Supply and demand
Published on 08 August 2018
To meet the demands of the growing Colombian economy, Maersk Line has worked with the Buenaventura port to ensure its larger vessels could serve customers better. Automobile makers are reaping the benefits.
The 347 metre long Svendborg Mærsk calling at Buenaventura means a more competitive product for customers like the automobile industry.
Only a few years ago, the port in Buenaventura, Colombia never received vessels such as Svendborg Mærsk. Today, the 347-metre container ship or one of its sisters calls every week, thereby doubling the previous maximum capacity.
Increasing trade, from Asia in particular, had made the deployment of larger vessels a natural next step for the Colombian economy. The problem was the width of the turning basin at the port, which left only 50 metres of slack on each side when the larger vessels made their 180 degree turn to return to the Pacific.
So Maersk Line partnered with TCBuen, the terminal operator, and the authorities, thoroughly testing the turn in simulators and then in the actual basin to ensure safe operations. When the green light was then given, the port was expanded to accommodate the larger vessels, a development that has not gone unnoticed by customers.
“So this is a new limit for the operations. It is something that was not considered possible some years ago and yet it’s something that we are doing today,” says Juan Camilo Vasquez, Sales Manager at Maersk Line Colombia, as he surveys the loading and unloading of Svendborg Mærsk at the port.
Automakers gain significant efficiencies from producing closer to demand, and with roughly 2,000 parts to a single vehicle and lean inventories a permanent fixture, the importance of a steady and consistent flow through the supply chain cannot be overstated.
GM Colombia is one of the customers that is benefiting. It imports about 10,000 containers through Buenaventura – the country’s main port on the Pacific – for the production of 70,000 automobiles at its Bogotá factory.
“It is important to us that global suppliers, such as Maersk, continue working to improve the service in this way,” says Carlos Francisco Cortes, GM Colombia’s Logistics Manager.
After automobile sales tumbled in recent years in growth markets, including in South America, one might wonder if the added capacity is really needed. Has the decade-long boom during the new millennium’s first decade been replaced by a new normal with sales levelling out?
The World Bank estimates Colombian GDP growth in 2016 at 3%, compared with 0% for Latin America and the Caribbean as a whole, and Maersk Line Colombia’s Vasquez sees plenty of potential.
While the outlook for Colombian automobile sales is sluggish for 2016, the vehicle penetration is 100 per 1,000 inhabitants and the average age of cars in the current fleet is 17 years. As a result, there is room for more in a country where Maersk Line already handles one out of every five containers.
“We have an industry that is quite diverse. Our middle class is also growing and we are demanding more products and services, so this is a land of opportunity for international trade,” says Vazquez.
Production closer to demand
In recent years, a lot of automobile production has moved to Asia, Eastern Europe and South America, mirroring the shift in global sales by moving closer to the demand. Roughly 40% of all automobiles are now made in emerging economies, according to forecasting and analysis company the Economist Intelligence Unit.
This is a new limit for the operations. It is something that was not considered possible some years ago and it’s something that we are doing today.JUAN CAMILO VASQUEZ, SALES MANAGER, MAERSK LINE COLOMBIA
During nine years in his current role, GM Colombia’s Cortes has seen more cars produced in Bogotá, more parts imported from Asia, and the importance of the partnership with Maersk Line increase.
“It is very important that our shipping partner is fully aligned with our priorities and works very closely with us, because any delay will impact our production line. Also, we expect our shipping partner to be competitive, enabling us to compete in the local market,” Cortes says.
Maersk Line Colombia has now gone a step further at Buenaventura, introducing 367 metre-long vessels from Asia to the west coast of South America in late 2015 – i.e. 20 metres longer than Svendborg Mærsk. It set a new record in Colombia as the first carrier to bring vessels with a capacity above 10,000 20-foot containers.
Reaping greater economies of scale benefits due to the size of vessels and a direct service from Asia, the result is greater reliability, space guarantees and more competitiveness.
“Basically, Maersk is fundamental to our business,” Cortes adds.