For the first time since its establishment in 2001, TOC Americas comes to Peru, one of Latin America’s star economic performers over recent times.
A combination of structural reforms and a robust policy framework provided the basis for GDP growth of over 6 percent a year from the start of the 21st Century until the global financial crisis of 2008-09. Even then Peru’s economy proved resilient.
Although commodities such as copper, gold and zinc still account for more than half the country’s exports by value, container traffic has grown in both directions on the back of rising real incomes and a growing consumer class.
In 2000, Peru’s ports handled a mere 460,000 TEU. By 2014 this had climbed steadily to more than 2.2 million TEU as the country leveraged investment in modern port facilities, attracting global terminal players APMT and DP World to sign concessions in Port of Callao, the country’s principal gateway for container trade.
This performance has been echoed in other countries of the Pacific Alliance – a trade group comprising Chile, Colombia, Mexico and Peru – which have all witnessed a quantum leap in containerised trade over the same period.
However, a new era dawns across the region; one which poses major challenges to continued economic prosperity and with it rising maritime trade. As a major commodity producing region, South America has been hit hard by the end of the ‘super cycle’ and slowing demand from China. Then, the election of Donald Trump to the White House threw into question the decades-long global trading system.
Already President Trump has withdrawn the United States from the proposed Trans-Pacific Partnership (TPP) and continues to talk of seeking a renegotiation of the North American Free Trade Agreement (NAFTA). America’s trading partners to the south are understandably concerned.
All these factors pose major risks to continued growth in container trades across the region, which additionally face the challenges of new, digitally-based supply chain models and shipping line consolidation.
One route to greater prosperity could be more regional economic integration. Despite a big increase in trade agreements among Latin American countries this century, the share of their exports that stays within the region has remained stubbornly around 20 percent, according to the World Bank, against 35 percent for Canada and the United States, 50 percent in East Asia, and 60 percent among the 18 core members of the European single market.
A renewed push has been influenced by the success of East Asia and the Pacific where intraregional trade, exports to the rest of the world, and incomes have risen together as the region continues to catch up with income levels of the United States. But political instability and economic nationalism have hindered progress.