IAME 2013 Conference
July 3-5 – Marseille, France
Paper ID 57

Port System evolution –the case of Latin America and the Caribbean

Gordon Wilmsmeier
UN-ECLAC
P.O. Box 147-D, Santiago, Chile, +56 (2) 2210 2640
Gordon.Wilmsmeier@CEPAL.org
Jason Monios
Transport Research Institute, Edinburgh Napier University, Scotland
j.monios@napier.ac.uk
Gabriel Pérez
UN-ECLAC
P.O. Box 147-D, Santiago, Chile
Gabriel.perez@CEPAL.org

Abstract
The explosion of the container trade has significantly influenced the port geography andmaritime logistics system in the Latin America & Caribbean (LAC). Paired with and in
response to liner shipping strategies this has led to a concentration of container traffic atselected ports. In recent years, the attempt to manufacture strategic locations by engendering
centrality and intermediacy has emerged as a recurring issue in region’s port development
process.
Emerging research questions are thus what effect these developments will have on
infrastructure demand and in particular how will they influence and be influenced by theactions of those ports currently occupying a secondary rank in the LAC port hierarchy? This
paper aims to understand the evolution of maritime networks and the autopoietic nature ofport development. The paper analyses time series data on container movements to examine
patterns of cargo flows and transhipment location choices. From a theoretical perspective, thisanalysis is situated within the context of recent institutional approaches by considering port
development and infrastructure investment strategies at primary and secondary LAC ports.
The discussion of these findings raises questions about port policy and both public and private
sector responses to a changing port geography and an extended understanding of connectivity.
The findings deepen understanding of the recursive relationship between shipping lines andport development strategies, as well as their effect on wider maritime network developments.
Keywords: container port development, concentration, peripherality, Latin America, liner,
shipping

Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

1. Introduction
This paper examines the drivers for peripheral ports to counteract the concentration ofcontainer traffic at a few large gateways, seeking ways to overcome their peripheral status andincrease their access to global trade routes. It builds on previous work by Wilmsmeier andMonios (2013), Wilmsmeier and Notteboom (2011) and Sanchez and Wilmsmeier (2010) byapplying the theoretical approach to liner networks connecting Latin America.
The geographical focus of the paper is on Latin American & Caribbean ports and analyses
time series data on container port throughput to examine patterns of growth and transhipment
location choices. From a theoretical perspective, this analysis is situated within the context ofrecent institutional approaches by considering port development and infrastructure investment
strategies at primary and secondary LAC ports. The paper aims to understand the evolution ofmaritime networks and the autopoietic nature of port development as secondary ports seek toreposition themselves within emerging feeder markets through a variety of proactive andreactive strategies that involve different actors within a complex institutional environment.
The approach taken in this paper builds on previous work in the field by providing insights on
the constraining factors of maritime networks and the associated implications for tradedevelopment. The discussion of these findings raises questions about port policy and bothpublic and private sector responses to a changing port geography, requiring an extended
understanding of connectivity. The findings deepen understanding of the recursive
relationship between shipping lines and port development strategies, as well as their effect onwider maritime network developments.
This conceptualisation of port development underlines the necessity for decision makers todevelop a clear understanding of its complexity; such knowledge can potentially reduce risks
and enable a view of port development and the wider impacts on the economic, social andtransport systems. At the same time such a conceptualisation enables decision makers toreflect critically on their own role as a factor for port development.
This paper does not attempt to develop a comprehensive theory to explain or predict port
development. Rather, the quantitative and qualitative analysis in this paper presents a more
multidimensional view, which offers new insights to port development and indicates
challenges in a variety of contexts.
The following two sections examine peripherality, the role of concentration of container
service provision at hub ports, port development strategies and the importance of liner
network connectivity. A discussion on the port’s ability to act develops the concept of“autopoeisis” in the context of recent institutional literature. The LAC port system andevolution are analysed in section five. Discussion of the results follows and section sevenconcludes.

