can do lucrative business in Mexico.

Country Focus: Mexico

NATIONAL INFRASTRUCTURE PROGRAM WHAT: Nationwide WHERE: Nationwide infrastructure upgrade program across six key sectors COST: $586 billion TIMEFRAME: 2014-2018

Image: Shutterstock Even though Mexico is a trillion-dollar economy, its infrastructure is lacking.

In a country where the population is growing at around 1.3% each year, public utilities are starting to feel the weight of these extra citizens.

Announced in 2014, and predicted to wrap up in 2018, Mexico’s Nationwide Infrastructure Upgrade Programme is amongst the nation’s most ambitious public works. Approximately $586 billion has been put aside to pay for these countryspanning developments, which include: • Transport & communications – 223 projects – $105 billion

• Health – 87 projects – $6.1 billion • Housing & urban development – Several projects nationwide – $103 billion86 Giving each project its own focus would deserve its own report, but here are some of the highlights of Mexico’s infrastructure construction splurge: • Construction of the Elevated Route over the MéxicoVeracruz Highway • Construction of the Intercity Passenger Rail System • Expansion of the Port of Veracruz

• Energy – 262 projects – $305 billion

• Development and construction of a new airport for Mexico City

• Pipelines – Five new pipelines in the Border Regions – $2.5 billion

• Laguna Verde Nuclear Power Station expansion

• Water treatment & infrastructure – 84 projects – $33 billion

All told, it is a hefty undertaking – one that encompasses nearly every aspect of public life. It should

https://www.export.gov/article?id=Mexico-Infrastructure-Program

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also be pointed out that the 2014-2018 date range may refer to the initial tendering and contracting phase. Construction proper, which is likely to be funded by numerous PPPs, will likely take place over the next 15 to 30 years.

Nearly three decades of largescale infrastructure building is likely to push the demand for breakbulk specialists higher throughout Mexico. Many of the projects are also based on improving Mexico’s transport and logistics performance too, such as construction of new highways, ports, and viaducts, essentially making moving bulky cargoes across the country an easier prospect.

So, not only is Mexico’s monumental construction work creating opportunities for oversized cargo freight handling companies, it is going to great lengths to ensure, logistically, the nation greatly improves too.

Country Focus: Mexico

EÓLICA DEL SUR WIND FARM WHAT: 396MW wind farm WHERE: Juchitán, Oaxaca, Mexico COST: $1.2 billion TIMEFRAME: 2011-ongoing

Image: Shutterstock Eólica del Sur is a wind farm project that has been rumbling along for some time.

Construction was halted in 2015 after it was alleged permits were awarded too early,87 but now this $1.2 billion project is finally starting to enter its first building phase.

The project, which will be Mexico’s largest wind farm and one of the biggest in Latin America, will be cover 5,332 hectares in Oaxaca state’s La Ventosa region, just outside the municipality of Juchitán88 – recognised as one of the best spots in the world for wind resources.89

Overall, 132 towers are to be installed at Eólica del Sur. 396MW of clean electricity will be generated here, with each turbine producing 3MW alone. It is estimated that this latest renewable project will cut carbon dioxide emissions by as much as one million tons a year in the Oaxaca region. Also required at the site is construction of a 52km transmission line in order to connect the wind farm to Mexico’s national grid.90 Securing funding for the project has not been an easy process, and costs have spiralled upwards as a result. Initially,

it came in under the billion dollar mark. Now, with project delays and partners pulling out, Mitsubishi Electric and Mexico’s National Infrastructure Fund will be putting up the majority of the final $1.2 billion project cost.91 Eólica del Sur is representative of Mexico’s shift towards renewables with its freshly liberalised energy market.

As public companies increasingly invest in wind farms such as this, and other clean energy projects, a greater number of deals and contracts will be unearthed for breakbulk operators.

http://mexiconewsdaily.com/news/wind-farm-project-halted-after-appeal/ http://subscriber.bnamericas.com/project-profile/en/parque-eolica-del-sur-ex-marena-renovables-eolica-del-sur 89 http://www.iadb.org/en/news/news-releases/2011-11-24/mexicos-marenas-renovables-wind-farm,9708.html 90 http://www.iadb.org/en/news/news-releases/2011-11-24/mexicos-marenas-renovables-wind-farm,9708.html 91 https://subscriber.bnamericas.com/Subscriber/en/news/project-profile-mexicos-eolica-del-sur-finally-looks-set-to-be-built 87 88

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Country Focus: Mexico

OPPORTUNITIES AND CHALLENGES FOR BREAKBULK CARGO HANDLERS IN MEXICO OPPORTUNITY: DEVELOPMENT OF THE RENEWABLE ENERGY SECTOR “This is not a reform, it’s a revolution on an unprecedented scale,” Dr Fatih Birol, Executive Director of the International Energy Agency, told the world’s press in October 2016 when describing Mexico’s ongoing energy reforms. If it is a revolution, then much of the nation’s zeal is being channelled into the renewables sector.

As outlined earlier in this report, Mexico has strict goals in place regarding production of clean

energy and its share in Mexico’s supply chain. Implementation of these will rely on how quickly and efficiently the numerous upcoming/ongoing installation projects are put into place.

Of course, any project lead, working on developments of this nature, will know transport and logistics are integral to timely project delivery. Mexico’s renewable sector holds incredible contract potential for carriers from now until midway

through the next century. By 2050, Mexico is aiming at 50% clean-power generation.

The developments Mexico needs to meet this are all underway now, being built, or have been tendered out to winning bidders. Therefore, the sector should offer a near constant flow of contracts and jobs for international breakbulk operators going forward.

OPPORTUNITY: ENERGY INDUSTRY REFORM With Mexico’s ongoing energy reform, a wave of exploration and oil and natural gas development is sweeping across the nation at present, as outlined earlier in this report. Opening up of the industry to private investors is reinvigorating what was a flagging economic sector, and opened the doors to billions in investment.

Lourdes Melgar, Mexico’s former Deputy Secretary of Energy for Hydrocarbons, is confident that

private firms are ready to open up a new chapter for Mexican energy, telling MIT, “Private sector participation will be key to the success of the energy reform as it allocates fresh resources to infrastructure development, brings about competition and efficiency, and promotes technological and managerial best practices.”

More importantly, private sector cash means increased revenue flows for Mexico’s formerly ailing oil and gas industry. More

money means more exploration and production activity, and a subsequent need to move business-critical components and machinery to Mexico’s onand-off-shore project locations.

Over-dimensional and outsized cargoes are par the course for the oil and gas industry. So, very much like renewables, hydrocarbon exploration and extraction is set to become a consistent source of project cargo contracts going forward.

92 https://www.iea.org/newsroom/news/2016/october/mexicos-energy-reform-is-set-to-revitalise-an-ailing-sector and-boost-the-econom.html 93 http://news.mit.edu/2017/3-questions-lourdes-melgar-mexico-energy-reform-0322

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Country Focus: Mexico

CHALLENGE: CORRUPTION Unfortunately, corruption is rife throughout Mexico. The influence of the Cartels, with their focus on drug-related violence, crime, and illegitimate business, has had a negative impact on the political and business processes of the nation, creating a negative business environment.

