World class by 2020

Infrastructure is a primary challenge to Peru’s continued growth. Expanding and modernising the country’s most important port will lower costs and attract more trade.

Two decades of strong economic growth has lifted many Peruvians into a middle class. To help keep it going, the country has to reduce its USD 38 billion infrastructure deficit. Photo: thomas sonne

“The port is functioning very well now, but it is not yet world class,” says Kor Goedendorp, head of the Callao expansion project. “That’s what APM Terminals is here to do. With all the improvements we are making to the business, in both the container and general cargo side, it will be a world-class port by 2020.”

Peru’s infrastructure is lagging far behind compared to its region-leading economic growth. The Ministry of Transportation and Communication estimates that Peru’s infrastructure gap stands at USD 38 billion, or 30% of the country’s GDP. Approximately USD 14 billion of this amount relates to transport, primarily roads and ports.

The port of Callao is Peru’s biggest and most important port, handling 80% of the country’s commerce. As such, the USD 750 million expansion and ­modernisation of the multi-purpose North Terminal by APM Terminals is one of the country’s key transportation infrastructure projects.

The impact of efficiency
Logistics costs in Peru are some of the highest in Latin America. According to a report from Peru’s Ministry of Production, 34% of the value of a Peruvian product is eaten up by logistics costs. This is compared to 15% for neighbouring Chile and 24% on average for the region.

By simplifying the storage and operations of the terminal, APM Terminals has slashed logistics costs for customers. Before APM Terminals took over in July 2011, the cost to take one container off a ship and out of the terminal was USD 435. Today, it is USD 238. When spread across the 320,000 containers moved in 2013, this amounts to USD 63 million in savings for customers.

In addition, ships are spending much less time in port, allowing more vessels and cargo to come in to ­Callao. Between 2012 and 2013, its first two full years of operations – and despite the ongoing expansion – APM Terminals Callao reduced the average amount of time each vessel spent in the port by 39% compared to the 2009-2010 period when the port was state controlled.

The result? A 59% increase in the number of vessels and a 21% increase in container and general cargo ­volume.

Enrique Cornejo, Peru’s former Minister of Transport: “Our country has enjoyed extraordinary growth over the last 20 years. In order for this to continue, it is essential to develop our infrastructure and continue to reduce the costs of doing business.”

More to come
The terminal is being renovated and expanded in five phases, with approximately USD 200 million invested in each phase. It is currently nearing the completion of phases 1 and 2, and should be complete by 2021.

Four new ship-to-shore cranes capable of handling 18,000 TEU vessels arrived this year at the new container berth; nine more will arrive over the next seven years. In addition, 12 new electric rubber-tyre gantry cranes are now in the yard, and this figure will grow to 36 in years to come.

On the general cargo side, a new grain berth with more storage, four mobile harbour cranes, bigger grain scoops and a conveyor belt for unloading vessels directly to storage are all in the works for the next couple of years.