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2. Peripherality and concentration
Issues faced by peripheral regions include high transport costs and an inability to generate
economies of scale and density (Nijkamp, 1998). Furthermore, a distinction may be drawn
between peripheral regions within a country and peripheral countries. In the context ofmaritime trade peripherality is particularly driven not by geographic but by economic
distance, connectivity and market structures (Wilmsmeier, 2010, Sanchez and Wilmsmeier2011). This is relevant in the context of increasing integration and reduction of economic,
legal and practical barriers between countries within supranational trading blocs and in the
Latin American case related to the physical integration initiatives that aim at increasing
regional integration based on infrastructure development. Nijkamp (1998) noted that “asystem of regions is much more an open trade system without customs or institutional
barriers. Thus, competitiveness plays a crucial role in regional development [and] ... factor
mobility tends to be much higher between regions” (p.8). The reduction of internal barriers
can lead to a concentration of container traffic at fewer, larger gateway ports, but also to adiversification and decentralisation of port traffic through a extension of port hinterland as aresult of infrastructure development. This paper aims to understand the drivers for a multiple
gateway approach that would lead to decentralisation and provide secondary ports with agreater role, while simultaneously providing increased opportunities for peripheral trade.
Numerous studies on port system development exist, evolving from the traditional spatial
analyses of port expansion and upgrading of berthing and handling facilities (Bird, 1963;
Taaffe et al., 1963; Rimmer, 1967; Hoyle, 1968; Hayuth, 1981; Barke, 1986; Van Klink,1998) to the more recent focus on port competition through hinterland accessibility, such as
the concept of port regionalization as one possible pathway in port system evolution(Notteboom and Rodrigue, 2005; Monios and Wilmsmeier, 2012). Discussions that include
the competition in the maritime foreland (as argued by Sanchez and Wilmsmeier, 2006),
focusing on intermediate transhipment hubs and the structure of maritime services haverecently been appearing (Rodrigue and Notteboom, 2010).
As a port system moves towards concentration, particularly for unitised cargo, significant
challenges to hinterland infrastructure become apparent. Ducruet et al. (2009) argued that“concentration stems from the path-dependency of large agglomerations”, while drivers of
deconcentration include “new port development, carrier selection, global operation strategies,
governmental policies, congestion, and lack of space at main load centres” (p.359). According
to Barke (1986) and Hayuth (1981), port system concentration will eventually reach its limits
and invert, leading to a process of deconcentration, a phenomenon discussed more recently by
Slack and Wang (2002), Notteboom (2005), Frémont and Soppé (2007) and Wilmsmeier andMonios (2013). However, existing theory falls short of differentiating between
deconcentration that emerges upon failure of a system in a reactive manner, deconcentrationthat materializes from proactive port development strategies, and deconcentration that

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

emerges from new economic and industrial development. Thus the drivers of deconcentration
processes can be related not only to the port system, but also to the transport system (i.e.
hinterland infrastructure and carrier strategy) and the economic system (e.g. logistics
strategies, economic development) (Wilmsmeier and Monios,2013; Wilmsmeier and Sanchez,
2010; Robinson, 2002).

3. Liner shipping networks and port system evolution
Port operators and shipping lines have both exhibited strong concentration processes andincreasing vertical integration. In 2011 the top 4 operator moved 26.5 per cent of the global
container throughput. Strategic alliances between them have exerted a profound influence on
maritime network structure and also on a region’s integration in the global maritime transport
network. These developments have to a certain extent made port development dependent on
network strategies of global players. The location of a port within the network influences thecompetitiveness of trade through that port and subsequently raises important questions ofwhat determinants lead to the configuration of current networks and how these could be
influenced.
The development of liner shipping networks is primarily driven by the demand forcontainerised transport, depending on the strategies of shipping companies and the demand of
the shippers for specific service characteristics. As such, the location of a port or a region
within the global liner shipping network is determined by the density of trade flows to andfrom a specific port or region. These factors then become the determinants of the service
frequency, loading capacity, number of port calls per roundtrip and transhipment or relay
strategies (Fagerholt, 2004).
Port selection can be based on several criteria, from physical characteristics and geographicallocation to port efficiency, strategic carrier considerations and hinterland access (Wilmsmeierand Notteboom, 2011). Magala and Sammons (2008) argued that port choice is a by-productof the choice of logistics pathway. Thus port choice becomes more a function of the overall
network cost and performance. From the carrier’s perspective, the economies of scale, scopeand density in shipping, port operations and inland operations would favour a very limited
number of load centres in a region (Cullinane and Khanna, 2000; Frémont and Soppé, 2007).
Wilmsmeier and Notteboom (2011) propose an evolutionary four phase generic model for
port system development:
First phase. The liner shipping network is determined by point-to-point direct services with astrong local or regional orientation. The liner service network is highly regional in orientationand interconnectivity to the overseas markets is poor. Government involvement in the port
sector is typically high while at the same time international market players (shipping lines andterminal operators) face limited possibilities to enter the region;