On Transparency International’s 2016 Corruption Perceptions Index rankings, Denmark is considered the world’s cleanest country (i.e. almost entirely free of corruption). Mexico ranks 123 spaces lower than the Danes, sharing the same corruption perception score as Djibouti, Sierra Leone, and Afghanistan.94

Bribery is a real issue. 60% of Mexican entrepreneurs surveyed by the Mexican Institute for Competitiveness (IMCO) said corruption is simply a part of the nation’s business culture.

To understand how it affects business, the same survey revealed 65% of respondents have lost out on deals to competitors who have used their influence or paid bribes to win contracts.95 Such a nationwide epidemic has been met with government action. In May 2015, the Mexican Congress passed a law creating a National Anti-Corruption system (SNA), aimed at combating corrupt practices in government departments.96

Fully enshrined in law from mid-2016 onwards, the SNA is expected to be rolled out to state and municipal levels from May 2017 onwards, although some, such as National President of the Mexican Employers’ Federation Gustavo de Hoyos, believe this will do little to improve the business situation.97 However, even with combating corruption now written into Mexican law, the impact of the SNA on both public and private projects is yet to be seen.

http://issuu.com/transparencyinternational/docs/2016_cpireport_en?e=2496456/43483458 https://qz.com/545958/mexico-would-be-an-economic-superstar-without-corruption/ 96 https://www.forbes.com/sites/riskmap/2015/10/22/5-steps-for-managing-corruption-risk-in-mexico/#58603a19726c 97 http://mexiconewsdaily.com/news/anti-corruption-plan-sees-little-progress/ 94 95

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Region Focus: Latin America

Image: Shutterstock

LATIN AMERICA AT A GLANCE

Latin America is undergoing rapid expansion in some huge economic sectors. The levels of oversized cargoes entering the region are set to soar – thanks in no small part to the megaprojects found in almost every Latin American nation.

Construction of renewable energy infrastructure, replacement and renovation of existing public utilities and

transport routes, plus large scale oil and gas and mining operations, all play starring roles in Latin America’s development story. Latin America is also home to the Panama Canal, that vital waterway linking the Atlantic and Pacific Oceans which will soon receive an expanded port and container terminal in Colón on the edge of the Caribbean Sea, funded by $1 billion of Chinese investment.98

http://www.globalconstructionreview.com/news/chinese-firm-starts-w7rk-1bn-panama7nian-meg7aport/

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Region Focus: Latin America

CENTRAL AMERICA Belize Guatemala GDP (estimated): Population: Annual GDP growth: Industrial production growth: FDI Inflows: 2016 estimate99

$68.39 billion 15,189,958 3.5%

GDP (estimated): $1.77 billion Population: 353,858 Annual GDP growth: 0% Industrial production growth: -1% FDI Inflows: $65,000,000 2015 estimate108

3.2% $1.2 billion

Honduras GDP (estimated): $20.93 billion Population: 8,893,259 Annual GDP growth: 3.6% Industrial production growth: 3.3% FDI Inflows: $1.2 billion

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2015 estimate104 105

Nicaragua

El Salvador GDP (estimated): $26.61 billion Population: 6,156,670 Annual GDP growth: 2.4% Industrial production / growth: 2.4% FDI Inflows: $450,000,000

GDP (estimated): $13.41 billion Population: 5,966,798 Annual GDP growth: 4.5% Industrial production growth: 5% FDI Inflows: $835,000,000 2015 estimate106 107

2016 estimate103

Costa Rica

Panama

GDP (estimated): $57.69 billion Population: 4,872,543 Annual GDP growth: 4.3% Industrial production growth: 4% FDI Inflows: $3.11 billion

GDP (estimated): $55.23 billion Population: 3,705,246 Annual GDP growth: 5.2% Industrial production growth: 4.8% FDI Inflows: $4.51 billion

2016 estimate102

2016 estimate101

https://en.portal.santandertrade.com/establish-overseas/guatemala/investing https://www.cia.gov/library/publications/the-world-factbook/geos/gt.html 101 https://www.cia.gov/library/publications/the-world-factbook/geos/pm.html 102 https://www.cia.gov/library/publications/the-world-factbook/geos/cs.html 103 https://www.cia.gov/library/publications/the-world-factbook/geos/es.html 104 https://en.portal.santandertrade.com/establish-overseas/guatemala/investing 105 https://www.cia.gov/library/publications/the-world-factbook/geos/ho.html 106 https://en.portal.santandertrade.com/establish-overseas/nicaragua/investing-3 107 https://www.cia.gov/library/publications/the-world-factbook/geos/nu.html 108 https://www.cia.gov/library/publications/the-world-factbook/geos/nu.html 99

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Region Focus: Latin America

SOUTH AMERICA Colombia

Venezuela

Guyana

GDP (estimated): $274.1 billion Population: 47,220,856 Annual GDP growth: 2.2% Industrial production growth: 1.9% FDI Inflows: $12 billion

GDP (estimated): $333.7 billion Population: 30,912,302 Annual GDP growth: -10% Industrial production growth: -8% FDI Inflows: $1.6 billion

GDP (estimated): $3.46 billion Population: 735,909 Annual GDP growth: 4% Industrial production growth: 12% FDI Inflows: $122,000,000

2016 estimate111

2016 estimate112

2015 estimate122 123

Ecuador GDP (estimated): $99.12 billion Population: 16,080,778 Annual GDP growth: -2.3% Industrial production growth: -3.2% FDI Inflows: $2.2 billion

Suriname

2016 estimate115

GDP (estimated): $4.137 billion Population: 585,824 Annual GDP growth: -7% Industrial production growth: -2% FDI Inflows: $276,000,000

Peru

2015 estimate120 121

GDP (estimated): $180.3 billion Population: 30,741,062 Annual GDP growth: 3.7% Industrial production growth: 3.2% FDI Inflows: $8.15 billion 2016 estimate114

Chile GDP (estimated): $234.9 billion Population: 17,650,114 Annual GDP growth: 1.7% Industrial production growth: 0.2% FDI Inflows: $18 billion 2016 estimate113

Argentina GDP (estimated): $541.7 billion Population: 43,886,748 Annual GDP growth: -1.8% Industrial production growth: 1.7% FDI Inflows: $9.51 billion 2016 estimate110

https://www.cia.gov/library/publications/the-world-factbook/geos/br.html https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html 111 https://www.cia.gov/library/publications/the-world-factbook/geos/co.html 112 https://www.cia.gov/library/publications/the-world-factbook/geos/ve.html 113 https://www.cia.gov/library/publications/the-world-factbook/geos/ci.html 114 https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html 115 https://www.cia.gov/library/publications/the-world-factbook/geos/ec.html 116 https://www.cia.gov/library/publications/the-world-factbook/geos/uy.html 117 https://en.portal.santandertrade.com/establish-overseas/bolivia/investing-3 118 https://www.cia.gov/library/publications/the-world-factbook/geos/bl.html 119 https://www.cia.gov/library/publications/the-world-factbook/geos/pa.html 120 https://en.portal.santandertrade.com/establish-overseas/suriname/investing-3 121 https://www.cia.gov/library/publications/the-world-factbook/geos/ns.html 122 https://en.portal.santandertrade.com/establish-overseas/guyana/investing-3 123 https://www.cia.gov/library/publications/the-world-factbook/geos/gy.html 109 110

