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Paraguay new paths
NEW PATHS FOR PARAGUAY
Low water in the River Parana waterway is prompting fundamental changes in inland container logistics and new port gateway selections
Suff ering its worst drought since the 1940s, the River Parana waterway system, that feeds into the River Plate and is the main transport artery for Paraguayan export and import cargoes, has seen barges and vessels grounded over the past year with trucking companies taking up some of the slack; and charging heavily for the privilege!
Among the main beneficiaries of a “newly developed, substitute Paraguay transport network” are the ports of Montevideo, in Uruguay, and Paranagua, in southern Brazil, and even Valparaiso, over the high Andes in Chile, which is a 1370 mile journey by road. Those vessels and barges that are able to negotiate the tricky and unstable water levels are having to operate sporadically and at only 50 per cent of capacity due to draft restrictions, and as a result have to charge a premium to make a profit. During “normal” years this traffic – from Paraguay to Uruguay/Argentina - totals around 220,000TEU per annum, including empties. Figures from the Directorate of Meteorology and Hydrology in Paraguay (DINAC) show that this year water levels at Asuncion, Paraguay’s capital and key river port, rose from 0.9 meters (2.9 feet) on January 1, up to 3.3m by February 1 and peaked at 4.63m on February 14, near the height of the rainy season in Brazil’s interior, the source of the water. They then fell rapidly down to 1.77m by March 8 and to below 1m by May 19 when the Low Water Level (LWL) season kicked in. This has led to stringent draught restrictions and long delays with boxes waiting for up to six weeks (instead of the usual average of seven days) for transshipment windows,
In addition, deep-sea carriers – with MSC leading the way with a 45 per cent share (48,343TEU) of the Paraguayan transshipment market for the first nine months of this year - who relay transshipment cargoes from Montevideo and Buenos Aires to/from worldwide destinations are regularly frustrated by the “unpredictability” of the feeder services as this plays havoc with their timetables and berthing windows. One terminal operator in Montevideo reports that around 15 per cent of all deep-sea calls have been cancelled as carriers “cut and run” rather than get embroiled in long delays and “lose the use of empties for several weeks if they get involved in the River Plate basin messy delays”. Paul Gunther, Managing Director of Maritime Service Line Paraguay (part of MSL Corporate), an NVOCC, told Port Strategy that during the first nine months of this year Paraguay, taking into account both exports and imports, generated 124,692TEU of full containers and suggested that distribution had shifted in several ways, “with far more boxes being moved by truck than usual”. The latter figure represents a 10.3 per cent increase over the 113,056TEU handled in the same period in 2020. For the whole of 2020 transshipment to Montevideo and Buenos Aires (BA) totalled 153,094TEU of full containers, down from 160,547TEU in 2019, and 181,398TEU in 2018, the last “normal year” before the extremely LWLs kicked in (figures from the Association of Paraguayan Shipagents). The latter’s members are the main owners of the Paraguayan fleet of barges and self-propelled vessels, which is the thirdlargest fleet of inland vessels in the world after those operated by the USA and China. The fleet comprises around 1000 units for bulk as well as container transport.
8 River Parana
waterway is suff ering its worst drought since the 1940s
Out of the 2020 container volume 93,751TEU comprised import boxes and 59,900TEU exports.
LWL PROMPTS BOX REDIRECTION
“The draught along the waterways in and from Paraguay has been reducing for more than two years now and we are having very many problems to move cargo on this route, where there are many delays and also, now, surcharges,” explains Gunther.
He adds that trucking is now a viable option for many shippers as carriers have been, since June, asking for LWL surcharges, of up to $300 per TEU, to compensate for draught reduced loading from terminals in the Asuncion area – such as the private terminals of Puerto Caacupemi Asuncion, Fenix and San Jose (all around 7km from downtown Asuncion), - for movement to Montevideo and BA.
