23 September 2015

by Gill McShane – Managing Editor – Produce Business UK

By 2020 Peru’s rapidly expanding agriculture sector plans to double the volume of its fresh fruit and vegetable exports to an impressive 2.3m-2.5m tonnes, compared with the 1.2m tonnes shipped last year. With only five years to go, Produce Business UK asks what the country’s leading port terminals are doing to ensure their facilities have the capacity to cope with the anticipated upsurge in produce trade.

Currently there are four port terminals for fresh produce in Peru: Callao, Paita, Pisco and Salaverry, according to Peru’s National Port Authority (APN – Autoridad Portuaria Nacional). All are privately managed, except Salaverry, which is a public port. Callao’s Multipurpose North Terminal and Southern Container Terminal represent the biggest ports by far and are located in Lima, Peru’s bustling capital city. The ports of Paita and Salaverry are situated in the north of the country (Piura and La Libertad respectively) where the growing areas for fresh produce are multiplying. The Port of Pisco, meanwhile, is found in Peru’s traditional fruit and vegetable production zone in the Ica region in the south. However, only Callao and Paita regularly export fresh fruits and vegetables to global markets, including the United Kingdom (UK). Although Salaverry and Pisco are the natural ports for the La Libertad and Ica regions respectively, neither has regular container shipping lines that call at the terminals at present and both need developing to attract cargo that will otherwise head to Paita or Callao. Who operates Peru’s ports? North Terminal of Callao – APM Terminals Callao Paita Port Terminal – Euroandinos Port Terminals (TPE) General San Martin Port Terminal in Pisco – Paracas Port Terminal (TPP) Salaverry Port Terminal – National Port Company (ENAPU) To maintain and raise their competitiveness, both Callao and Paita are already investing in and carrying out upgrades to their facilities. Following its concession to the Paracas Consortium, ANP says there are also plans at Pisco to construct two berths, an access channel and an outer harbour area. At Salaverry, meanwhile, according to a report published in El Comercio on Monday (September, 21), Andino Investment Holding (AIH) has apparently proposed an investment of US$430m (£278m) to modernise and expand Salaverry over a 30-year period to accommodate cargo such as agricultural products and therefore compete with Callao. The objective is to bolster Peru’s logistics capacity and competitive edge as a fresh produce supplier ahead of the anticipated doubling in fresh fruit and vegetable export volume from the Andean nation. Shipping lines calling at Peru are also shoring up their services to play their part in the country’s produce trade evolution. Already, over the last decade, Nick Bainbridge, head of commercial at Total Exotics, part of Total Produce UK, says Peru’s fresh exports to Europe have been transformed with the opening up of non-traditional sea freight routes, specifically from the Port of Paita in the north of the country. Where previously sea freight would take between 21-23 days to reach Europe, Bainbridge says the journey can now be completed from Paita in the space of around two weeks. Seatrade Peru, which is operated by local agent AnkaSea, claims to offer the fastest service to northern Europe. “Seatrade operates a FDD [fast, direct, dedicated] service from Peru to northern Europe called The Rayo Service, which connects Paita with the Port of Dover (via a journey of 14 days), as well as Hamburg (15 days) and Rotterdam (17 days),” explains line manager Gert-Jan Speld. The Rayo service, which calls at Ecuador (Puerto Bolivar and Guayaquil) before Peru, has added extra tonnage every year since its first loading in 2012. In the near future, the firm’s specialised reefer container vessels will likely be employed in this trade too. “Our specialised reefer container vessel capacity of 2,200 TEUs will certainly help to increase [Peruvian] trade for core commodities like bananas, grapes and mangoes, but also avocados, asparagus (both white and green), pomegranates and snow peas, which all find their way to the UK market every week,” Speld points out. Raising competitiveness Whereas Peru was previously unable to compete with the likes of Kenya in certain products, Bainbridge argues the availability of shorter sea routes has enabled Peruvian exporters to take a “massive” leap forward. Today, Paita handles organic bananas, table grapes, mangoes, avocados and blueberries within the fresh fruit and vegetable category, according to data from Seatrade Peru, in addition to seafood, coffee, andalusite (an aluminium nesosilicate mineral) and fish meal. Peru’s two main ports of Callao and Paita have both been steadily increasing their volumes of fruit and vegetables handled for the UK market, with growth rates of 15.9% and 7.2% recorded respectively in 2014 against 2013, as indicated by figures presented to Produce Business UK by APN, and compiled by Peru’s exporter association (Adex) with Customs Peru, and prepared by the Department of Statistics (Doma). Pisco, meanwhile, which began supplying the UK as