Brazil GDP (estimated): $1.77 trillion Population: 205,823,665 Annual GDP growth: -3.3% Industrial production growth: -3% FDI Inflows: $58 billion 2016 estimate109

Paraguay GDP (estimated): $27.32 billion Population: 6,862,812 Annual GDP growth: 3.5% Industrial production growth: 6.5% FDI Inflows: $704,000,000 2016 estimate119

Uruguay GDP (estimated): $54.37 billion Population: 3,351,016 Annual GDP growth: 0.1% Industrial production growth: 3.5% FDI Inflows: $1.65 billion 2016 estimate116

Bolivia GDP (estimated): $35.7 billion Population: 10,969,649 Annual GDP growth: 3.7% Industrial production growth: 3.5% FDI Inflows: $510,000,000 2015 estimate117

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Region Focus: Latin America

INDUSTRIES OF LATIN AMERICA OIL & GAS

Image: Shutterstock

South America’s energy sector is enormous – and with plenty of new discoveries made in the past decade, it has the project cargo opportunities to match.

11 of the 35 largest oilfield discoveries in the past decade were made in Brazil, which has helped lead to a 68% increase in the country’s proven oil and natural gas reserves. Production has seen a similar increase,

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being projected to rise by 210,000 barrels per day in 2017.

The meat of Brazil’s oil areas are offshore, chief among them the Lula, Jupiter and Sugar Loaf fields discovered in the past decade or so. The estimated oil

in place of these fields is huge, but development has been tentative so far – it is one to keep an eye on for the project cargo community.

Region Focus: Latin America

PROJECT CARGO CASE STUDY: MOVING 3,000 TON CONSTRUCTION MODULES Location: South Brazil

Heavy cargo handling specialist ALE moved and installed 40 modules for a construction project in the south of Brazil during October 2016.

Cargo: 40 3,000-ton construction modules for P-74 FPSO vessel

The heavy-lift project was completed using ALE’s AL.SK350 crane and involved modules weighing up to 3,000 tons, making it the heaviest commercial load ever lifted by a land-based mobile crane, according to ALE.

Transport Company: ALE Date: October 2016

“The crane is performing well and exceeding expectations with its high slew speed, in combination with the 4,000-ton winch system. Despite challenges faced by the weather, we have successfully completed the first campaign ahead of schedule, recognizing the engineering achievements this milestone brings,” said Ronnie Adams, Senior Project Manager at ALE. The modules were installed as part of work for the P-74 Floating Production, Storage and Offloading, or FPSO, vessel.

Image: ALE

Argentina is in the top four countries globally for shale oil and shale gas reserves, known as unconventional reserves as extracting them requires specialist techniques and equipment. In particular, the large Vaca Muerta shale formation in the west of the

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country near the Andes has been confirmed for development starting in 2017. Ricardo Bedregal at HIS Energy has estimated that $8 billion a year would be needed to bring Vaca Muerta production to fruition, with 140 drilling rigs needed at peak production.

Argentina’s hydrocarbon industry in general is receiving heavy investment, including 20 plants for gas treatment and purification, 657,000 barrelper-day refining capacity, and 15,500 km of trunk gas pipelines including the Argentine Northeast Gas Pipeline.

Region Focus: Latin America

PROJECT CARGO CASE STUDY: NAVIGATING THE AMAZON Location: Finland to Manaus, Brazil, then remote Amazon basin oil fields

UTC Overseas took three months to undertake the mammoth task of delivering seven 130-tonne Wärtsilä generating sets from Finland to remote oil fields in the Amazon.

Cargo: Seven 130-ton Wärtsilä generator sets

The generating sets plus some of their accessories, including seven 40-foot containers and eight radiators in wooden boxes, were transported first by sea from Finland to Manaus, Brazil, and then by waterway, having offloaded the generating sets and their accessories onto four barges operated by Transglobal Servicos midstream.

Transport Company: UTC Overseas

Two generating sets were loaded onto each barge and the seventh was alone on another.

Date: February 2017

UTC carried out six months of “exhaustive preparation” before beginning the transportation, and, at different stages of the operation, had as many as 20 staff involved. It verified and analysed river port facilities and landing earthen ramps, checked access to roadways and site facilities for disembarking and offloading the generators on to pads, and evaluated the stability of the bridges necessary on the route.

“It was important to evaluate all the possible negative circumstances we could be faced with in order to avoid any typical last-minute surprises. You have to be prepared to have the solution on hand then and there,” said Alain Holtappels, Regional Manager of West Coast of South America at UTC Overseas.

The project’s team traversed through four countries on its journey from Finland to Ecuador following the river flow, which passes through Peru.

In total, the journey spanned more than 12,400km.

When the barges arrived at the ports, the generating sets were transferred from the barges to low-bed, 10– to 12-axle trucks for transport to the final destinations, which Holtappels said was “a very difficult task.” Altogether, the trucks had to cross 12 bridges en route to their final destinations, many of which are not designed for this weight of cargo, meaning construction or reinforcement of bridges along the route was necessary.

To complete the transportation, the team unloaded the generating sets into their respective buildings without any incidents using a sliding system.

“Wärtsilä trusted us with this job and I think they were satisfied with the result,” Holtappels said. “We arrived at the final destinations with zero delays and everybody was happy.”

Images: UTC Overseas

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Region Focus: Latin America

Venezuela holds the largest oil reserves in the world, but at the time of writing doing business in the country is practically impossible, so the chance of project cargo operators getting Venezuelan contracts is minimal. But if and when the country recovers from its economic meltdown, there is immense potential for operators in Venezuela’s oil and gas sector.

for around two thirds of the total. Much of Colombia’s oil production is based in the Meta department in central Colombia, where the country’s largest oil field of Rubiales is located. Oil production also takes place in the Andean foothills and the jungle of the eastern Amazon – a remote location which requires challenging project cargo solutions.

South America’s third largest oil producer after Venezuela and Brazil is Colombia, whose petroleum exports account

On the downside, the shadow of militant and insurgent attack hangs heavy over Colombia’s oil sector, with frequent

attacks on pipelines and facility discouraging the kind of investment that Colombia’s energy sector deserves.

Oil and gas plays a role in the rest of the continent as well, with Ecuador chief among them as an OPEC member.

Oil accounts for over half of Ecuador’s exports, and a lack of refining capacity also means the petrochemicals sector in the country is promising for the transportation industry.

MINING

Image: Shutterstock To uncover one of Latin America’s key economic drivers, you have to do a little digging.