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Port System evolution – the case of Latin America and the Caribbean
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Second phase. The region and the market players seek a higher connectivity to overseas
markets by consolidating cargo in an intermediate hub. The first tendencies towards a huband-spoke network emerge. The evolving liner service network configuration increases thedependency of the port system on indirect services via the hub, while direct regional services
start to lose their importance. The growing connectivity of the port system to overseas
markets increases the region’s attractiveness to shipping lines and international port operators.
The rising pressure on port infrastructures and the need for a professional and commercial
approach to market dynamics urges government bodies to revise their port policy. Often, thelocal/regional/national government will seek the start-up of a port devolution process to face
the mounting infrastructural and operational port challenges linked to the opening up of theregion to the world market. The resulting changes in the port governance and policy
framework enable international stevedoring groups and shipping lines to access key assets inthe local ports and to seek control over terminal operations.
Third phase. Port traffic growth leads to a further outreach of the hub-and-spoke network andthe inclusion of new ports in this pattern. International port operators further penetrate into themarket and state intervention in ports is strongly reduced. Main lines are growing and smaller
regional services start to develop again in a secondary network.
Fourth phase. The market size of specific ports has grown to such an extent that shippinglines can now offer direct services from these ports to overseas regions. The hub sees its
functional position undermined. In view of maintaining its role in the network, the hub willseek liner service connections to smaller ports in the region which still lack connectivity tooverseas market. Consequently, the terminal activity in the hub shifts in geographical terms
and a new secondary hub-and-spoke network emerges involving other gateway ports.
Following Wilmsmeier and Notteboom’s (2011) four-stage model of the evolution of liner
shipping networks, it may be that networks in the LAC region and its sub-regions are between
stage two and stage three, where a hub-and-spoke pattern is mature and smaller regional
services start to develop again in a secondary network, to stage four, where shipping lines can
now offer direct services from these ports to overseas regions, and in order to combat thisundermining process, existing hubs seek liner service connections to other ports in the region
that still lack connectivity to overseas markets.
While network development and port choice are based on many factors, the port’s ability to“steer their own future” (Olivier and Slack, 2006; p.1414) can exert some influence. Ports cantake on “the challenge of the periphery” (Barke, 1986; Hayuth, 1981; Slack and Wang, 2002);
in particular, secondary ports can take advantage of wider trends such as the limits ofconcentration and reposition themselves to take advantage of a network that may be changing
from an outdated system of hubs to new structures. In order to understand how secondary
ports act under such conditions, a more complex and nuanced understanding of the port’s
ability to act is required.
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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

4. The port’s ability to act
One basis for distinguishing between the shipping and port subsystems remains the fact thatthe constituent elements of the latter are composed of physical characteristics in space, while
the former comprises mobile elements. The economic and the shipping system together
generate pressure on the port system in the form of ever-evolving specific requirements withrespect to infrastructure, superstructure, equipment, efficiency and organisation. This prompts
a process of time-lagged reaction within the port system to satisfy this changing demand and
it is this reactive process that actually constitutes the port development process, determined byand reflected in its physical (infrastructure and superstructure), economic,
social/environmental, and institutional arrangements.
Changes in the port system occur in an almost completely discrete manner, since variations in
port infrastructure and superstructure, as well as organisational changes, do not occur in acontinuous fashion; investment in the port sector is often characterised as ‘lumpy’ (Sanchez
and Wilmsmeier, 2010). Moreover, port development is very often dependent upon anddetermined by the degree to which a specific port in question is embedded within local andregional institutional considerations and, therefore, beyond the direct sphere of influence ofthe port system itself. This is critically important not only to the port but also to the economy
it serves as it is this that ultimately defines the degree of connectivity enjoyed by the
economic system that prevails within a port’s hinterland.
Due to the fact that the port system development cycle advances in a discrete manner, its
adjustment to the continuous evolution of freight transport demand will inevitably lead toalternating situations of either infrastructural insufficiency and scarcity of supply on the one
hand (i.e. excess demand), or to a surfeit of port infrastructure (i.e. surplus supply). In
addition to such natural cycles, there is the long-term lifecycle of the port, throughdevelopment, introduction, growth, maturity and decline (Cullinane and Wilmsmeier, 2011).
It has been suggested that the early spatial port development models such as Bird (1963) oreven the more recent UNCTAD generational model (UNCTAD, 1992) are unable to capture
the complexity of port infrastructure, operations and services (Bichou and Gray, 2005).
Beresford et al. (2004) developed the WORKPORT model as a response to the need toconceptualise the complexity of this operational environment.
Institutional approaches to port development have argued that the port authority has
constraints on its ability to act, stemming from its specific nature. The key distinction is thatport development is path dependent, heavily constrained by past actions and institutional
design, but also contingent, in relation to private investment and public planning. Ng and
Pallis (2010) showed how port governance is largely determined by local/regional
institutional characteristics, despite attempts to implement generic governance solutions.
Notteboom et al. (2012) applied the concept of institutional plasticity (Strambach, 2010) toport development, arguing that, while port development is path dependent, a port authority
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can achieve governance reform by a process of adding layers to existing arrangements. In thisway, the port authority does not break from the existing path of development, but develops
new capabilities and activities via a process of “institutional stretching”. An example is givenof port authorities investing in load centres in the hinterland, beyond their traditional
jurisdiction, and the particular importance of informal networking is noted (see also Monios
and Wilmsmeier, 2012). Jacobs and Notteboom (2011) asserted the need for an evolutionary
perspective, drawing upon the economic geography literature to define the movement fromcritical moments to critical junctures, concluding that port authorities have windows ofopportunity in which collective action is possible. The authors concluded that “the question ofto what extent critical moments require institutional adaptations in order to materialise into
critical junctures needs further thought” (p.1690).
In this paper it is argued that, in order to make use of previous work, a more sophisticatedinstitutional appreciation of the port is required, as the entity normally considered a unified
port is not only created by numerous actors but is endlessly being recreated with each new
relationship or network in which the port is embedded. The port’s connectivity is always
changing and creating itself anew. Marx said that "the capitalist system carries within itself
the seeds of its own destruction." Maybe that is also true for ports as they move through theirlife cycle, which includes an inevitable decline after concentration, as noted above. The aimof this paper is to understand this process in a more active and flexible manner, in particular
the role of secondary ports in managing the transition from stage three to stage four ofWilmsmeier and Notteboom’s (2011) four-stage model.
The concept of “autopoieis” was introduced by Maturana and Varela (1980), who defined it asfollows:
An autopoietic machine is a machine organised (defined as a unity) as a network of processesof production (transformation and destruction) of components that produces the components
which: (i) through their interactions and transformations continuously regenerate and realise
the network of processes (relations) that produced them; and (ii) constitute it (the machine) as
a concrete unity in the space in which they (the components) exist by specifying the
topological domain of its realisation as such a network. (Maturana and Varela 1980; pp.7879)
The concept was first applied to port geography by Sanchez and Wilmsmeier (2010), who
observed that transport systems exhibit a self-organising structure that can be viewed throughthe lens of autopoiesis. A transport system may adjust itself while developing its identity anddefining its limits, however, transport autopoiesis is likely to have an especially high inertia
when it comes to changing system variables (see Mingers, 1994, p.77; Jantsch, 1982, p.64).
Under pressure from an uncertain environment, a transport system takes actions in order totackle existential situations (otherwise market forces will deconstruct the organisation of the

