San José, Costa Rica, since 1956

Moín Port could attract foreign investment

From the print edition

Paul Gallie knew the Caribbean coast of Costa Rica long before he directed the largest private concession project in the country’s history. The North Wales native joined his first ship at 16, and sailed the oceans for two decades. The last company Gallie went out to sea with was food producer Chiquita. With Chiquita, Gallie spent time becoming familiar with the Caribbean port city of Limón, located in the poorest province in Costa Rica.

Now Gallie, 48, works as the managing director of APM Terminals Moín, where he is in charge of a $1 billion project to update Costa Rica’s failing Caribbean port system. He knows all about Limón’s doleful history, and Gallie believes the dock can transform the Caribbean quarter into a prosperous port city by attracting multinational companies and creating tens of thousands of jobs.

In 2011, the World Economic Forum’s global competiveness report ranked Costa Rica’s port infrastructure 137th of 142 countries. That number is part of the reason Costa Rica dropped five spots to 61st in the overall global competitive rankings. The country also placed 111th in transport infrastructure competitiveness, the worst in Central America.

The Moín Container Terminal could give Costa Rica a modern port in 2016. The terminal would be in prime position to benefit from the Panama Canal’s own expansion project, with the Atlantic end of the canal only 10 hours away by boat. 

While the project remains on track, the venture is facing legal battles in Costa Rica’s court system (TT, July 13). Judges will rule in coming days on a lawsuit filed by unions and banana producers that calls into question the legality of the government’s contract with Dutch company APM Terminals. The courts threw out an injunction by the unions to halt the concession in October.

Gallie talked with The Tico Times about the project’s contentious relationship with the unions, improving Costa Rica’s troublesome transportation system and why a new port can change a city’s future. 

Excerpts follow:

Paul Gallie

APM Terminals’ Paul Gallie, right, says Costa Rica’s Caribbean ports urgently need renovation to meet the demand of 21st century ships. Last year, a World Economic Forum report ranked the country’s port infrastructure 137th of 142 countries. Courtesy of Paul Gallie

TT: Why did APM Terminals bid and choose to invest in the Costa Rica port project?

PG: Certainly there’s the volume of travel that makes the project viable. Puerto Limón last year handled well over 900,000 TEUs [20-foot Equivalent Units, a number used to describe a ship’s cargo capacity equal to 20-feet-long by 8-feet-wide]. … That’s Costa Rican imports and exports. That certainly makes the project viable. There’s sufficient cargo there.

Secondly it’s a place where we can make a difference. We’ve got the experience of 60 terminals around the world, 14 projects under construction and 24,000 employees, so we are at the top of the ladder when it comes to container terminals development and management. We see in Puerto Limón [and] Moín the severe problems they have in their port infrastructure. We thought we could make a difference. The project was viable. Yes, it’s a good business. That’s the business we’re in. But also the legal framework of Costa Rica is very strong, which obviously for our board of directors was a key point to receiving authorization to make a bid.

Is a modern port able to take advantage of the Panama Canal expansion?

Yes it is. I’d say that was part of the focus, but it’s not the [only] focus. Let’s say, for example, the Panama Canal expansion was not going ahead; that wouldn’t have made a difference with our interests in Moín. The fact that the Panamanians did try to expand the Panama Canal, which will be open for use in 2015, you could say that’s a bonus. … 

One hundred years ago, when the canal was first opened, Costa Rica never took advantage of that port. And now they have a second chance, and it’s not often you get a second chance like that in life. 

Were you expecting all these court battles with the unions?

It’s not unusual. All around the world, whether we’re in Latin America, Africa, the Middle East, Europe [or] the United States, we always respect the laws of where we’re operating. People have the right to their opinion. And if we have to go to court to resolve some legal issues, then that’s fine. And we do that here in Costa Rica. 

The good thing is we already signed the contract … at the end of August. And it was [approved] by the Comptroller General in March of this year. So from that side, the project is fully legal and it’s continuing. We’re not wasting one day. I’ve got my whole project team working on it as we speak. We’re very much on track with the contract. And at the same time, on the side, we defend very rigorously any legal challenges. 

What is APM Terminals’ vision for Limón?

I know Limón very well. I used to sail there as captain. I’ve known Limón for many, many years, … and Limón has been forgotten from Costa Rica in history. Of course, the population of Limón, the Afro-Caribbean population, [was] not even allowed outside of Limón until after 1948. …

People have to remember this piece of history. People say, “We’re poor, what does that have to do with building a new container terminal?” It’s that Limón has been promised things by the central government for 100 years, and it’s never materialized. It’s only actually private money that’s ever done anything in the province of Limón. One of [which] was the first private concession in Limón [and] the first private concession in Costa Rica, which was the railroad between Limón and San José. 

And the subsequent development of banana plantations was all basically private   money. Other projects have never materialized. And I think we are the catalyst to turn that around once and for all. I think now Limón’s time has come.