Mining, thanks to the continents’ rich mineral wealth, forms a central pillar of many Southern and Central American countries’ economies. Around 45% of global copper production, half

of all silver mined, and around 20% of gold and zinc produced globally comes from South American mining operations, as well as large amounts of iron.124 Two of the world’s largest producers of copper, Chile and Peru, are located along South America’s Pacific

http://www.mining.com/web/focus-latin-american-mining-industry/ https://www.export.gov/article?id=Chile-Mining-Sector

124 125

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Coast, underpinning mining’s rich heritage and economic importance for the region.

Chile alone is the world’s largest producer of copper, supplying 30% of global demand, producing around 5.75 million tons of the metal in 2015. 125

Region Focus: Latin America

Unwilling to rely on a single mineral product for its mining prosperity, Chile also extracts vast quantities of molybdenum, gold, and silver. It might also be sitting on as much as 62% of the world’s currently-exploitable lithium reserves. A demand for lithium-ion batteries, particularly in the automotive world, is expected to become a significant source of capex in Chile’s mining industry.126 An injection of around $56 billion is being fed into Peru’s mining sector until at least 2021, including substantial cash flow increases for the copper, gold, iron, and zinc extraction industries. As much as 60% of Peru’s exports are minerals and ores. Behind its neighbour Chile, Peru is the second largest copper producer in the world. As much as $2.8 billion was invested in 2016 alone, including more money for mine preparation and infrastructure construction.127 Close to $45 billion is ready to be invested in mine expansion, construction, and exploration

well into the next decade, making Peru a mining industry to monitor going forward.128 Iron can be found abundantly throughout Latin America – particularly Brazil. In 2016, South America’s biggest economy became the world’s second largest exporter of iron.

Vale, the globe’s number one iron ore producer, centres most of its operations here, including the newly commissioned $14 billion S11D iron ore project in the Carajás Mining Complex.

The Carajás Mining Complex, the biggest iron ore mine anywhere in the world, produces 40 million tons of ore each year and sits on provable reserves of 7.8 billion tons.129 With the advent of S11D, output will more than double to 90 million tons per annum.

Elsewhere, Vale is planning on investing in its Itabira Complex to boost production to 55 million tons to 2018.130 Several countries are looking to expand their mining operations considerably. Argentina, for example, recently passed new laws to attract investors,

including dropping a 5% tax on mining companies, and another removing the prohibition on foreign companies sending mining profits made in Argentina outside of the country. It is hoped this will garner $25 billion in investment by 2025.131 Ecuador is also anticipated for great things, mining-wise, with its market valuation set to jump from $1.1 billion in 2017 to $7.9 billion by 2021.132 A number of foreign-backed projects are underway, such as the Murador copper mine, controlled

by China’s CRRC-Tongguan consortium, and Junefield Minerals’ Rio Blanco copper development.133 Consistent capital investment is scheduled to work its way into Latin America’s mining industry until at least midway through the next decade. More money means more projects means more project cargos, so oversized freight specialists: keep watching this sector with interest.

https://www.export.gov/article?id=Chile-Mining-Sector http://sesprofessionals.com/overview-of-perus-mining-industry/#expansion 128 http://sesprofessionals.com/overview-of-perus-mining-industry/#expansion 129 http://www.mining-technology.com/projects/carajas 130 http://www.austmine.com.au/News/articleType/ArticleView/articleId/2708/Brazil-Iron-Ore-Industry-Overview 131 http://www.mining.com/argentina-pass-new-mining-law-week/ 132 http://www.mining.com/ecuador-mining-industry-to-grown-eightfold-by-2021-report/ 133 http://www.mining.com/ecuador-mining-industry-to-grown-eightfold-by-2021-report/ 126 127

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Region Focus: Latin America

RENEWABLE ENERGY Over the last decade, renewable energy has made some lengthy strides in Latin America, and it seems positioned to continue its upwards trajectory as the 2020s approach. From 20042014, global investment topped $2 trillion, with 2014 accounting for $270 million of the monolithic total. Latin American alone accounted for half of this spending. By 2030, the region could be generating nearly 200 gigawatts of renewable energy annually.134 An important cross-region project is the Central American Electrical Interconnection System (SIEPAC). This is a mammoth task, involving the integration of the power grids of Panama, Costa Rica, Honduras, Nicaragua, El Salvador, and Guatemala. Even though it was first proposed in 1987, it took until 2013 for SIEPAC to enter legislation. Once fully integrated, SIEPAC will be a 230,000 volt transmission network complete

with 300 megawatts of transmission capacity.135 Depending on their size, developmental stages, legislative environment, and funding, the renewable sectors of Latin American states differs from country to country.

Argentina’s clean energy output meets 13% of total domestic power demand, for example, whereas nearly 100% of Costa Rica’s energy needs comes from renewables. Roughly half the power generated in Latin America, however, is produced sustainably.136 Much of the electricity generated throughout South and Central America, around 62%, comes in the form of hydropower. Brazil leads Latin America’s hydropower sector. As much as 76% of its electricity originates from hydroelectric plants – noteworthy as Brazil is the Americas’ third largest producer of electricity.

By 2020, Brazil will need to add 70GW to its national grid, something which 25,000 of upcoming Hydropower capacity is expected to provide. Projects like the 11,233MW, $11.2 billion Belo Monte power plant on the Xingu River in the state of Pará are expected to aid with this.137 While hydropower is a big alternative to fossil fuels throughout South and Central America, solar and wind are two areas gaining traction throughout the region.

More than 47 GW of new wind power is expected to be put into place between 2017 and 2026 in Latin America, with Argentina going in particularly hard.

Argentinian authorities tendered out 765MW of wind capacity in November 2016138, backed by upcoming construction projects like the 220MW Chubut wind farm announced in June 2017.139 Argentina is aiming for 20% of its power supply to be sourced from renewables by 2025.140

http://www.renewableenergyworld.com/articles/2015/08/why-renewable-energy-in-latin-america-is-a-winner.html http://www.eprsiepac.com/contenido/ 136 http://www.nortonrosefulbright.com/files/renewable-energy-in-latin-america-134675.pdf 137 http://www.power-technology.com/projects/belomontehydroelectr/ 138 http://www.windpowermonthly.com/article/1411641/argentina-seeks-400mw-wind-tender 169 https://renewablesnow.com/news/argentinas-genneia-signs-power-supply-contract-for-220-mw-wind-park-571077/ 140 http://www.climateactionprogramme.org/news/argentina-to-become-latin-americas-most-attractive-renewable-energy-market 134 135

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Region Focus: Latin America

Solar is enjoying blazing growth in Latin America, expanding at a rate of 169% between 2012 and 2014, far outstripping levels of development seen elsewhere.

Geographically, the region is well suited to PV projects, with features such as the Atacama Desert or the sweeping Pampas plains spanning Argentina, Brazil, and Uruguay. GTM Research suggests conditions are so good that Latin American countries are expected to install 23.7 GW of additional solar capacity during 2017-2020.141 Chile is at the forefront of Latin American solar expansion. Its

limited gas and coal supplies makes electricity generation a thorny issue for the Chilean government. Investing in solar is one way it is meeting energy security. US company SolarReserve, has proposed three huge projects that could generate electricity 24 hours a day using solar energy: 150 MW plant in Tamargual, a 260 MW site near Copiapó in the Atacama Region, and a 390 project in Antofagasta.142 While those projects are still in the conceptual stage, Latin America’s largest solar power plant is nearing completion.