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Port System evolution – the case of Latin America and the Caribbean
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transport system). When feedback loops are missing, parts of the system may grow in an
uncontrollable manner, and, through the limitations of its physical characteristics, it may leadto overshooting and collapse of the system. In developing countries, autopoeisis may beparticularly challenged. This is because, even though the transport system steers and organises
itself, the global tendencies of the system are defined by its environment and not itself.
As the facilitators of flows, ports represent a bridge between the outputs of the economic
system and the movement of these outputs within globalised trade. Ports have grown to be a
key component of competitiveness, and their structure is intrinsic to its ability to facilitate
trade. Yet with each transformation of the inputs, the system changes its state (Schober, 1991,
p.3520).
This paper will describe the changes in the LAC port system evolution and based on thefindings will discuss the drivers of these changes as the port is placed right in the interplay
between supply (liner shipping industry) and demand (container traffic). While this discussion
cannot be conclusive in the context of this paper it aims to place arguments for a more
systemic view on port development (a discussion that usually only focuses on main ports) andto identify arguments which support secondary and emerging ports in their striving to develop
their facilities and strategies and the governing institutional structures.

5. The Latin American & Caribbean port system
The container throughput in the Latin American and Caribbean port system grew from 10.4
million twenty-foot equivalent units (TEUs) in 1997 to 41.3 million (TEUs) in 2011. The
movement in 2011 was equivalent to 7 per cent of all global port movements. One fifth of allcontainers in LAC are moved in Brazil (ECLAC, 2012) followed by Panama (16 per cent),
Mexico (10.23 per cent), Chile (8.21 per cent) and Colombia (5.16 per cent). However the
port throughput at regional and country level is only a very crude reference of the current stateof the port system. In order to understand the port system evolution it is necessary to take aspatio-tempoal perspective, looking at disaggregated figures at country and sub-regional level
and at an extended time period. The LAC port system can be categorized into 3 sub-regions
and seven coastal areas. The following analysis includes data for 131 ports with container
activity in the region

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

LAC

Central America & Mexico (CA)

West
Coast
CentralAmerica &Mexico(WCCA)

East Coast
CentralAmerica &Mexico(ECCA)

Panama(Atlantic)

South America (SA)Panama(Pacific)

West
Coast
South
America(WCSA)

North
Coast
South
America(NCSA)

Caribbean(Carib)

East CoastSouth
America(ECSA)

Figure 1: Latin America and the Caribbean shipping and port system categories (Source: Authors)

The analysis of the port activity shares in the region at subregional level reveals that Panama
has gained the greatest market share and growth figures over the last 15 years. As port activity
growth in Panama is particularly related to transhipment traffic, it might be argued that this isa first indicator for the changes in the port system towards the third stage hub-and-spoke
structure as indicated by Wilmsmeier and Notteboom (2011) and thus leading to aconcentration in the port system towards transhipment hubs; a development that is rather
driven by liner shipping strategies than economic development.
The Caribbean a key market for transhipment however, has been losing market participation
over the last years; indicating a shift from the traditional transhipment hubs (e.g. Kingston,
Jamaica and Freeport, Bahamas) towards Panama and Cartagena, Colombia.
A further development is an activity shift in Central America and Mexico from ECCA to
WCCA. For the case of Central America (including Mexico) the share of container activities
have transformed from an 80:20 ECCA-WCCA relation to a 52:48 relation in a market that in2011 was almost five time bigger than 1997.
In order to get a more in depth understanding, if the role of transhipment hubs has lead to aconcentration and/or if transhipment activity has shifted geographically, the specific evolutionof throughput of the identified transhipment hubs in the Caribbean and on LAC’s Pacificcoast is analysed in the following.

