By Jean-Paul Rodrigue. The expansion of the Panama Canal comes with the expectation that larger ships will call Central American and Caribbean ports, but in many cases port infrastructure is lacking. Located about 160 nautical miles from the Caribbean entrance of the Panama Canal, the port of Limon Moin surpassed 1 million TEU for the first time in 2012, six times as much than the second largest Costa Rican port, Caldera on the Pacific side (Figure 1). However, the current port is limited to alongside drafts of 9 meters and as such to container ships around 2,500 TEUs (Panamax ships can carry around 4,500 TEUs). The growth prospects of the Costa Rican economy, which ranks amongst the most stable and competitive in Latin America, underline that the current port infrastructure is inadequate to accommodate traffic growth expectations, larger classes of container ships as well as more stringent requirements in supply chain management.
Figure 1: Central American Container Ports, 2011
In this context, APM Terminals (APMT) secured in 2011 a 33-year concession from the Costa Rican government to design, build, finance, and operate a new container terminal in the city of Moin. This DBFO form of public/private partnership implies that APMT is assuming almost all the risk of the 992 million USD terminal project. TCM (Terminal de Contenedores de Moín) is the largest infrastructure project in Costa Rican history and is meant to support Costa Rica’s growing agricultural export industry as well as an active manufacturing sector. The fact that APMT is committing such a high level of capital investment is reflective of its confidence in the potential of the Costa Rican economy and the role that the new terminal will play in its development.
The first phase of the TCM project consists of a 40 hectares island 500 meters off the Caribbean coast, 600 meters of quay, two berths (alongside depth of 14.5 meters), a 1500 meter long breakwater, 16 meter deep channel and six super-post Panamax container gantry-cranes. This enables the terminal to handle ships in the range of 8,000 to 9,000 TEUs, depending on the load configuration. Future expansion phases will place the alongside berth depth at 16 meters, enabling the terminal to handle container ships in the range of 15,000 TEUs (Figure 2).
Figure 2: Concept of the Fully Developed Limon Moin Terminal (Image courtesy of APMT)
TCM is expected to handle over 1 million TEUs when operations start in 2016. This figure is expected to rise to 2.5 million TEUs over the following decade as Costa Rican trade increases, in part because of the trade facilitation the modern terminal facility will provide. A important driver for terminal activity concerns reefer (refrigerated containers) exports, mainly bananas and pineapples, coming out of Costa Rica, the fourth-largest banana exporter and the largest pineapple exporter in the world. The country currently has 70% of the global market share for pineapples, with 82% of the market share in the US. and EU. Since pineapples are a relatively new commodity on global markets, low levels of market penetration underline a substantial growth potential. Such an important consideration is part of the terminal design with about 15% of the terminal capacity designed to handle reefers, which is three times the average. The new terminal is expected to further reduce the costs of Costa Rican fresh tropical fruit exports and thus promote their competitiveness and availability on global markets. High value and time sensitive cargo calling from Moin is likely to influence the structure of liner shipping networks with more direct connections, or attempting to call Moin last along a pendulum feeder route towards a transshipment hub (e.g. Colon, Kingston, Caucedo).
The growth of port traffic will put pressures on the inland road transport system. Logistics costs in Costa Rica are perceived not to be problematic since fresh fruit logistics is already well established. Additional road infrastructure investments are likely to be required to handle additional volumes and connecting well the port and the national road system, as well as the development of logistics zones. The expectation is that port and road infrastructure investments will benefit the national economy, generating additional cargo contributing to the revenue of the terminal operator.
The APM Limon Moin project is part of an emerging trend in reefer supply chains. Services that used to be assumed by dedicated reefer ships or small container reefer ships are being shifted to regular liners with higher capacity and lower costs. Container ships also tend to have more reefer plugs to accommodate this growth. Ships used to have 5% of their available slots designed to handle reefers and many ships now have 20% of their slots allocated to reefers. This is also a revenue generation issue as reefer transportation is a profitable trade for maritime shipping companies such as Maersk, particularly in light of lower growth prospects of standard container shipping. Thus, the growth of the reefer trade is influencing the design of terminal facilities and shipping services in Latin America. With a relatively low deviation level from main maritime shipping routes, modern high capacity facilities and economic growth prospects along the Caribbean coast of Central America, the potential transshipment role of Limon Moin remains to be seen.
Jean-Paul Rodrigue. With a Ph.D. in Transport Geography from the Université de Montréal, he has been a professor at Hofstra University (New York) since 1999. Rodrigue's research interests cover the fields of transportation and economics as they relate to logistics and global freight distribution. He is a member of the PortEconomics.eu initiative and of the World Economic Forum’s Global Agenda Council on Advanced Manufacturing (2011-13). He was commissioned by UN-Habitat to write a chapter about urban freight distribution for the 2013 Global Report on Human Settlements.