Atacama-1, a 210 MW solar farm and power plant, is expected to come online by the end of 2017, providing 24 hour electricity generation for up to 410,000 homes a year.143 Regionally, the future of Latin America’s power sector isn’t just bright, it’s green too.

Renewables growing in size and scope throughout the region, promising an increasing number of developments going forward – becoming a potentially lucrative source of contracts and revenue for project cargo carriers into the next decade and beyond.

PROJECT CARGO CASE STUDY: RECORD BREAKBULK AIRLIFT Location: Viracopos and Garulhos Airports, Sao Paulo, to Santiago, Chile

In February 2017, industrial engineering firm Bolloré Logistics Chile transported a 155-ton transformer unit by air from São Paulo, Brazil, to Santiago, Chile.

Cargo: 155-ton transformer unit

The unit was transported on behalf of Chilean utility company Colbún and collected from manufacturer ABB’s facility in Guarulhos, Brazil.

From there it was transferred to the airport and loaded aboard an Antonov An-225 heavy-lift aircraft.

Transport Company: Bolloré

“This shipment was the heaviest single piece ever airlifted in the Americas, and the second-heaviest in the history of aviation. This was an extremely complex and challenging operation, which required over four months of thorough preparation,” said Nelson Figueroa, Director of the Industrial Projects Division at Bolloré Logistics Chile.

Date: February 2017

Image: Bolloré https://www.greentechmedia.com/research/report/latin-america-pv-playbook https://arstechnica.com/science/2017/03/plans-for-a-24-hour-solar-thermal-plant-earn-environmental-approval-in-chile/ 143 http://www.lifegate.com/people/lifestyle/chile-atacama-1-solar-power-plant 141 142

46

Region Focus: Latin America

MAJOR PROJECTS REQUIRING BREAKBULK TRANSPORT SERVICES IN LATIN AMERICA From the soaring peaks of the Andes to the sweeping plains of Argentina and the steamy depths of the Amazon rainforest, significant developments can be found in every corner of South and Central America. Latin America’s geography makes transporting necessary project components and equipment a challenge, but not one that is insurmountable.

Latin America is also home to the Panama Canal, that vital

47

waterway linking the Atlantic and Pacific Oceans. No stranger to large-scale development, Panama is soon to enjoy an expanded port and container terminal in Colón on the edge of the Caribbean Sea. $1 billion of Chinese investment is being pumped into this development, dubbed the Panama Colón Container Port, hinting at big interest in Central America from the Far East.

While the exact nature, size, funding, locale, and duration differs from project to project, they are united by a common thread: the need to move overdimensional cargoes to and from project sites.

Below are profiles of a few megaprojects indicating the kind of activity taking place region-wide, providing a glimpse into the variety of freight and cargoes required for Latin America’s biggest developments.

Region Focus: Latin America

PORTO CENTRAL WHAT: Greenfield port development project WHERE: Presidente Kennedy, Espirito Santo, Brazil COST: $1.52 billion TIMEFRAME: 2017-2021

Image: Shutterstock While Brazil is already well served with Atlantic ports, it is getting a fresh mixed-use maritime facility in the state of Espirito Santo.

Located close to the municipality of Presidente Kennedy on the state’s southern tip, Porto Central promises much. Its project lead, the Port of Rotterdam Authority, states this latest world class facility uses “industrial clustering” to provide greater operational efficiency.145 Industrial clustering means bringing together multiple sectors into the port facility proper, allowing them to be served by individual vessels – rather than building facilities to serve a singular purpose

or industry. As such, Porto Central will handle iron ore storage, liquid bulk, steel, and coal cargoes as well as bulk agricultural cargo.

Porto Central will also feature a dedicated oil and gas terminal to keep Brazil’s upstream rolling smoothly. Oil and gas resources would be stored in as many as 80 tanks to store upwards of 160,000 cubic meters of refined products.146 The facility itself will cover an area of approximately 2,000 hectares. It will be a deepwater port too, with a serviceable depth of approximately 25 meters. Its location, identified

by Brazil’s National Agency of Waterway Transportation as a developmental priority and ideal for the installation of a port, sits on a hinterland where six Brazilian states meet. Together these six regions, which include Rio de Janeiro and Sao Paulo, account for 64% of Brazil’s GDP. Economically, the port makes sense – but it will be an enormous construction effort.147 The fact that this is a greenfield site means dredging is required, to be carried out by The Netherlands’ Van Oord Dredging and Marine Construction.

Crucially, it also means facilities such as the aforementioned oil and gas infrastructure, bulk

http://www.cardosofreitas.com.br/portocentral/wp-content/uploads/2012/04/201203ID-FS003-PORTO-CENTRAL-E_lowres1.pdf http://blog.industrialinfo.com/2017/01/13/oil-gas-projects-abound-in-brazil/ 147 http://www.cardosofreitas.com.br/portocentral/wp-content/uploads/2012/04/201203ID-FS003-PORTO-CENTRAL-E_lowres1.pdf 145 146

48

Region Focus: Latin America

cargo terminals, and other necessary port functionalities will have to be built – including its berths and docks.148 If we look at similar port construction projects from around the world, such as the Tuas Container Terminal in Singapore, we can see the types of superheavy components that will need transporting to Porto Central.

At Tuas, which has had to build new berths, one key feature are its caissons. Each of these foundational elements weighs 15,000 tons and is 28 meters tall. Porto Central will be in need of cargoes such as this once construction begins in earnest.

Building work is expected to take place in 2017 with the first phase completed by 2021. In

an unusual move, Porto Central S.A, the joint venture between the Port of Rotterdam Authority and TPK Logistica Porto Central, will build the site’s substructure and infrastructure links itself.

Specialised areas, such as grain storage, will be built and operated by outside partners.149

TOROMOCHO MINE WHAT: High-altitude copper mine WHERE: Morococha, Yauli Province, Junin Province, Peru COST: $3.5 billion TIMEFRAME: ONGOING

Image: MIQ Logistics

Below the surface of Peru, or buried deep beneath its soaring mountain ranges, sits millions of tons of mineral resources – and no shortage of companies are itching to dig them out. Peru is no stranger to mega mining projects, but one of its latest,

and largest, is the $3.5 billion Toromocho Mine.

the mine in late 2016, expansion plans are underway.

It is a project that has been going for some time ( it first began production in 2013 to be exact), but after Chinese investors inked a deal to expand

The majority of Toromocho’s output is copper and copper concentrate, while molybdenum and silver is extracted here too.

