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Cabotage in Chile: good or bad for business?

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Cabotage in Chile: good or bad for business?

ECLAC paper analyses the country’s maritime transport industry regulation
Edition of May 03, 2017

Since 2010, opening of maritime cabotage has been an issue between the Chilean Ministry of Economy and local carriers. Although the measure would boost international trade and attract more foreign vessels to local ports, national seafarers could face a disadvantage and potential loss of livelyhood. Some say this is a shortsighted vision of the benefits better access to foreign markets could bring to national economic development.

TRB paper 17-00885 A Chilean Maritime Highway: Is It a Possible Domestic Transport Option? by Mary R. Brooks and Gordon Wilmsmeier, argues that “the propensity for cargo in Chile to use maritime cabotage under a liberalized framework can be seen not only from the maritime sector perspective, but also from a wider transport and logistics sector one that includes integrated logistics and multimodal companies. A key question is wether the current transport system is effective and how much the opening of maritime cabotage for all sub-sectors (bulk, containers, general cargo, passengers) or certain subsectors would improve efficiency and sustainability of the transport and logistics system.”

Cabotage = +efficiency?

So, does cabotage equal efficiency in transport? Would the Chilean maritime transport system –and the national economy- benefit from an open regime?  This appears to be the question on everyone’s mind but no one dares to take the first step or have the first say in it for fear of being hushed –as has happened in the past. But the truth is, there is no way to know for sure wether open cabotage regulation would in fact benefit the modal and logistic regime.

Alternatives have been proposed, such as the development of a coastal maritime highway boost land infrastructure for road transport or even to improve railway connectivity, but none seem to leave the analysis stage. 

Is the flow enough?

The paper shows evidence of the actual cabotage flows in Chile: “currently, only 15% of all tonne-kilometers of Chilean national cargo is moved by sea. Earlier studies show that over 90% of national cargo is moved by road (latest data from 2010). (…) In 2014, maritime cabotage moved 50% less than national rail cargo services. The dependency on road freight results in 75% of all petrol and diesel consumption attributable to road.” So, the figures revealed by the document could be interpreted in two ways: 1. The flow of maritime transported goods is not enough to justify a cabotage regime; 2. The industry is used to land transport because its been doing things that way for many years, but not because short sea transport would not be a viable option.

Is it a matter of supply-demand or a new way to do business? Are the country’s overzealous laws and traditions getting in the way of advancing toward the future? Is it just a matter of broader horizons or is there a deeper reason behind the rejection of an open cabotage regime? Apparently, the motto seems to be ‘don’t fix what isn’t broken’.

By MundoMaritimo


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