recently as 2012, saw its volume rise by 224% last year. Salaverry’s activities got underway in 2013 and last year the port experienced a massive 611% growth in volume to the UK. In 2014, the four ports combined exported 77,632 tonnes of fruits and vegetables to the UK. Of that total, fruit represented the lion’s share of sendings at 69,917 tonnes, while vegetables made up the 7,715-tonne difference. Callao is the leading export hub by far, accounting for 58.8% (or 45,680 tonnes) of the total exports, followed by Paita with 37.7% (29,295 tonnes). Pisco and Salaverry are much smaller cargo terminals, handling 906 tonnes and 1,752 tonnes respectively. Modernisation plans To continue on that growth trajectory, the ports’ operators are investing in improvements and modernisations such as extended quays, new container docks, more reefer plugs, additional gantry cranes and even proposed on-site cold storage facilities that could eventually replace external depots. Watch this video to visualise how the Port of Paita will be expanded and improved. “Currently, there are significant investments taking place with regards to port infrastructure and equipment to improve the competitiveness of Peruvian ports for all types of cargo,” reveals Guillermo Fellmont from APN. In terms of infrastructure, Juan Pulgar, general manager of Seatrade Peru, believes Peru is about five to seven years behind Chile with regards to its agriculture business and corresponding port infrastructure. Furthermore, he says logistics costs are still at a very high level, which takes away some competitiveness for Peruvian products. “Cost is one of the most important issues for Peru if the country is to maintain and raise its competitiveness,” Pulgar comments. “At the same time, if you have better efficiency and effectiveness, that will also improve the quality of [fresh] products shipped, and Peruvian growers are really concerned about improving their quality processes in order to supply better quality produce.” To address costs and product quality, Pulgar reveals that Peru’s port operators are considering plans to handle all cargo volume within their facilities. “Currently, external depots can receive cargo headed for the ports,” he explains. “But if cargo volume is controlled within the port’s facilities it will provide a cost saving for shippers that will benefit the entire logistics chain.” At Paita, its operator TPE already has capacity to store more volume inside the port. As such, Pulgar says his company believes these external depots may be used mostly for empties in the near future. Even so, he points out that quite a few shippers still use the external depots once container units have been filled before bringing them to the port. “According to our information, we know TPE at Paita and APM at Callao are also evaluating the feasibility of building cold storage facilities inside the port terminals to accommodate cargo that arrives on pallets, including handling the loading of the pallets into containers,” Pulgar reveals. “This will offer better control over the logistics chain and improve cost savings.” José Carlos Ferreyros, commercial manager of container business at APM Terminals, which operates Callao, confirms cold storage facility plans are underway at the port of Callao. “We aim to develop a cold storage facility within the port, which will, at first, be focused on frozen cargo only,” he reveals. “Fresh reefer cargo is usually packed at the premises of the exporter and sent to off-dock depots outside the port, which then move the cargo to the port for loading. Or some exporters take their full reefers directly to the port to be plugged in and loaded [to vessels] thereafter.” For now, on-site reefer facilities are already being expanded. At Paita, Pulgar claims there are about 800 stationary plugs to connect temperature-controlled units within storage areas to handle fresh fruit and vegetable exports, plus 300 mobile plugs (power packs). “Some of the bigger shippers have some cold storage areas for 4-5 TEUs and maybe the biggest have capacity for up to 10-12 TEUs,” he adds. “Development [at the port] only means more capacity because the terminals will have more plugs for reefer cargo,” Pulgar points out. In comparison, at Callao there are 407 stationary plugs for reefer cargo at the moment, which is set to reach 1,000 by the end of 2015, according to Ferreyros at APM Terminals. Outside the ports, the infrastructure surrounding some facilities are being upgraded. For instance, Pulgar notes the road lanes between Piura and the port of Paita are being expanded to allow for better connections between fresh produce sourcing areas and the port terminal. However, at Callao, Pulgar laments that infrastructure improvements are taking a slower pace as a result of congestion (around the busy capital) and bureaucratic issues. Ferreyros agrees the infrastructure around Callao is lacking. “It’s very poor, mainly due to the lack of roads to feed the container flow into and from the port’s facilities in Callao.” – See more at: https://www.producebusinessuk.com/services/stories/2015/09/23/port-upgrades-to-bolster-peru-s-capacity-and-competitiveness#sthash.bBwiXiKA.dpuf