As much as 1.5 billion tons of ore

http://portfinanceinternational.com/categories/emerging-economies/item/2673-brazil%E2%80%99s-porto-central-aims-to put-presidente-kennedy-on-world-stage 149 http://portfinanceinternational.com/categories/emerging-economies/item/2673-brazil%E2%80%99s-porto-central-aims-to put-presidente-kennedy-on-world-stage 148

49

Region Focus: Latin America

can be potentially excavated out of Toromocho. Over the course of its 35 year operational life, the mine is expected to hit a peak capacity of 117,200 tons of ore a day, alongside daily production of 1,838 tons of copper concentrate and 7.25 tons of molybdenum oxide.150

initial construction phase in 2012. The process itself was long and laborious, indicating some of the challenges Latin America’s varied geography poses for logistics operators.

was a smooth, uninhibited one, including:

• Tollgates151

As Toromocho is perched thousands of meters high in the Andes, getting essential components to and from Toromocho has been one of the project cargo world’s toughest challenges.

MIQ conducted in-depth route and geographical analysis, in order to identify problem areas where cargo loads might be hampered by the terrain. The nearest railroad runs near to Toromocho, but oversized loads are prohibited – meaning MIQ had to transport its cargoes entirely by road.

MIQ Logistics, a US-based transportation firm, handled moving shells for Toromocho’s ball mills prior to the mine’s

Even after careful measuring and route planning, MIQ still had to construct a number of elements to ensure the route

• 25 lay-bys • 13 bridge reinforcements • Check points

It also had to design a unique frame to carry the shells, which were to be transported unpackaged. MIQ engineered and built a flat-bed frame featuring 12 hydraulic modules with their own unique axes.

This allowed MIQ’s trucks to enjoy greater turning circles, making them more able to tackle the Andes twisting mountain highways.

Images: MIQ Logistics

http://www.chinalco.com.pe/en/characteristics-mine http://www.breakbulk.com/wp-content/uploads/2016/10/Case-Study-Toromocho-Project.pdf 152 https://www.ft.com/content/3c7b1df6-04dd-374e-aa9b-8588e8222802 150 151

50

Region Focus: Latin America

ATACAMA-1 CONCENTRATED SOLAR PLANT WHAT: Latin America’s first 24 hour solar plant WHERE: Atacama Desert, Chile COST: $1.1 billion TIMEFRAME: 2015-2017

Image: Shutterstock The Atacama Desert covers an area of 105,000 square kilometers and is one of the driest places on Earth.

There are several of its corners that have never known rainfall, at least since record keeping began, and it also sits at roughly 4,000m above sea level. As places to build a solar power farm, despite its remoteness, the Atacama is hard to beat.

That might be why Chile is powering ahead with construction of Atacama-1 – Latin America’s first 24 hour solar power plant. Abengoa, a

Spanish multinational with an extensive energy portfolio, is the chief investor behind this $1.1 billion project, which will help Chile meet its goal of 25% renewable energy by 2025.

Compositionally, this project will feature a photovoltaic plant with a capacity of 100MW attached to the solar thermal power plant.

The power plant itself holds an output of 110MW and 17.5 hours of storage.153 Heliostats are to be arranged around a central tower. At the top of this tower is a sensor which collects solar radiation

beamed from the heliostats’ panels, captures it, and sends it off to the storage area.

Interestingly, Atacama-1’s tower will Chile’s second tallest building once topped off.154 A $17 million substation is also being built to connect the complex to Chile’s national grid.

Once Atacama-1 is up and running, Abengoa will begin developing its sister site – the cleverly titled Atacama-2. This would mirror Atacama-1 in size and scope, generating 110MW of power following its installed 100MW capacity.155

http://www.abengoa.com/web/en/novedades/atacama-1/acerca/noticias/ https://www.australiansolarquotes.com.au/2016/01/25/chiles-1-1bn-solar-power-tower/ 155 https://subscriber.bnamericas.com/Subscriber/project-profile/en/planta-solar-atacama-2-atacama-2 153 154

51

Region Focus: Latin America

OPPORTUNITIES AND CHALLENGES FOR BREAKBULK CARGO HANDLERS IN LATIN AMERICA OPPORTUNITY: REGION-WIDE DEVELOPMENT OF RENEWABLE ENERGY SECTOR Another area that holds dynamic opportunities for breakbulk cargo service providers is renewable energy. Latin America as a whole is collectively throwing billions into the development of a region-wide renewable energy sector.

The International Renewable Energy Agency (IRENA) is backing Latin America’s sustainable power development.

In its latest report on regional

energy policies, IRENA said: “High electricity prices in most of the region, growing demand, problems of energy security and, in some cases, the potential for exporting [energy], provide fertile ground for the take-off of renewable energy technologies.”156 Ongoing work in this sector should provide ample chances to secure lucrative contracts for logistics companies. By their

very nature, components for renewable energy production plants are often overdimensional, for example wind turbines or power-generation modules. Latin America represents billions in potential green energy capital, which can transfer into improved revenue streams for breakbulk cargo movers.

CHALLENGE: ECONOMIC & SOCIETAL INSTABILITY Diversity in the differing political, economic, environmental, and societal issues facing the region means Latin America poses numerous

challenges for business people and project cargo carriers. The nature of the concerns facing each nation are as varied as Latin America’s countries

themselves. But one thing is clear: the business environment throughout the region is affected greatly by them.

http://knowledge.wharton.upenn.edu/article/bright-outlook-renewable-energy-latin-america/

156

52

Region Focus: Latin America

THE FACTFILE: DOING BUSINESS IN LATIN AMERICA LATIN AMERICAN COUNTRIES BY COMPETITIVENESS Country

WEF Global Competiveness Ranking

Mexico

51

Belize

No data

Costa Rica

54

El Salvador

105

Guatemala

78

Honduras

88

Nicaragua

103

Panama

42

Country

Institutions (global Ranking)

Infrastructure (global ranking)

Infrastructure (score)

Macroeconomic environment (global ranking)

Macroeconomic en vironment (score)

Health & Primary Education (global ranking)

Health & primary education (score)

Central American Countries’ Global Competiveness Index Performance: Basic Requirements (WEF, 2016) 158

Mexico

116

3.3

57

4.3

51

5.0

74

5.7

Guatemala

110

3.3

81

3.8

57

4.9

107

5.0

Panama

70

4.0

36

4.9

16

6.0

67

5.8

Costa Rica

60

4.1

67

4.1

82

4.4

35

6.2

El Salvador

132

3.0

69

4.0

97

4.2

96

5.4

Honduras

109

3.3

99

3.3

55

4.9

83

5.6

Nicaragua

122

3.2

104

3.2

56

4.9

87

5.5

Belize

No data

No data

No data

No data

Institutions (score)

Central American Countries’ Global Competitiveness Index Performance: Overall Rankings (WEF, 2016) 157

No No data data

No No data data

Global ranking refers to a country’s rank on the WEF 2016-2017 Global Competitiveness Index (out of 138). Score refers to that country’s performance in specific sectors between 1-7 (1 being the lowest score; 7 being the highest).

