After the Earthquake

After the Earthquake

The catastrophic, 8.8 magnitude earthquake that rocked Chile on Feb. 27 killed more than 500 people and left behind a shambles of infrastructure, with damages topping $30 billion.

Miles and miles of the South American nation’s roads, bridges and ports were destroyed or severely damaged.

For shippers, the ensuing tsunami doubled the disaster in Chile’s southern coastal city of Concepcion and its four Pacific ports. Giant waves washed away ships and containers, and smashed ashore, breaking piers into pieces.

The state-run Port of Talcahuano had served the region as a key breakbulk shipment hub, handling wood and pulp exports for Arauco y CMPC. Talcahuano’s port was destroyed.

The nearby privately owned Port of Coronel, which also handles wood exports and project cargo such as electric generators, also suffered heavy damage. Only two of its six berths are operating, shipping agents say.

The other two privately operated ports in Conception Bay – Lirquen and San Vicente – suffered heavy damage. They are operating at severely reduced capacity, creating long delays for shippers.

“It is in the southern ports where we are facing conflict,” said Alberto Oltra, managing director of DHL Global Forwarding in Chile. “The southern ports (San Vicente, Lirquen and Coronel) say they are operative, but really they are not working. They haven’t received any shipping lines yet.”

DHL uses Chile’s southern ports to move thermoelectric plant equipment into the area.

Shippers say Chile’s principal exports of pulp and salmon have been suspended as producers shut down plants to review damage from the earthquake, which has been recorded as one of the most powerful in more than a century in South America. Its aftershocks were similar in size to the quake that killed some 300,000 people in Haiti in January.

“Obviously, the shutdown by producers affects us as we need to find alternatives for the vessels that are ready to dock and load produce,” said Alberto Morante, regional director of Bertling Logistics for Latin America, and based in the Chilean capital of Santiago.

The supply chain is further complicated by the alternatives available for the ocean carriers. Vessels that normally docked in Concepcion Bay are being diverted to the central Port of Valparaiso and the Port of San Antonio. Both ports suffered infrastructure damage from the earthquake and by mid-March were only just regaining capacity after four-day closures.

The Port of Valparaiso, the biggest container and passenger ship harbor in Chile, was the first port to reopen. Both the cargo and passenger areas were operating at 90 percent capacity a week after the quake. Ships can unload, but some must wait more than 10 days to do so.

Now the operable ports face growing congestion as they take in goods normally handled by the ports in Concepcion Bay.

“The biggest problem is the high cost of waiting,” said Adolfo Liewald, operations manager for BBC Chartering’s agent Ian Taylor Chile. “The ships that we operate cost between $20,000 and $25,000 a day.”

At the time of the quake, Ian Taylor had some 25 vessels in the Concepcion Bay area, most of which were diverted to the central ports.

Shippers and logistics executives agree that Valparaiso and San Antonio reopened with surprising speed given the unprecedented circumstances. “Four days after the earthquake, we sailed into San Antonio and unloaded 3,200 vehicles,” Liewald said.

The challenge for the breakbulk industry lies in the dearth of specialized equipment and facilities to handle breakbulk cargo at Chile’s central ports. Breakbulk cargo movement is further complicated because truckers now must drive some 310 miles to reach the more southern destinations along roads severely damaged by the quake.

Meanwhile, many maritime officials have been forced to relocate offices, making communications more difficult. And companies are still searching for cargo lost from ships that were docked when the quake hit. Bertling alone lost 50 containers — valued at more than $1.3 million — swept away from the docks at Talcahuano when the first quake hit.

Despite the widespread destruction, the devastating earthquake could have a silver lining for Chile’s ports and infrastructure. Many ports, roads and highways were old and deteriorating. They now will receive fresh investment under a national reconstruction plan.

Chile is one of Latin America’s strongest economies, and is known for successfully tendering private sector contracts for infrastructure, including ports, making its economy competitive.

To date, none of Chile’s Pacific ports have been able to receive post-Panamax vessels, which will be able to traverse the Panama Canal once that waterway’s expansion is completed in 2015.

The state-run Port of Talcahuano’s facilities had not been updated in more than 40 years.

“We needed to rebuild the ports even before the quake,” Luis Alberto Rosenberg, general manager at Talcahuano since 2002, told reporters. Rosenberg said he had struggled unsuccessfully to tender modernization projects and was thwarted repeatedly by political blockades.

Government officials in Chile estimate the cost of rebuilding Talcahuano at $105 million if it is to be equipped to receive post-Panamax ships. The rebuilding could allow the port to be run by the private sector.

Concepcion Bay’s other three ports also will need investment for rebuilding. Even in the large central ports, investment is crucial to their survival. Valparaiso’s eight docks are inoperative, and two of the Port of San Antonio’s five harbor cranes are damaged.

At least 50 miles of toll roads need repair, and another 20 bridges must be rebuilt.

An estimated 20 bridges are still standing but in need of repair.

As a metaphor to underscore the high priority of infrastructure repair, outgoing President Michelle Bachelet was just about to hand over power to new President Sebastian Pinera when a 6.9 magnitude aftershock struck, sending people running through the streets, cutting short the swearing-in ceremony.

President Pinera’s mandate is now clear; rebuilding Chile will require all the right-wing tycoon’s business skills. Pinera already has announced a $30 billion reconstruction plan and visited Talcahuano on his third day as president.

Just before he arrived, a 5.8 magnitude aftershock rocked the area.

Pinera has given government officials 60 days to meet key health, education and roadway needs. The task falls directly to new Public Works Minister Hernan de Solminihac, who also must create an action plan to rebuild Chile’s ports.

Meanwhile, Chile is expecting an important uptick in project cargo spawned by reconstruction work and rebuilding damaged factories.

“This is going to mean an increase in that line of business, 100 percent for sure, because in the next six months there are going to be imports of infrastructure and materials at a level much greater than normal,” said DHL’s Oltra, whose company has donated its logistics services to hand out emergency supplies in the quake’s aftermath.

Contact Leticia Lozano at lozanoleticia@yahoo.com.