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LATIN AMERICA: "A Buyer's Guide to M&A in Latin America (Jan. 2018)" report

LATIN AMERICA: "A Buyer's Guide to M&A in Latin America (Jan. 2018)" report. 36-page report by Baker McKenzie.

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back to index backLATINtalk January,  2006

Riding The Wave

One of the biggest signs of growing trade between Asia and the Americas is the congestion building at ports such as Los Angeles and Long Beach, California, the main ports for Asian ships.

In the past year, many shipping companies have simply headed south into Latin America rather than wait around in bottlenecks at U.S. ports. According to forecasting firm Global Insight, the rise in containerized trade in Latin America and the Caribbean will grow at or above 7% a year.

Nevertheless, there are Mexican port authorities that believe that container traffic will be substantially higher. ``In 2004, the growth in container movement in Latin America and the Caribbean was in the order of 12.8%, which was much greater than the gross domestic product growth of the region,'' says Francisco Pastrán, director of statistics for Mexico's Communications and Transportation Ministry.

The growth rates are the result of increasing trade in countries such as Mexico and Brazil, says Pastrán, who points out that growth in Mexico alone was greater than 13%, higher than the regional average. In Brazil, growth was even higher, in part because of ports such as Santos, which moved 1.88 million ton equivalent units (TEUs), a 21% leap in that type of cargo.

Much of that growth has come as a result of a booming Chinese economy, of which Latin American ports have not failed to take full advantage. In April, the port management at Manzanillo, Mexico closed a special trade agreement with Shanghai, China's port administrators. The deal includes regular service between both ports through the China Shipping Line and China Ocean Shipping Company. ``With two Chinese shipping companies arriving directly to Manzanillo, without making stops in between, and an accord with Long Beach to lessen its load, we are the port for Pacific Basin countries,'' says Héctor Mora, port director at Manzanillo.

In 2004, Manzanillo moved more than 830,000 TEUs and this year expects to increase that figure to 1 million, making it the No. 1 port in Mexico. Things weren't always this way: In 2002, the port had a big jump thanks to a strike at Long Beach. ``Many of the containers came here. Many of the shippers began to look at us because we took very good care of the cargo. In 1994 we moved 64,000 TEUs, and we have been growing annually at an average rate of 29%,'' says Mora.

In just the first quarter of 2005, Mexico cargo rose 17.2% compared to the same period the year before. By December, total investment at all of Mexico's ports will hit US$659 million, according to Mexico's port regulator.

Santos, in Brazil, is the No. 1 port in the region, and it too has capitalized on rising global trade. ``In 1990 we moved 445,000 TEUs, but our projections for this year are close to 2.1 million TEUs,'' says Sergio Saraiva, press director for Companhia Docas do Estado de Sao Paulo (Codesp), the port authority.

Growing exports of products like soy, coffee and sugar have been key to the success of the port, which moves more than a quarter of the country's exports, 70% of the port's business. ``This absolute and consolidated role for Santos in the national scene is, without a doubt, the result of investments made by the private sector over a decade,'' Codesp President José Carlos Mello Rego told reporters in July.

Private sector. In the past few years, Brazilians have been forced to improve port infrastructure due to an increasingly productive private sector. In addition, the South American giant has become an important destination for Asian exports. ``After seeing exports to China jump 80% in 2003, Brazil invested in the Asian country and is buying its products like never before,'' says Reigle Ribeiro, a logistics analyst with Brazil's ABGroup. Between January and August of this year, imports of Chinese merchandise again rose nearly 80%, Ribeiro says.

Source: - GAI

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