San José, Costa Rica, since 1956

Efficiency at Caldera Port Improves, but Dark Clouds Are on Horizon

Caldera, Costa Rica’s main Pacific shipping port, has in recent years had the distinction of placing near the bottom of Latin American port efficiency rankings, but that seems to be changing.

The average time it takes to unload a grain boat has decreased from about a week to under four days since Sociedad Portuaria Caldera, a private consortium led by a Colombian firm, took over day-to-day operations nearly two years ago.

Government officials and port users agree that Caldera is turning the page and beginning to shed its old reputation.

“Without a doubt, the arrival of the concession holder has been very positive,” said Urías Ugalde, executive director of the Pacific Port Authority (INCOP), the government agency that used to run Caldera.

“There was an infrastructure problem that only a private firm could resolve. There has been a noticeable increase in productivity.”

Rafael Carrillo, manager of Molinos de Costa Rica, a firm that imports and processes wheat, said increased efficiency has saved importers time and money. “In the past, it could take as long as 10 days (to unload a grain ship),” he said. “Time was lost unnecessarily because of basic things like the port not operating 24 hours, workers taking off for lunch all at the same time and lack of adequate lighting.

Contracts (with shipping firms) had to be negotiated to take this into account. These problems were solved almost immediately.”

But problems are on the horizon. Accumulation of sediment around the berths, a consequence of years of government neglect, has substantially reduced water depth, limiting the size and tonnage of ships the port can service. A controversial expansion in the form of a new grain terminal is stalled while the government and Sociedad Portuaria renegotiate the terms of the contract.

The ‘New’ Caldera

Inaugurated in 1981 as a replacement for nearby Puntarenas, Caldera is essential to the Costa Rican economy. Though it handles only a fifth of the country’s maritime cargo, Caldera handles many essential imports, including almost all basic grains such as rice, corn, soy and wheat. This specialization in bulk cargo has allowed Caldera to become the main port for imports of steel, fertilizer and cars, as well as tuna exports.

Sociedad Portuaria took over Caldera in October 2006, six years after winning an international bid to modernize the port, operate it for 20 years and build a new grain terminal. Bureaucratic hurdles, mistakes and opposition from displaced port workers prevented the concession from receiving a definitive green light until March 2006.

As part of the concession, INCOP fired the port’s workers, awarding them compensation and in many cases early retirement.

This allowed the concession holder to inherit a clean slate and not be limited by the INCOP union’s collective bargaining agreement, which limited the port’s daily operating hours to 18 and entitled workers to a wide range of expensive perks.

“This alone resolved the largest of the problems we faced,” Carrillo said. “The biggest problems were labor-related. The collective bargaining agreement had many absurd clauses.”

In addition to working longer, the port is working harder. Bulk cargo handling has increased from an average of about 400 tons per hour to 600. Container handling has increased from 15 to 31 per hour, according to INCOP.

Worker efficiency has also increased. Sociedad Portuaria employs 152 people, most of them former INCOP workers. Additional port services are hired from small cooperatives staffed by former INCOP workers. Now operating 24-7, the port employs about 500 people, compared to 1,100 under INCOP, said Julio César Ospina, general manager of Sociedad Portuaria.

“The most important change has been a change in mentality,” Ospina said. “That is what made the increased efficiency possible.”

So far, Sociedad Portuaria has invested $9 million in new equipment and $3.2 million in infrastructure. The company purchased a 35-meter crane, several container stackers and claws for unloading grain that are capable of moving 15 cubic meters of grain at a time – five times the capacity of the claws they inherited, he said.

Dredging and Expansion

The accumulation of sediment around the port’s berths is preventing the port from operating at full capacity. Though it is recommended that ports be dredged every four years, Caldera has not been dredged since 1999, when INCOP began preparing for the eventual concession.

To resolve the issue, Sociedad Portuaria has hired a dredging ship, La Virgen del Rosario, which should begin a 55-day process to restore the port to its original depth in the coming weeks, Ospina said.

Once the port is back to its original depth, additional dredging will take place to further increase depth, thus allowing Caldera to handle vessels carrying between 40,000 and 42,000 tons of bulk cargo, up from a maximum of 35,000 at present. Increasing the amount imported per ship would result in savings for importers that could be passed down to consumers, Ospina added.

Sociedad Portuaria is also required to build a specialized grain terminal. An additional dock and moving the slow-to-unload grain ships to their own section of the port would increase the efficiency with which other cargo is handled. The terminal will include a conveyor belt connecting the dock to the loading areas as well as eight silos with a total capacity of 20,000 metric tons.

Construction of the new terminal was delayed for a year because of legal action by the National Association of Public and Private Employees (ANEP), which adamantly opposes concessions. After 11 months, the Constitutional Chamber of the Supreme Court (Sala IV) ruled in September 2007 against ANEP, allowing the project to move forward.

Prior to the ruling, Sociedad Portu aria could not even conduct the environmentalimpact studies or seek construction permits.

A study on the impact of the dredging required to create an area with the 12-meter depth needed for the terminal was recently conducted and is now in the hands of the National Technical Secretariat of the Environment Ministry (SETENA).

Delays = Money

The contract gives Sociedad Portuaria 36 months to build the terminal at a budget of $22 million. However, as a result of years of delays beyond its control, Sociedad Portuaria claims the terminal is no longer financially feasible. The increase in construction material costs since the contract was signed in 2001 has increased the project’s cost to $52 million, Ospina said.

In July, Sociedad Portuaria sent INCOP a menu of options to make up for the shortfall: raise the fees charged to port users, have the government pay the added cost or extend the concession to allow the company to recover its investment over a longer period of time.

INCOP is analyzing the proposal to see if Sociedad Portuaria’s numbers are reasonable. If they are, the institution will draft an addendum to the contract based on one of the three options or a combination thereof. The addendum will require approval from the Comptroller General’s Office, Ugalde said.

Speaking for the Chamber of Grain Importers (CACIGRA), Carrillo argued that the current delay offers an opportunity to cancel the terminal, which the chamber’s believes is too complex and unnecessary.

CACIGRA has opposed the terminal from the start, preferring instead the construction of more berths. The conveyor belts will just get in the way of unloading ships, and the silos will get filled with just one medium-size grain ship, Carrillo said.


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