The Many Benefits of Port Privatization - Puerto Quetzal, Guatemala

In this second article about Port Privatization in Latin America, I have zoomed in on Puerto Quetzal, Guatemala. The first article on Puerto Cortes, Honduras was about a straight-forward privatisation and Puerto Quetzal differs in so far that Terminal de Contenedores Quetzal (TCQ) was a green field project build in addition to the existing public multi-purpose port in Puerto Quetzal.

This article is thus about Puerto Quetzal. I have visited the port several times over the past 20+ years and it has seen modest changes in that time but it is about to see a major change - the opening of Terminal de Contenedores Quetzal (TCQ). Grup TCB of Spain (recently acquired by APM Terminals) won in April 2013 a 25 year contract to build, operate and manage the terminal and had strong support from IFC (World Bank) in the form equity partnership and debt financing. The terminal construction has just been completed and TCQ is ready for operations, except that it is waiting for various authorities - notably customs - to issue different permits. 

The terminal will play an important role as a significant export outlet for Guatemala where Pacific volumes grew by about 10% in 2015 but its contribution will not be limited to - or even primarily - a necessary capacity addition. The TCQ terminal is a relatively small terminal - 350m berth, initially using 2 STS cranes but getting a 3rd STS crane end-2016 and another when berth has been expanded to 540m. It will, however, offer 14.5m water depth which will enable many shipping lines of inserting Panamax and Post-Panamax tonnage on services that today by-pass Guatemala and instead transship cargo to/from Guatemala in Panama or Mexico. One can speculate whether such connectivity advantage would not lead to Puerto Quetzal taking a share of the Salvadoran market, currently moving by nearby Acajutla but time will show us this.

The more important contribution, however, may be bringing processes and technology to Guatemala that will change how business is done, reducing cost and improving cargo security at the same time. A few examples of this:

Global standard berthing windows and high productivity through planning and using state-of-the-art STS cranes will enable shipping lines to eliminate schedule buffers and reduce time in port.

Automated Gates will enable fast receipt and delivery of containers, while minimising human intervention. All people entering or leaving the terminal will be registered, using finger print authentication. Imagine the improvement in cargo security, with a single end-to-end process backed by the latest technology.

A Single inspection centre with the major government agencies in one location. Currently, a truck might arrive to pick up a container and be send off to first one inspection, then perhaps a second and a third. Each inspection carries a cost and the truck could be held up for days. In the new process, a container will be earmarked for inspection, moved when authorities are ready to do a single inspection and this will be performed with terminal equipment i.e. a truck is free to leave (for exports) when container has been dropped off, or will only be dispatched (for import) when container is ready for pick up.

Puerto Quetzal is not the first to see these processes or technologies deployed but it is about to reap the benefits of port privatisation! How big the benefits will depend on how fast that shipping lines take advantage of a deep-water high-efficient port in north Central America, how fast Salvadoran cargo takes advantage of a port with better connectivity and how fast quicker truck turnaround times are turned into tangible savings for exporters and importers. truck turnaround times, enabling cost reductions for export and import alike.