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Caribbean

Central America - CA & Mexico

Central America - PanamaSouth America

Figure 2: Sub-region’s shares in container throughput in LAC, 1997 to 2011
(Source Authors, based on ECLAC)

A comparison of growth rates of Pacific coast ports for the periods 2000-2005 and 2005-2011
reveals that the growth rates of the two leading transhipment ports: Balboa, Panama andLazaro Cardenas, Mexico, are the greatest for the first period, and are among the leading
growth rates also for the period 2005-2011. Further, four secondary ports (Arica, San Vicenteand Puerto Angamos in Chile; and Corinto, Nicaragua) evolve the fastest. There is also a
notion that the ports with the greater growth rates between 2000 and 2005 depict slower
growth in the following period, probably indicating a conversion from take-off phase towards
more maturity after they have reached a certain size. Ports like Callao, Peru and San Antonio,
Chile display relatively lower growth rates in comparison to other traditional gateway ports.
The findings deliver arguments for two trends a) exponential growth rates of transhipment
ports and b) exponential growth rates in emerging of secondary ports between 2005 and 2011
partly combined with the entrance of new players in the port system such as in the case of San
Vicente (SVTI), Chile.

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1000%
900%
800%
700%
600%
500%
400%
300%
200%
100%
0%

2005-2011

2000-2005

average 2000-2005

average2005-2011

Figure 3: WCSA and WCCA growth rates of container ports, 2000 to 2011
(Source Authors, based on ECLAC)

The emergence of secondary ports is particularly notable for the case of Chile, which leads toa greater geographical spread of ports towards the South of the country. As mentioned above
the appearance of San Vicente (SVTI) in 2005, as a new player and the growth of the colocated Talcahuano, appear to be “pioneers” in the emerging relevance of secondary ports in
the region and the transformation of the port system. The analysis also reveals that the two
traditional main ports effectively lost over six per cent market share between 2005 and 2011.
However, the pure numerical analysis by port does not reveal the systemic relationships in theport system created by the privatisation efforts over the last two decades and theinternationalisation of container port operations. In the case of Chile this is particularlyinteresting as the operator of San Antonio is the same as in San Vicente. Thus, while theindividual port San Antonio, was not able to increase its weight in the port system, the private
operator’s relevance and share in port activity grew strongly as this would consider the ports
of San Antonio, San Vicente and the other Chilean ports operated by that company.

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TEU

2

2,0

1,8

1,8

1,6

1,6

1,4

1,4

1,2

1,2

1

1,0

0,8

0,8

0,6

0,6

0,4

0,4

0,2

0,2

0

Millions

Millions

Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

0,01997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Antofagasta

Arica

Chacabuco

Coquimbo

CoronelIquique

LirquenPuerto Angamos

Puerto Montt

San Vicente (SVTI)

Talcahuano

Ventanas

Punta Arenas

San Antonio

Valparaiso

Figure 4: Shares in container throughput in WCSA, 1997 to 2011
(Source Authors, based on ECLAC)

Shifting the focus of analysis to the ECSA a somewhat similar picture emerges. In the period
between 1997 and 2011 overall container throughput more than tripled to almost 11 million
TEU in 2011. This was accompanied by a significant shift in the market participation of the
ECSA countries. Brazil’s market participation expanded from 60 per cent to 72 per cent,Argentina lost one third of its market share and in 2011 generated only 20 per cent of allcontainer traffic in the ECSA. This shift is principally originating from the expansion ofBrazil’s economy, paired with its population size. By way of example Brazil today is one of
the world’s largest exporters of chicken and beef; a trade that has only recently emerged as a
response to the growing demand in the emerging Asian economies. Uruguay, the smallest
economy on the ECSA, however was able to grow its market share to almost 8 per cent. The
latter is not only driven by the economic development of the country, but also by the ports
strategy to act as a transhipment hub and gateway for Paraguayan cargo but also for southern
Argentinean cargoes (see also Wilmsmeier, Martinez-Zarzoso and Fiess, 2010).
Adjunct to the shift in market participation at country level the traditional concentration in thenational container port systems is being diluted by the entrance and emergence of new
players. In the case of Argentina the deconcentration process is still in its infancy, but it isnoteworthy that the container terminals in Buenos Aires have lost about 6 per cent of national
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Port System evolution – the case of Latin America and the Caribbean
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2011

Millions

0
2010

0
2009

1

2008

1

2007

2

2006

2

2005

3

2004

3

2003

4

2002

4

2001

5

2000

5

1999

6

1998

6

1997

TEU

Millions

market share over the last 7 years, showing the fast expansion of new container ports (e.g.
Zarate) in the country.
Vitória
Vila do Conde
Suape
Sâo Francisco do Sul
SantarémSantana / Macapá
Salvador
Rio Grande
Rio de Janeiro
Porto Velho
Pecem
Paranaguá
Natal
ManausMaceioItaqui
Itajai (inc.Navegantes)
Itaguai /Sepetiba
Imbituba
Fortaleza
Belém
Angra dos Reis
SantosFigure 5: Shares in container throughput in ECSA, 1997 to 2011
(Source Authors, based on ECLAC)