157 158

http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/ http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/

53

Region Focus: Latin America

61

Venezuela

130

Chile

33

Peru

67

Ecuador

91

Bolivia

121

Uruguay

73

Paraguay

117

Suriname

No data

Guyana

No data

Brazil

120

3.2

72

4.0

126

3.5

99

5.3

Argentina

130

3.0

85

3.7

130

2.9

63

5.9

Colombia

112

3.3

84

3.7

53

5.0

90

5.4

Venezuela

138

2.2

121

2.6

135

2.4

91

5.4

Chile

35

4.5

44

4.7

32

5.4

71

5.7

Peru

106

3.4

89

3.6

33

5.4

98

5.3

Ecuador

113

3.3

71

4.0

83

4.4

68

5.8

Bolivia

133

2.9

102

3.2

110

4.0

101

5.3

Uruguay

32

4.7

47

4.5

94

4.3

56

5.9

Paraguay

131

3.0

122

2.6

60

4.9

106

5.0

Suriname

No data

No No data data

No No data data

No data

No data

No data

Guyana

No data

No No data data

No No data data

No data

No data

No data

3.2

4.9

87

5.5

No data

No data

No data

160

122 Belize

No data

Institutions (score)

Health & primary education (score)

Colombia

Health & Primary Education (global ranking)

104

Macroeconomic en vironment (score)

Argentina

Macroeconomic environment (global ranking)

81

Infrastructure (score)

Brazil

Infrastructure (global ranking)

WEF Global Competiveness Ranking

Institutions (global Ranking)

South American Countries’ Global Competiveness Index Performance: Basic Requirements (WEF, 2016)

Country

Country

South American Countries’ Global Competiveness Index Performance: Overall Rankings (WEF, 2016) 159

3.2

104

No No data data

56

No No data data

Global ranking refers to a country’s rank on the WEF 2016-2017 Global Competitiveness Index (out of 138). Score refers to that country’s performance in specific sectors between 1-7 (1 being the lowest score; 7 being the highest).

159 160

http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/ http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/

54

Region Focus: Latin America

Overall Rank

Starting a business

Getting electricity

Registering property

Getting credit

Protecting minority investors

Paying taxes

Trading across borders

Enforcing contracts

Resolving insolvency

Ease of Doing Business in Central America: Economic Metric Rankings (World Bank & IFC, 2017 161 )

Country

EASE OF DOING BUSINESS IN LATIN AMERICA

Mexico

47

93

98

101

5

53

114

56

40

30

Guatemala

88

119

19

74

16

173

93

77

173

149

Panama

70

43

23

84

20

70

170

53

145

133

Costa Rica

62

125

53

52

7

165

62

71

125

107

El Salvador

95

129

109

71

44

158

166

44

104

80

Honduras

105

84

144

85

7

132

152

109

151

139

Nicaragua

127

99

146

146

101

145

176

73

83

103

Belize

112

158

79

126

167

118

44

101

134

81

Countries are ranked by the World Bank and International Finance Corporation on their performance in the above metrics against 190 reviewed countries.

Problematic Factors for Doing Business in Central America Table 01: Economic Factors (WEF, 2016 162 )

Restrictive labour regulations

Insufficient capacity to innovate

Inflation

Tax rates

Tax regulations

Foreign currency regulations

7

4

3.7

1.7

9.4

8.6

0.7

Guatemala

2.7

5.3

3.1

0

1.7

5.5

0

Panama

3.6

10.6

5

1

3.5

2.3

0.5

Costa Rica

10.3

5.6

4.5

1.6

13.4

7

1.9

El Salvador

5.5

1.5

2/2

1.3

10.4

3.4

0

Honduras

6.9

3.3

1.3

0.8

13.8

13

0.8

Nicaragua

9.4

1.2

7.6

0.6

8.2

8.6

0

No data

No data

No data

No data

Country

Access to financing

Factors

Mexico

Belize

161 162

No data

http://www.doingbusiness.org/rankings http://reports.weforum.org/global-competitiveness-index/

55

No No data data

Region Focus: Latin America

Problematic Factors for Doing Business in Central America Table 02: Infrastructure, Governmental & Societal Factors (WEF, 2016 163 )

Government insta bility

Inefficient govern ment bureaucracy

Policy instability

Inadequately educat ed workforce

Poor work ethic in national labour force

Crime & theft

Corruption

Poor Public Health

Mexico

6.7

0.4

12.1

2.3

5.1

1.6

12.7

22.5

1.2

Guatemala

14.1

0.6

11

6

7.8

1.3

19.7

17.7

3.5

Panama

3.5

0.8

17.5

1.3

15.8

6

9

18

1.6

Costa Rica

16.1

0.5

22.9

2

2

2.2

1.6

8

0.3

El Salvador

2.8

1

12.1

10.8

2.8

1.4

26.6

14

2.7

Honduras

3.9

2.3

15.3

4.2

4.9

1.4

13.5

13.2

1.5

Nicaragua

11.5

0

17.2

2.1

16.4

4.1

0

10.7

2.3

Belize

No data

No data

No data

No data

No data

No data

No data

Country

Inadequate infra structure supply

-

Factors

No No data data

Please note: From the list of factors, respondents to the World Economic Forum’s Executive Opinion Survey were asked to select the five most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5. The score corresponds to the responses weighted according to their rankings.

Starting a business

Getting electricity

Registering property

Getting credit

Protecting minority investors

Paying taxes

Trading across borders

Enforcing contracts

Resolving i nsolvency

Brazil

123

175

47

128

101

32

181

149

37

67

Argentina

116

157

91

114

82

51

178

111

50

98

Colombia

53

61

74

53

2

13

139

121

174

33

Venezuela

187

189

186

129

118

175

185

187

137

165

Chile

57

59

64

58

82

32

120

65

56

55

Peru

54

103

62

37

16

53

105

86

63

79

Ecuador

114

166

95

69

101

118

137

97

96

157

Bolivia

149

177

99

139

133

137

186

98

128

96

Uruguay

90

60

43

110

62

123

113

146

111

61

Paraguay

143

143

102

76

101

137

153

116

74

102

Suriname

158

185

84

176

175

165

103

78

187

129

Guyana

124

99

129

122

82

87

136

135

91

154

Country

Overall Rank

Ease of Doing Business in South America: Economic Metric Rankings (World Bank & IFC, 2017 164 )

Countries are ranked by the World Bank and International Finance Corporation on their performance in the above metrics against 190 reviewed countries.

161 162

http://www.doingbusiness.org/rankings http://reports.weforum.org/global-competitiveness-index/ 56

Region Focus: Latin America

Problematic Factors for Doing Business in South America Table 01: Economic Factors (WEF, 2016 165 )

Restrictive labour regulations

Insufficient capacity to innovate

Inflation

Tax rates

Tax regulations

Foreign currency regulations

Corruption

Poor Public Health

Brazil

3.4

8.7

2.8

2.5

15.9

12.5

0.2

22.5

1.2

Argentina

11.7

5.8

0.8

23.1

15.9

3.9

3.1

17.7

3.5

Colombia

5.2

5.4

2.1

4.5

21.1

8.6

0.8

18

1.6

Venezuela

1.4

7.1

0.1

17

2.4

1

24.2

8

0.3

Chile

4.7

15.8

10.2

0.6

6.9

10

0.2

14

2.7

Peru

2.8

15.4

3.2

0.5

6.7

7.6

0

13.2

1.5

Ecuador

12.8

14.9

3.2

2.1

11.6

8.3

4.9

10.7

2.3

Bolivia

3.6

15.5

3.1

0.5

11.1

9.2

0

8

0.3

Uruguay

3.7

17.9

5.7

7.1

16.5

1.3

0.4

14

2.7

Paraguay

10.5

5.1

3.7

0.3

0.7

2.5

1.2

13.2

1.5

Suriname

No data

No No data data

No data

No data

No data

No data

10.7

2.3

Guyana

No data

No No data data

No data

No data

No data

No data

No data

No data

Country

Access to financing

Factors

Please note: From the list of factors, respondents to the World Economic Forum’s Executive Opinion Survey were asked to select the five most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5. The score corresponds to the responses weighted according to their rankings.