A lot of other things are going on as well, not just our project. If you look at the expansion of [the National Oil Refinery], you look at the expansion of the country’s own oil terminals. If you look at the expansion of Route 32 [a highway connecting the capital to Limón] to four lanes from two, it’s huge potential. There’s an airport that could be revamped. You look at general tourism increases in the area. 

So, I think when you put all these projects together, especially the port project, then there’s sufficient volumes of people coming into the town, and money and everything, until you can’t stop [the growth] anymore.

One of the major advantages of having a modern port is it acts as a magnet to other foreign investors. We foresee other multinational companies that are maybe new to Costa Rica or maybe have factories already in the Central Valley putting their production facilities and distribution centers close to the port so they save logistics costs. And that could be a major multinational building [or] a factory there. This could provide obviously thousands of jobs. And we have a lot of experience of this in ports around the world.

How would you describe your relationship with the unions currently?

We’re absolutely open to talking with everybody. And I can’t count the number of presentations [APM Terminals General Manager Rogelio Douglas] and I have done in the community of Limón. …

I think [the Atlantic Port Workers’ union] has a very strong history, and they are trying from their perspective to protect their number of interests. But if they really saw the long-term view, the best way they could protect their jobs is to work with us and not against us. … 

I’d like to very much be talking to you now and saying we have an excellent relationship with the union, and we’re all moving together with a common name, but as you know, that’s not the case. I think as time goes on I sincerely hope the union and its leaders will look at what’s happening in the world, that ships are getting much bigger, [and] that Limón doesn’t have the protection against the elements that it needs to keep the port open. And that if we work together, we’ll have a much stronger future.

Can you give other examples of port projects helping improve the infrastructure of a community? 

We don’t have a business there. But one example locally is Cartagena in Colombia. Colombia privatized their ports in 1993, and Cartagena has the best of both worlds, not only the tourism, but they’ve generated tens of thousands of industrial jobs because they have a modern deep-water port now. Whereas before the port was very inefficient. …

In Oman, in the Middle East, basically we built a port in the desert, and now there’s a whole industrial area around that port. …

We’re very active in West Africa, as well. I think we have 10 terminals in West Africa, and those terminals are providing in different countries such as Nigeria, Ghana and Angola. In these countries all our terminals have attracted business. …

The World Bank estimates that for each job in the port, it generates about 10 indirect jobs around the port. 

How can Costa Rican improve its infrastructure to compete internationally?

The first part I think they did it, [with] San José and its airport. … It needed to be expanded to meet modern air traffic and future air traffic demand. With the ports, they’ve made the right decision with the concession of the Moín terminal because that will allow us to receive larger ships on a more frequent basis. …

Internally, the infrastructure definitely needs some help. The best way to do that, the recommended way by the World Bank and by the Inter-American Development Bank, is the concession model. If Costa Rica doesn’t have sufficient funds itself, it has to reach out. There are a lot of companies out there. We are experts in ports and terminals. There are companies out there that are experts in roads, bridges, and these types of things. …

Railroads need to be reactivated. Rail is a very environmentally friendly way of moving cargo. Take all these trucks off the road and Costa Rica can show the world how it can be a model for this.

I saw last week that President [Laura] Chinchilla, together with President [Ricardo] Martinelli of Panama, just opened a temporary bridge over the Sixaola River to Panama on the Caribbean side. That’s good news. There needs to be a proper four-lane bridge over that river. It’s a route I use regularly to Bocas del Toro that needs to be opened up to promote trade between Costa Rica and Panama. Better road connections with Nicaragua; those are some of the things that need to be done.

It took almost 30 years to complete the Caldera Highway to the Pacific coast. Do you think we’ll have to wait long before Costa Rica completes the expansion of Route 32?

 It’s truly incredible. I’ve worked and lived in a lot of countries around the world. Decisions definitely need to be speeded up in Costa Rica for the benefit of the country. The decision-making process is too cumbersome, and people need to make decisions rapidly, and that would definitely help competitiveness.

There’s no way Costa Rica can wait 30 years for Route 32, on which 80 percent of the country’s trade passes. That is the key highway. That’s a more important highway than the Caldera Highway. The Caldera Highway is good for connections from Puerto Caldera to San José, but Puerto Caldera is much smaller. It’s nice for people in the Central Valley to get to the beach in an hour, but if you really want to improve the lives of all Costa Ricans, than the first key way to do it is to improve Route 32. Then all your goods and services and everything that comes into the country will become much cheaper. 

Plus that road is dangerous to drive on.

I don’t even allow my staff to travel it in hours of darkness. It’s dangerous during the day, and at night it’s just an accident waiting to happen. …

The interesting thing about Route 32, the problems only started when they closed down the railroad, because most of the traffic of bananas and pineapples coming from the plantations around Guapiles was all on rails, and that road was much quieter and safer. We need to get that traffic back on rails, and double the size of the road. And then things will get better. 

Why should Costa Rica bring the railroads back? 

… Everybody’s investing in rails. In Costa Rica, it shouldn’t be that expensive to invest in rails, and it’s in keeping with the country’s environmental, ecology image. It’s something we definitely would support. We’d love to put containers on the train.

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