Traditionally, Santos has been the principal container port in Brazil and 38 per cent ofBrazil’s container throughput was handled in the terminals of Santos in 2011. Nevertheless,its market decreased in comparison to 1997, when the port was responsible for over 43 percent of Brazil’s container movements. Rio de Janeiro as the second biggest container port in
Brazil in 1997 lost 50 per cent of its market participation over the last 15 years. A number of
secondary ports and greenfield projects emerged over the last 15 years that a) lead to ageographic spread of container activity and b) initiated a deconcentration process of container
activity. Rio Grande held an important market participation of 10 per cent in 1997 and was
discussed to evolve as a competitor to Montevideo and Buenos Aires in the south of Brazil as
its infrastructural conditions and draft of 15m favoured the handling of post-panamax vessels.
The port expanded and increased its market share to over 13 per cent in 2003, benefittingfrom the repercussion of the economic crisis in the port of Buenos Aires (see Sanchez andWilmsmeier 2008). However, since then its shares in the Brazilian container throughput havebeen decreasing to almost 8 per cent in 2011. Thus, the continued growth was not sufficientfor keeping up with the speed of expansion of the overall national container activity. The port
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Port System evolution – the case of Latin America and the Caribbean
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Wilmsmeier,of Itajai (including the new Navegantes terminal) doubled its market participation to 13 percent in 2011, Manaus also doubled
double its share to 6 per cent. Suape more than tripled isparticipation to over 5 per cent in 2011.
The ports in the Caribbean/ECCA/NCSA port system can be categorized as follows: puretranshipment hub (minimum
minimum of 70 per cent transhipment
ment cargo), hybrid port (between 30 and
70 per cent transhipment cargo), gateway port (less than 30 per cent transhipment cargo) andlocal and inter-islands
islands transhipment port. Port throughput in these sub-regions
sub regions grew from 4.6
million TEU in 1997 to 15.9 million
million TEU in 2011. The authors estimate that the share oftranshipment cargo increased from 38 per cent (1999) to around 50 per cent of total traffic in
2011. Thus, the incidence of transhipment traffic in the region is significantly above global
average of 28 per cent in 2008 (Rodrigue, 2012).
• MIT, Panama• PPC, Panama• CCT, Panama• Kingston, Jamaica• Freeport, Bahamas• Cartagena, Colombia• Puerto Cabello, Venezuela• Point Lisas, Trinidad & Tobago• Caucedo,
Dominican Republic• Port of Spain, Trinidad & Tobago

Transhipment
port

Hybrid Port

Local and interinterislandstransshipment
port

Gateway port

• Jarry, Bridgetown, Phillipsburg,
Oranjestad, Georgetown-Cayman,
Vieux Fort, Castries, St John, CPCP
(Campden Park Container Port), Long
Point Port (Nevis), Road Bay Port,
Kingstown, Willemstad, Georgetown,
Nieuwe Haven• Limon--Moin, Costa• Veracruz, Mexico• Puerto Cortes, Honduras• Rio Haina, Dominican Republic

Figure 6:: categorization of ports in the Caribbean/ECCA/NCSA port system(Source: Authors))

The market participation of the transhipment ports grew from 33 per cent in 1997 to 45 percent in 2011. The development of the hybrid ports is more diversified. Cartagena, Colombia
being the most successful one,
one by increasing its market share from 5.8 to 11.6 per cent in thesame period, while other hybrid ports like Port
Port of Spain, Puerto Cabello or Point Lisas are notable to gain market share. Cartagena’s transhipment share in total container movements
increased significantly since 2005 when Hamburg Sued decided to make the port its strategictranshipment hub for Latin America and the Caribbean connecting
connecting to seven of the carrier’s
services between North and South America, the Caribbean, the Mediterranean and North
Europe. Hamburg Sued’s transhipment volume through the Cartagena has increased fivefold
between 2006 and 2012 (Port Strategy, 2012). A particularparticular case in this category is Caucedo,
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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

Dominican Republic. The port appeared in 2003 based on a greenfield development andoperated by a the global terminal operator DP World with the aim to become a newtranshipment port in the region. Since then the port has evolved from to a hybrid port bycapturing significant amounts of the increase in local destination cargo and at the same time
pursuing the goal to attract transhipment cargo. The latter reaching a share of above 50 per
cent of all container movements in 2011
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%

Transshipment

Caribbean basin

Veracruz

Limon-Moin

Puerto Cabello

Miami

Port of Spain

Point Lisas

Rio Haina

Panama Caribe

Kingston

Caucedo

Cartagena Bay

Freeport

0.0%

Other load/unloaded containers

Figure 7: Share of transhipment and origin/destination cargoes for selected ports in the
Caribbean/ECCA/NCSA port system (Source: Sanchez, 2012)

