Port Spending Flows in Latin America as Panama Canal Expands

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Researched by Industrial Info Resources (Sugar Land, Texas)--Thanks in part to the massive, ongoing expansion at the Panama Canal, the ports of Latin America have embarked on some significant expansion projects aimed at bolstering their presence in the import and export business in both the Pacific and Atlantic oceans. Billions are being invested in port infrastructure projects all across Latin America, as almost every country that has a deepwater port is attempting to take advantage of the bounty that the expanded Panama Canal will provide. Industrial Info is currently tracking 45 port projects worth an estimated $3.5 billion that are scheduled to begin construction activities in 2013 or beyond in Latin America.

Click on the image at right for a graph detailing Latin American port projects that are scheduled to begin construction in 2013 or beyond.

The Panama Canal expansion--a $5.25 billion investment by the government of Panama--is a gamble that the increased volume will stimulate growth in a rapid fashion when the project is completed in early 2015. The project began construction back in 2007 and involves the construction of two new lock complexes, one in the Pacific and one in the Atlantic; new access channels; the deepening of navigation channels; and the increasing of Gatun Lake's maximum level. Initial estimates are that the Panama Canal will be able to double its 2005 capacity by 2025, which will bring billions of dollars in new revenue to Panama.

This expansion also will prove to be a boon to ports across the region. Major ports in the U.S. are either in the process of expanding their own facilities to be capable of handling post-Panama expansion ships, or already have done so. The ports in both California and Texas are expected to reap significant benefits from the expansion. Along those same lines, expansions are ongoing or planned in Panama and elsewhere in Latin America to handle the additional capacity. In Panama, new ports are being planned for both sides of the canal, while Brazil is investing heavily in its port infrastructure as well.

Industrial Info is tracking an additional $910 million in port project activity in Panama and another $1.24 billion in Brazil. Expansion also has become the rule of the road in a number of other Latin American or Caribbean countries. Ports in the Bahamas are investing more than $500 million, as are ports in Columbia ($140 million), Peru ($280 million), Guatemala ($240 million), Honduras ($205 million), and even Costa Rica ($35 million).

The need for this increased infrastructure is paramount. For the last several decades, major companies have recognized that Latin America is a rapidly growing area ripe for investment. Companies such as the major automakers, heavy equipment manufacturers and suppliers of oilfield equipment are taking advantage of the growing economies and rich oil and gas reserves to build manufacturing plants in Latin America at a rapid pace. Billions are being invested each and every year, and the raw materials and finished products need a convenient method of transportation in and out of the region, which means bolstering the port infrastructure.

The billions currently being planned or actively invested in port infrastructure in Latin America are but a drop in the bucket for what is expected in the coming years. New ports are springing up throughout the region, and those that have been in place for years are expanding to meet the needs of the companies that are investing in these countries. Latin America is going to be a place to be for port investment for many years to come, as this infrastructure is expanded to handle the projected workloads of the future. It would not be surprising if port investment doubles or even triples by 2014, and possibly grows even higher as the Panama Canal expansion nears its completion in early 2015. Hopefully, once that massive project is completed, the investment will continue for many years to come as more and more major companies recognize the value of investing in Latin America.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.