165

http://reports.weforum.org/global-competitiveness-index/

57

Region Focus: Latin America

Problematic Factors for Doing Business in South America Table 02: Infrastructure, Governmental & Societal Factors (WEF, 2016 166 )

Government instability

Inefficient government bureaucracy

Policy instability

Inadequately educated workforce

Poor work ethic in national labour force

Crime & theft

Corruption

Poor Public Health

Brazil

7.8

3.4

11.9

9.2

4.8

0.9

0.8

13.6

1.7

Argentina

4.9

0.7

7.5

5.9

2.6

1.5

1.1

11.2

0.2

Colombia

9

0.9

8.7

3

9

2.4

5.3

16.2

0.9

Venezuela

2.2

1.6

9.7

11.5

0.4

0.8

10.9

9.4

0.2

Chile

3.5

0.5

17.2

6

11.6

4.3

4.6

1.7

2.1

Peru

11

0.7

19

5.6

5.1

2.1

6

12.6

1.6

Ecuador

1.2

2.6

11.5

8.5

4

2.9

2.2

8.5

0.9

Bolivia

2.9

0.2

17.2

3.4

6.2

5.4

1.1

19.1

1.3

Uruguay

11.6

0.2

16.4

0.2

11

5

1.9

0.2

0.9

Paraguay

15

0.4

13.6

1.5

14.5

5.2

3.6

18.2

4.1

Suriname

No data

No data

No data

No data

No data

No data

No data

No data

No data

Guyana

No data

No data

No data

No data

No data

No data

No data

No data

No data

Country

Inadequate infrastructure supply

Factors

Please note: From the list of factors, respondents to the World Economic Forum’s Executive Opinion Survey were asked to select the five most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5. The score corresponds to the responses weighted according to their rankings.

166

http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/

58

Region Focus: Latin America

ECONOMIC FREEDOM OF LATIN AMERICAN COUNTRIES Central American Countries by Heritage Foundation Economic Freedom Index Rankings (Heritage, 2016 Country

Economic Freedom Index score

Economic Freedom Index global rank

Economic Freedom Index rating

Mexico

63.6

70

Moderately free

Guatemala

63.0

74

Moderately free

Panama

66.3

54

Moderately free

Costa Rica

65.0

63

Moderately free

El Salvador

64.1

66

Moderately free

Honduras

58.8

100

Mostly unfree

Nicaragua

59.2

98

Mostly unfree

Belize

58.6

101

Mostly unfree

South American Countries by Heritage Foundation Economic Freedom Index Rankings (Heritage, 2016 Country

Economic Freedom Index score

Economic Freedom Index global rank

Economic Freedom Index rating

Brazil

52.9

140

Mostly unfree

Argentina

50.4

156

Mostly unfree

Colombia

69.7

37

Moderately free

Venezuela

27.0

179

Repressed

Chile

76.5

10

Mostly free

Peru

68.9

43

Moderately free

Ecuador

49.3

160

Repressed

Bolivia

47.7

168

Repressed

Uruguay

69.7

38

Moderately free

Paraguay

62.4

80

Moderately free

Suriname

48.0

167

Repressed

Guyana

58.5

106

Mostly unfree

167

168

Economic freedom scores are rated out of 100 based on their performance in rule of law, property rights, government spending, trade freedom, and so on.

167 168

http://www.heritage.org/index/ranking http://www.heritage.org/index/ranking

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)

)

Region Focus: Latin America

GOVERNMENT TRANSPARENCY IN NORTH AMERICA North American Countries by Transparency International Corruption Perception 169 ) Ratings (Transparency International, 2016 Country

Corruption perception score

Corruption perception rating

Mexico

30

123

Guatemala

36

130

Panama

38

87

Costa Rica

41

58

El Salvador

36

95

Honduras

30

123

Nicaragua

26

145

Belize

No data

No data

South American Countries by Transparency International Corruption Perception 170 Ratings (Transparency International, 2016 ) Country

Corruption perception score

Corruption perception rating

Brazil

40

79

Argentina

36

95

Colombia

37

90

Venezuela

17

166

Chile

66

24

Peru

35

101

Ecuador

31

120

Bolivia

33

113

Uruguay

77

21

Paraguay

30

123

Suriname

45

64

Guyana

34

108

Countries are ranked by Transparency International according to their corruption score.

A score of 100 means free from corruption.

169 170

http://www.transparency.org/whatwedo/publication/corruption_perceptions_index_2016 http://www.transparency.org/whatwedo/publication/corruption_perceptions_index_2016

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Region Focus: Latin America

CREDIT RATINGS OF LATIN AMERICAN COUNTRIES Central American Countries by Credit Ratings (Trading Economics, 2017

171

)

Country

S&P rating

S&P outlook

Country

S&P rating

S&P outlook

S&P outlook

Mexico

BBB+

Negative

A3

Negative

BBB+

Stable

Guatemala

BB

Negative

Ba1

Stable

BB

Stable

Panama

BBB

Stable

Baa2

Stable

BBB

Stable

Costa Rica

BB-

Negative

Ba2

Negative

BB

Stable

El Salvador

CC

Negative

Caa1

Stable

CCC

No data

Honduras

B+

Positive

B2

Positive

No data

No data

Nicaragua

B+

Stable

B2

Stable

B+

Stable

Belize

B-

Stable

B3

Stable

No data

No data

Latin American Countries by Credit Ratings (Trading Economics, 2017

172

)

Country

S&P rating

S&P outlook

Moody’s rating

Moody’s outlook

Fitch rating

Fitch outlook

Brazil

BB

Negative

Ba2

Stable

BB

Negative

Argentina

B

Stable

B3

Positive

B

Stable

Colombia

BBB

Negative

Baa2

Stable

BBB

Stable

Venezuela

CCC

Negative

Caa3

Negative

CCC

No data

Chile

AA-

Negative

Aa3

Stable

A+

Negative

Peru

BBB+

Positive

A3

Stable

BBB+

Stable

Ecuador

B

Stable

B3

Stable

B

Negative

Bolivia

BB

Stable

Ba3

Negative

BB-

Stable

Uruguay

BBB

Negative

Baa2

Negative

BBB-

Stable

Paraguay

BB

Stable

Ba1

Stable

BB

Stable

Suriname

B

Negative

B1

Stable

B-

Negative

Guyana

No data

No data

No data

No data

No data

No data

171 172

http://www.tradingeconomics.com/country-list/rating http://www.tradingeconomics.com/country-list/rating

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