The gateway ports were not able maintain their market participation, despite their growth incontainer throughput. Sanchez (2012) observes a significant geographical shift in the
Caribbean/ECCA/NCSA port system driven by changes in the evolution of traditionaltranshipment ports and the emergence of new players as well as the expectation in thelogistics system resulting from the Panama Canal widening.
Beyond the changes in throughput volumes the appearance and evolution of port devolution
processes in the region since the beginning of the 1990s has marked critical moments for
those countries and ports involved. This development is closely linked to the appearance ofinternational port terminal operators from the region and also global terminal operator groups(see also Sanchez and Wilmsmeier, 2006). The comparison of the presence of internationalterminal operators in the region in 2006 and 2012 reveals how the influence of these actors

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

increases. By 2006, 35 container terminals were being operated by international and global
terminal operators in 12 countries of the region. This number increased to 51 by the beginningof 2012.
While the pure presence of private port operators is not a guarantee for success in port andterminal development it can be argued that these operators changed the level of competition in
the different sub-regions. Until 2006 intra-port competition was restricted to the port of
Buenos Aires, the Caribbean coast in Panama and to the competition between Valparaiso and
San Antonio in Chile as they serve a congruent hinterland. Since then the further influx ofinternational terminal operators has brought a new level of intra-port competition to Callao,
Peru (APMT and DPW), Panama’s Pacific coast (PSA and HPH), Buenaventura, Colombia(TCB and ICTSI), Lazaro Cardenas (APMT and HPH), Manzanillo, Mexico (SSA, HPH,
ICTSI), Santos (DPW, APMT and Santos Brazil). It is interesting to observe that eachinternational operator shows specific geographic specialisation strategies. In the first phaseduring the influx of international operators the interest concentrated on the countries’ main
ports of which many in the 1990 did not have sufficient scale (except Buenos Aires andPanama Caribbean coast) to make operation viable for two competing operators. The
continued growth in demand has changed this situation and since 2005 we the increase incompetition can be observed as describe above. HPH has a clear dominance in the Central
American market (i.e. Mexican market). APMT has been focussing on new terminal
developments strong interest not only in transhipment cargoes but lately rather gateway ports
with potential to develop towards hybrid ports. DPW has a more equilibrated presence in each
sub-region. These findings underline the advances in the evolution of the port system asproclaimed by Wilmsmeier and Notteboom (2011).

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Colón
Freeport
Veracruz
Altamira
Haina
Puerto Plata
Barranquilla (Inc.SPR y ZP)

Cartagena
CaucedoPuerto Cabello
La Guaira
Puerto Barrios
Point Lisas
Willemstad

Kingston
Limón-Moin
Puerto Cortes
Port of Spain
La Habana
Jarryother ports

Figure 8: Shares in container throughput in Caribbean/ECCA/NCSA, 1997 to 2011
(Source Authors, based on ECLAC)

A number of questions emerge from the descriptive analysis regarding the evolution of theregion’s port system and sub-systems. What were the critical moments and what were thecriteria of success that some ports converted these moments into critical junctures for the portsystem development in LAC? If the LAC port system is evolving from concentration todeconcentration, what implications does this have for the region’s and countries’ strategies
and policies? What is the role of shipping lines in driving the emergence of new andsecondary ports? What are the reasons that traditional ports fall start to lose their position in
the system? Has the influx of global and international port operators contributed to the shifts
in the port system? In how far does the economic development not only contribute to growth,
but also to geographically diverse growth of container ports? Are other economic or
institutional variables playing a role for the emergence of these ports? Which ports have beensuccessful in taking on the “the challenge of the periphery”?

6. Discussion
The advances in port devolution and deregulation of port infrastructure and transport services
in general opened new scales for development in the region. Port devolution brought asignificant change to the region transforming the structure of actors and their relationships and

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier G., Monios, J., Pérez, G.
Wilmsmeier,thus creating new drivers and strategies in port development and asking for an institutional
adaptation process.
Until today the focus has been almost exclusively on the development of main container ports,
leaving only residual attention
ention to secondary port development in the region. Therefore manyof the previously described changes and transformation in the different sub-regions
sub
have
happened almost unnoticed or at least not been part of a contextual debate of port systemdevelopmentt challenges and opportunities.
These new developmentss offer opportunities and needs for policy implementation that reaches
beyond the physical development of single port infrastructures and traditional port operations
in main ports and as it requires addressing more strategic and integrated possibilities ofsystem developments. Success in an increasingly competitive environment can only beachieved, if the institutions and private sector actors are able to identify the crucial moments
and are enabled to convert
onvert these into crucial junctures.
Based on the analysis the following main critical moments can be identified to haveinfluenced the port system development in Latin America & the Caribbean.
Caribbean These did neither
appear in sequence nor simultaneously but ratherr
in a diversified spatio-temporal
temporal manner.
Economic
growthcontainer volumes

a changing
geography oftradechange in the
structure ofcargoes

Technologicalchangeship size

automatisation ofsuperstructures

Logistics
information
systemsPort
devolution

port reform

influx ofinternational
private operatorsinter-terminal
competition

Port function

gateway ports

hybrid ports

transhipment
ports

Shipping line
strategy

direct services

transhipment
strategies

liner specifictranshipment hub

Port system

one main port

new terminal
development interterminal
competition

diversification emergence of
secondary ports

geographical shiftshift
emergence of new
ports

Figure 9: Critial Moments in LAC port development between 1990 and 2011 (Source: Authors)

