The historic commercial pulse between the ports of Buenos Aires and Montevideo has taken a sudden turn in the last week due to a decision by the Government of Javier Milei clearly favorable to Uruguayan interests.
After ten years of intricate negotiations with Argentina and a series of its own mistakes, Uruguay has finally been authorized to dredge the entrance channel to the port of Montevideo up to 14 meters.
With this measure, the Government of the South American country will be able to comply with the contracts that established that depth, signed with three multinational companies that operate in the main Uruguayan port.
And beyond these commitments, the authorities assure that the Montevideo port will receive container ships with greater draft, will increase its cargo capacity and will boost local and regional trade.
The approval of the Argentine neighbors – with whom Uruguay shares the management of the Río de la Plata – took place on January 31 and was valued by the Uruguayan side as a “milestone” that gives strength to their aspirations to transform this enclave. port in the logistics hub of the region.
“It is a fact of absolute relevance for the country,” said the Uruguayan Foreign Minister, Omar Paganini, after the approval of the project in the Administrative Commission of the Río de la Plata.
Paganini specified that Uruguay will formalize the presentation of the works between February and March of this year, to continue with the bidding and execution stages.
Dredging the channel from the current 13 meters to 14 could cost, according to experts, about 200 million dollars and its maintenance between 20 and 40 million annually.
It will be approximately 62 kilometers long.
"We are talking about increasing the cargo capacity of the port of Montevideo, the main natural port of the Río de la Plata, as a port of departure for the production of vast areas, in addition to those of our country, Paraguay, Bolivia, the north Argentine, Brazilian Mato Grosso, that is, the entire Paraná-Paraguay waterway,” he highlighted.
Dredging to 14 meters was an objective “long sought” by Uruguay, recalled Paganini, who was in charge of the negotiations with his Argentine counterpart, Diana Mondino.
In that sense, the chancellor highlighted “the change of mood” of the new Administration of Javier Milei regarding these issues.
“More than rivals, we can be partners,” he added.
Uruguayan aspirations to deepen the access channel to the port date back to 2013, when the center-left ruled in Uruguay and the Peronist alliance ruled in Argentina.
Only in 2018, under the presidency of conservative Mauricio Macri, did Uruguay obtain authorization to dredge the channel to 13 meters and not 14, as intended, due to a drafting error in the Uruguayan project.
After detecting the failure, Uruguay verbally renegotiated the 14 meters and in exchange gave its consent for Argentina to advance on its side in the construction of the Magdalena Canal, an alternative maritime route in Argentine waters whose suitability for river transport.
That project did not come to fruition.
Currently, Argentine flag vessels leaving an Argentine river port for another in the same country must pass through waters in common use with Uruguay, whose traffic is managed by that country.
That is, ships that want to move from one Argentine port to another must leave national jurisdiction and request authorization from the Uruguayan authorities.
The same thing happens with overseas vessels that transport Argentine foreign trade goods.
Defenders of the works on the Magdalena Canal have highlighted the importance of the project from “a geopolitical, economic and national sovereignty point of view,” according to a report from the Argentine Economic Policy Center.
In addition to providing an exit to the sea and improving connectivity, the work would allow savings in navigation times and logistics costs, the document states.
“If the Magdalena Canal is not built (...) we will be condemned to unnecessarily spend our few dollars on transshipments in the port of Montevideo,” lamented José María Lojo, president of the port of La Plata, after the agreement was announced. between the governments of Milei and Luis Lacalle Pou (center-right).
“Montevideo will be the central port and ours will be secondary ports that will supply smaller ships.
The port of Montevideo has a very good nautical connection, but the cargo it moves is mainly from or destined for Argentina,” Lojo said in a series of messages on social networks and concluded: “It would be positive to explore complementarity agreements with the Uruguayan brothers.
But these agreements must be for the benefit of both and not penalize our trade in favor of transport multinationals.”
“Fierce” competition
At the end of 2020, the Lacalle Pou Government announced that it was preparing to dredge the access channel to 14 meters, to comply with contracts with the companies UPM (cellulose), Obrinel (grains), Katoen Natie (logistics), which operate in the port of Montevideo.
But Argentina stopped it, because that agreement for the 14 meters had never been signed.
Once again, Uruguay admitted the error and presented a new project again, in November 2022, which led to a technical labyrinth and intricate negotiations that were only unblocked in January 2024. “Or we all understand that the river is a place where We are going to win, that the waterway is a place where we are going to win, or we continue in some way preventing the other from growing,” said President Lacalle Pou as soon as the news of the authorization became known.
“What did Milei ask for in exchange for this concession?” the journalists asked him.
“Absolutely nothing,” responded the president.
“Far from the port fight being over, the competition with Argentina is going to be fierce,” Silvia Etchebarne, master in Logistics and port management, president of the Maritime League of Uruguay, tells EL PAÍS.
“Uruguay has comparative advantages that are geographical and are provided by the 14 meters [the port of Buenos Aires has 11 meters], but the competitive advantages must also be taken into account, which are provided, for example, by infrastructure and rates.
There we enter difficult terrain,” she says.
The 400-meter-long and 70-meter-high ships that Uruguay intends to receive, Etchebarne exemplifies, will be able to enter the port of Montevideo through the depth of 14 meters, but they will not have room for maneuver to do so in the public docks.
Likewise, she highlights that the competition with Buenos Aires is for container loading.
“What is the load that we are going to capture to use the 14 meters?
“Where is that studio?” she asks.
According to the National Ports Administration, the movement of containers at the Montevideo terminal registered a record in 2023, reaching 1.1 teus (unit of measurement equivalent to a 20-foot/28,000 kilo container).
This data includes Uruguayan import and export operations, plus cargo in transit from countries such as Paraguay, southern Brazil and southern Argentina.
Faced with the euphoria of the authorities, expert Etchebarne suggests being cautious with that figure, because it would include unloaded containers.
“We have historically been a transit port, not a distribution center.
That requires a commercial strategy and I have not seen it,” she points out.
The specialist celebrates that Uruguay complies with its contracts and deepens the canal to 14 meters, but she insists on the need to work to be competitive with Buenos Aires, where the world's main shipping companies have their terminals.
“The port fight is going to be fierce, with Buenos Aires and also Río Grande in Brazil,” she reiterates.
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