World Bunkering > News > Spring 2009 > Latin America - Maintaining growth on both coasts

The economies of Latin America have been amongst the world’s most dynamic in recent years. However, in its preliminary overview of the region’s economic development in 2008, announced last December, the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) forecast that regional GDP growth in 2009 will be a modest 1.9%, largely as a consequence of the international crisis. This compares with an increase in regional GDP of 4.6% in 2008 and 5.7% in 2007.

“The cycle of economic bonanza reaches its end in 2008, after six years of consecutive growth in the region,“ said ECLAC Executive Secretary Alicia Bárcena. “Today, the region is better prepared than in previous occasions to handle a crisis, but in no case is it immune.” In the report, ECLAC likens the situation of Latin American economies to “flying like a glider”, supported by the momentum of previous years. “The motors of growth have been turned off and it is uncertain when they will be turned on again, or how the landing will be,“ the commission suggests.

According to ECLAC, the international crisis is having an impact on Latin America in a number of ways. It notes that exports are already decreasing, especially in countries most heavily linked to developed economies in recession, such as Mexico and some Central American nations. Foreign direct investment flows are also likely to decline.

However, while Latin America generally is heading for an economic slowdown, many countries in the region are still expected to achieve healthy rates of economic growth this year, certainly in comparison to countries in the “developed” world, where GDP contraction is anticipated for 2009.

South America as a whole is likely to suffer from the slowdown in containership trades in the short term. MOL, for example, recently announced that it would revise the schedule of its existing Asia-US service, which is run jointly with PIL, rather than launching its own service. However, a number of international terminal operators are making considerable investments in South American ports in both the container and dry-bulk sectors, implying a long-term commitment to the region, which is ultimately likely to result in considerably increased activity and demand for bunkers. In some areas, bunker suppliers are already seeing increased demand.

Colombia

Colombia is becoming increasingly important as a bunker location, a fact underlined by the expansion of existing players in the market. Last year, CI International Fuels bought a fourth barge, the 2,246 cu m Intergod IV, in reponse to increased demand from cruise vessels in Cartagena. Further expansion included the establishment of a floating fuel station and a further 450 cu m capacity barge. In late 2008, CI expanded its bunker operations to Buenaventura, which it claims makes it the only bunkering company in Colombia to supply in both the Pacific and the Atlantic oceans.

In late January this year, Bunkers International announced that it had begun operations in the main port of Baranquilla, supplying all grades of IFO and MGO, with limited quantities of low-sulphur fuel. It also resumed operations in the port of Buenaventura.

Mexico

Mexico has had something of a mixed ride over the past few months, and a number of new developments suggest that this will continue. Mexican suppliers benefited from the general surge in bunker prices last June, when prices in Mexico remained comparatively low. As a result, many customers chose to take bunkers there, rather than in more traditional locations, causing a considerable increase in volume.

However, the situation has now reversed. As bunker prices elsewhere have fallen in line with the falling price of oil, prices in Mexico have been rising as the government increases the price of diesel. At the time of writing, Mexico’s fishing fleet has been on strike since 9 January in protest at the high price of diesel, and the transport industry is also considering going on strike. “We are confident that the situation will resolve itself, but for the time being it is having a negative effect on bunker volumes,” says Martijn Keldermann, commercial manager at Marinoil.

Lately, Marinoil has made considerable investments in a modern waterfront terminal and recently purchased a tug, with 2000bhp, twin screw variable pitch, and the first double-hull bunker barge in Mexico which has a capacity of 1,600 cu m for both IFO and MGO supply. A total of $3.5 million was invested in this equipment.