The analysis of the port system in this paper hints that countries and also individual ports(represented by their actors, either public or private) were able to make use of critical
moments in more and less successful manners. Given the historic need for infrastructuredevelopment in the region most attention was given to the main ports and the developmentd

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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

and role of secondary ports at national and regional level was frequently forgotten in theanalysis. However, secondary port are starting to engage in more integrated development
strategies strategy that also include the consideration of logistics development connected tothe port (e.g. Manaus, Brazil, Puerto Angamos, Chile).
The introduction of bigger vessels on the world’s mainline routes can be expected to initiate aprocess whereby vessels cascade down to the secondary LAC routes and creating
requirements for new infrastructure not only in the region’s main ports but also the secondary
ones. A recent study expects that 13,000 TEU ships will start to call regularly on the coasts ofSouth America between 2016 and 2020 (Sánchez and Perrotti, 2012), which will have direct
implication on the liner shipping networks and port infrastructure in the region. If some of thesecondary ports will not be able to handle bigger size ships due to insufficient handling
capacity to accommodate them, this would support the growth of regional second-tier hubs,
which can then serve the smaller ports either by smaller feeders or even land transport (thusraising issues relating to the quality and capacity of hinterland infrastructure links).
Additionally, the introduction of ever-larger vessels on mainline routes may be attractive forshipping lines but will strain ports severely. Ports invest large sums upgrading their facilities
and competing to receive vessel calls, but handling such demand spikes is difficult. Large
container drops can result in inefficient crane utilisation, as the numerous large cranes
required to service large ships are not all required between calls; furthermore, such numbersof containers cannot always be moved in and out of the port in a smooth manner. Second,shipping lines already cannot meet their own schedules; current average reliability across theindustry is below 70 per cent. The larger the vessel and the larger the drop of containers at
each call, the larger the knock-on effect of such poor reliability on the rest of the container
system.
The use of the first mover advantage for greenport development like in Caucedo is alreadyshowing repercussion in the market participation of ports. The advantages gained by these
ports in the “battle” for a position particularly in the transhipment market, will be difficult toreplicate by the competitors that have only recently started to develop their strategy in thisdirections.
When analysing port evolution of a port system and its sub-systems, it is important to beaware of the effects of path dependence and the contingency of port development upon port
devolution, competition and public planning approval. The work in this paper underscores the
temporal aspect of path dependence. For inversing peripheral status, the first mover advantage
is of considerable importance because when fighting for a small market, coming in against an
incumbent is an unattractive business proposition in a sector with large upfront investment,
large sunk costs and a long payback period. However, proactive strategies such as those by
Caucedo and Cartagena seem to be challenging traditional path dependence. With thedevolution process many countries have left port development in the hand of the private
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Port System evolution – the case of Latin America and the Caribbean
Wilmsmeier, G., Monios, J., Pérez, G.

sector , but this position ignores the realities of, as Swyngedouw puts it, ‘the production oflocational effects as a result of capital investment in space’ (p. 424). Fleming and Hayuth
have also noted how the virtues of centrality and intermediacy that create strategic locations
can be manufactured. But how will future private investment and institutional capacities
current development, particular in a region where government investment in ports is almost
absent. There seems certain evidence from the above analysis that the manufacturing ofstrategic locations can be successful and may have initiated the emergence of secondary ports
in LAC.
The available data suggest some evidence for a deconcentration of container traffic within the
LAC port system, related to a shift both in gateway regions and a shift from a gateway role toa transhipment role, thus supporting the movement of cargo through secondary LAC ports.
More research is required, but these identified shifts have potential benefit for secondary
ports, many of which are pursuing significant port expansions to take advantage of thisexpected trend. These ports seek to reposition themselves within an emerging feeder market
that could reduce their peripherality that has been embedded by the traditional LAC port andinfrastructure system. The paper thus raises questions about port policy and both public andprivate sector responses to a changing LAC port geography.

7. Conclusion
Port development in LAC has been driven by significant and continued growth of container
traffic. Strategies of liner shipping companies have evolved towards a wide implementation of
hub-and-spoke networks, while the effects of path dependence and the contingency of bothprivate investment and public planning approval have been found to play an important role inport development, further embedding emergent port hierarchies. The work in this paper takesthese notions forward by underscoring the spatio-temporal aspects in port system evolution
and relates to the importance of a systemic view and analysis of port system development inorder to identify critical moments and junctures.

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