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Paraguay-Parana Waterway: a real solution for Bolivian overseas trade

Marconsult - our Agent in Bolivia - reports into current opportunities for the profitable transport of cargo in and out of the country.

Wed 21 Mar 2018

Bolivia is a land-locked country that relies heavily on overseas commerce to thrive. Any development of logistics solutions are therefore a lively and well debated subject as the success of the overseas trade depends on the strategy chosen.

Recent studies have drawn a clearer picture of the current state of Bolivian commerce. They have also put the spotlight on realistic solutions which would allow Bolivia to access both the Pacific and Atlantic coasts more easily and in a sovereign manner.

In 2016, Bolivian total cargo imports and exports added up to 10.5 million metric tons (MT): 4.1million MT transited through ports on the Pacific Ocean against 1.2million MT on the Atlantic Ocean. In other words, approximately 50% of Bolivian cargo is required to be transported by sea. 68% of the export cargoes were sent from Chilean ports, whilst only 30% departed from Atlantic coast ports.

As a result, Bolivian trade has been sensitive to interruptions of work in Chilean ports (mostly in Arica), which have led to losses of about 300 million US dollars in the past five years, according to a preliminary estimate of registered strikes in Chilean ports over the 2013-2017 period.

The importance of overseas commerce, not only for Bolivia, but also for Argentina, Brazil, Paraguay and Uruguay, has been the reason behind the creation of the Inter-government Committee of the Waterway (Comité Intergubernamental de la Hidrovía (CIH)).The Committee has already signed different agreements with international organisations (BID, FONPLATA, PNUD, CAF) for the implementation of a scheme that would allow the countries to carry large volumes of cargo through long distances, at the lowest possible cost.

Fluvial transport proves to be more competitive than land (road or rail) and air transportation in particular in respect of environmental issues and fuel consumption per kilometer: 1,500 tons carried by one barge amount to 60 trailer-trucks on land. From a kilogram to horsepower ratio point of view, one HP moves 150 kilograms of cargo on a trailer-truck, 500 kilograms on a train, and 4,000 kilograms on one vessel. Taking into account that the motor park is responsible for 60% of the greenhouse gas emissions in the world, it is clear that a fluvial solution would be more eco-friendly.

This is where the Paraguay-Parana Waterway comes into play.

The Waterway is a fluvial system formed by two international rivers, the Paraguay and the Parana. It offers a natural navigable way with minimum incline, which eliminates the need to build locks. It starts in the northern part of Brazil (Caceres Port) and heads south passing through Bolivia, Paraguay and Argentina to Nueva Palmira Port in Uruguay. This hydric artery covers an area of 1.75 million square kilometers which is inhabited by 17 million people. Its waters are classified as international.

It is a place where soya, cotton, sunflower, wheat, flax, iron, manganese and other industrial and agro-industrial products are produced and shipped on the two rivers. Four times more produce is going downstream than upstream. Fuel constitutes 80% of the upstream cargo.

Most vessels that can be found on the Waterway are non-propelled barges which have a load capacity of up to 1,500 tons. A usual convoy is made of 20 barges and a pushing tow averaging 5,000 HP.

In the Eastern part of Bolivia you can find the Donisio Foianini Triangle (formerly Corredor Man Cesped). This area counts 48 kilometers of river banks on the Paraguay river, which were given to Bolivia under the Petropolis Treaty signed on 17 November 1903, meaning that the country has a sovereign access to the Atlantic Ocean on international waters. Jennefer, Aguirre, Gravetal river port terminals are all based in this area. They are already operational ports, and are crucial to obtaining access to international waters and open seas. Busch river port is an additional option – it is currently unused but has fantastic potential.

Busch Port is located in the German Busch Province, (Santa Cruz, Bolivia), on the banks of the Paraguay River. It could allow the transport of Bolivian cargo to and from the Atlantic Ocean via the Waterway all year round, but needs major investments, in particular for the construction of a Motacusito-Mutun-Puerto Busch railroad, as well as a multi-purpose port. It will take three to five years for the project to become a reality, making it a medium term solution.

According to an initiative for the Integration of the South American Regional Infrastructure (IIRSA), the railroad Motacucito-Mutun-Puerto Busch requires an investment of USD 200 million. This 130 kilometers leg was declared “Work Of Maximum National Priority” in a Supreme Decree N° 18680 dated 29 October 2017. If it becomes reality, it will link with the current railroad that connects Santa Cruz with Puerto Quijarro (approximately 16 kilometers from Puerto Suarez), which is where products from five out of nine regions of Bolivia will be shipped (Cochabamba, Sucre, Tarija, Beni and Santa Cruz). It will also make the transportation of thousands of tons of iron possible, from the metallurgy project of El Mutun to Puerto Busch.

Ports adjacent to the Tamengo Channel and the Paraguay – Parana Waterway, including Busch Port – will be converted in a medium term into a more economical alternative for commercial flux. With shorter transit time and cost advantages, it will translate into greater competitiveness for Bolivia.

The Waterway has huge transportation potential but it is necessary that joint policies and efforts between the public and private sectors converge. The goal of the Waterway program is the efficient use of a natural fluvial transportation way, where the relative lower cost of fluvial transportation and the security in navigation constitute a decisive factor for the integration of the countries located along, starting from a balanced and sustainable development of the regional economies.

Source: Comercio Exterior No. 254 of the Bolivian Institute of Foreign Trade (IBCE)