So poor are the facilities in the public port of Asuncion that hardly any containers pass through there these days.
Further, in order to find slightly better draft, many boxes and grain shipments are trucked a greater distance from the capital, to Puerto Seguro and Terport (both 52km from the capital near Villetta). Even more cargo is moved to Puerto Caacupemi Pilar (some 300km away), in the direction of the River Plate and on the confluence of the Parana and Paraguay Rivers.
Rather than the inconvenience of using multi-modal options, some shippers are preferring, as an alternative, an all-trucking option to Paranagua (650 miles and 17 hours) or Valparaiso (1370 miles and more than 30 hours), although the deep-sea journey would save at least five days compared to loading in Paranagua and seven or eight if loaded in BA or Montevideo). Plate ports have jumped from US$4000 per TEU up to US$18000 over the past 18 months, so significant savings on the ocean freight can be made utilising Valparaiso. Alejandro Gonzalez, Country Manager for both Paraguay and Uruguay for Multimar, the Buenos Aires headquartered shipping agency, agrees that extreme LWLs “have created a dire situation for Paraguay” confirming also that Montevideo had gained some extra cargoes from Argentina during the past year, but it isn’t just due to the extreme LWLs. Congestion, chaos and lack of draught in BA, has also played a part in many shippers and services switching back to Montevideo.
MONTEVIDEO PROFITS
“Paraguay is a landlocked country and so it is very important to have good water levels for assured inland navigation for inbound and outbound cargoes, not just for containers but also for breakbulk and bulk cargoes,” underlines Gonzalez. “Paraguay is also very important for Uruguay’s Business Plan, along with Bolivia.” He notes that as a small buffer state wedged between the giant nations of Brazil and Argentina, Uruguay depends heavily on third countries to gain cargo mass in order to make its larger ports viable for regular deepsea calls.
“At the port of Montevideo, for example. more than 60 per cent of the total cargo movement is not from Uruguay, but comes from Paraguay, Argentina (both the south and north) and Bolivia which like Paraguay is land-locked,” explains Gonzalez, adding that the terminals in Uruguay have to keep transshipment tariffs down otherwise traffic may gravitate back to BA. Usually, the Uruguayan share of the 220,000TEU Paraguayan transshipment market fluctuates between 40 and 60 per cent, but with so much uncertainty in BA, plus the upheaval caused by the LWLs this has now risen to more than 70 per cent. As several commentators noted while researching this article: It will be very interesting to see how the new Paraguayan containerised transport matrix works out once the water levels are back to normal.
“Excluding air cargo, we usually see 90 per cent of Paraguayan cargo moved by river and 10 per cent by land, but last year this changed to 15 per cent by truck and this year it has jumped to 25 per cent,” elaborates Gunther. “So yes, it really has been a very, very good year for trucking and I can see this continuing for some time to come, until the water levels return.” The MSL executive warns though that with the Christmas rush in process for November and December there “are not enough trucks available to meet the huge demand so the truckers are preparing to put their prices up significantly.” With BA suffering from a “lack of direction” – since its Puerto Nuevo expansion plan was cancelled last year – Montevideo has increased its market share of the Paraguay market, by 10 per cent, up from 60 per cent last year to 70-75 per cent and BA has fallen from 35 per cent down to just 5-10 per cent, according to Gunther. At the same time, he estimates that Paranagua has risen from five per cent (mostly electronic and white goods to Ciudad del Este, on the border with Parana state, Brazil), up to 15 per cent and that this route could remain a gateway for Paraguay even after good water levels return to the Parana Basin.
Most interesting, however, a new outlet for Paraguayan containers is Valparaiso, one of two ports which serves the Chilean capital Santiago [the other being San Antonio]. This year some 10,000TEU, about five per cent of all international boxes out of Paraguay, have made that arduous and expensive journey, mostly from Asuncion and mostly bound to/from China and the Far East. Freight rates from the River
8 Paranagua in
