A conflict of interest between the two ports has been revealed following a demand for the concession of the Puerto de La Union to include the Port of Acajutla.
The failure of the Puerto de La Union - the concession for which no longer even has any suitors - has a basic cause: neither today- nor in the medium term- is there enough maritime traffic for both terminals to have enough work.
Maritime industries say that if the new rates requested by the Autonomous Executive Port Commission are approved, logistics costs will increase by 16%.
The current tariff was established in 2005 but when it comes time to paying at the counter this rate increases because of additional charges, it is for that reason that the Superintendency of Competition (SC) through means of a study is proposing a revision and update of the existing rates, adding in these elements.
A suggestion has been made to establish flat rates abroad and attract more port services companies in order to eliminate the concentration that exists today.
From a statement issued by the Superintendency of Competition in El Salvador:
The consultant Edgardo Gamarra, a specialist in competition and in the field of maritime port services, today introduced the "Study of the Conditions of Competition in the Maritime Port Sector in El Salvador" requested by the Superintendency of Competition. The Governing Board of the institution will analyze these results and then issue a resolution with recommendations to promote competition in this sector.
Pacific Energy has announced that it has signed the lease contract for the space which will be used for its plant in the port of Acajutla and has completed the EIS.
Energía del Pacifico (EDP) announced that progress that has been made on three specific areas: the environmental impact study, holding an day for providing information and public consultation with the residents of the area where the plant will be located, and the signing of the contract for lease of the space to be used in the Port of Acajutla.
The increase in the export of sugar containers offset a decline in dry bulk cargo in 2013.
In 2013 the port of Acajutla in El Salvador recorded the movement of 179,303 TEUs, while in 2012 159,879 TEUs were recorded, which represents growth of 12 %.
"This growth can also be expressed in terms of the cargo that arrives inside containers. Roberto Mendoza, manager of the Port of Acajutla, explained that in this case the annual growth was 17.9%.
A new non-intrusive inspection process at the port is causing delays and making container movement more costly.
The Corporation of Exporters of El Salvador (COEXPORT) reported delays at the Port of Acajutla due to a new non-intrusive inspection, which has caused problems and delays in the movement of containers.
"... You're spending more because the container is inspected until it is stowed.
The plan is to improve access to the port, equipment and facilities for the movement of loads, and increase the depths of the three piers.
The Autonomous Executive Port Commission of El Salvador (CEPA) will develop a renovation plan for the port of Acajutla (Sonsonate) with $8.1 million of its own funds and $22 million from external sources.The port renovation plan was approved in July by the board.
The CABEI has approved loans for infrastructure work in ports and airports, and construction of prisons amounting to $92 million and $71 million respectively.
A statement from the Central American Bank for Economic Integration (CABEI) reads:
The Central American Bank for Economic Integration (CABEI) has approved funding for the Autonomous Executive Port Commission (CEPA in Spanish) of the Republic of El Salvador for an amount of up to U.S.
Spain's Royal Academy defines a "White Elephant" as something that is "expensive to maintain and has no useful purpose". Like the Port of La Union.
Without ever taking off to become the port that was promised, La Union can now add to its dismal history the increased cost of funding due to the differential between the dollar – the currency in which the meager income of the port is received - and the Japanese yen, the currency in which the loan was negotiated with the Japanese Bank for International Cooperation (JBIC) to build it.
With no changes in sight in the short-term Salvadoran ports have lost competitiveness in the region.
Operations of the $200 million mega-port La Union are limited and only make logistics costs more expensive. The Port of Acajutla is operating at full capacity, but authorities have not yet defined a clear way forward.
Meanwhile, other countries in the region have raised investments to increase the efficiency of their port terminals.
Carriers suggest specializing the ports of La Union and Acajutla in order to make them more attractive.
After the first month of the port´s operation, the port showed some movement by receiving one ship per week, but since then it has remained completely inactive.
According to Maria José Saavedra article´s in Laprensagrafica.com, the president of the Salvadoran Association of Cargo Transport Entrepreneurs (ASETCA), Nelson Vanegas, suggested that "Puerto La Union could specialize in cooling containers and Puerto Acajutla, could specialize in grains, fuels, gases and any liquids, so that companies know best what products land on each port."
According to private operators, shipping companies will continue using port Acajutla, so the new port would only generate losses for the Salvadoran state.
The port, completed on January 2008, has been inoperative since then, because it lacks the necessary equipment, and because the government has not yet defined and approved a concession model for a private operator.
“Grupo TCB” and “Grupo Empresarial del Pacífico S.A.” submitted a concession proposal to port authorities.
The proposal includes 3 ports: Cutuco, Unión, Acajutla.
From the proposal: “… they promise to invest $43 million in two port cranes, 33 trailer trucks, 15 port trucks, two towing trucks and a mobile crane”, reported Diariocolatino.com.
The $3 million project to redesign the Salvadoran Port is expected to begin in February.
Guillermo López Suarez, head of CEPA, the Port Authority, explained that the project will be carried out in three phases, ending around the end of 2010.
"The official confirmed that works will be conducted under a scheduled, staged program, to avoid interfering with the arrival of those ships who are already expected to dock at the port", reported Elsalvador.com.
They criticize the government's intention of operating the port with minimal equipment and under administration of CEPA, the state port authority.
Shipping companies remark that in order to make them leave Acajutla Port, the new port at La Unión must offer better fees and more efficient loading and unloading of containers.
Ricardo Cruz, operations manager at NYK shipping, affirmed that "if a shipping company is going to move to La Unión, it must know what this port offers. As long as we don't know what are the benefits of operating from La Unión, we are not going to consider moving, since it gives us the same we already have at Acajutla".