Holland Goes Paraguay
A country that is landlocked can be a market for maritime companies. Take Paraguay. It has no seaport, but 70 percent of its exports are transported by vessels. Its barge fleet is the third largest in the world, right after the United States and China.
This is impressive, more so if you compare the population of Paraguay (6.8 million) with these economic giants.
The Paraguay‐Paraná river makes this possible. This 3,442 kilometres long river runs through Brazil, Paraguay, Bolivia, Argentina and Uruguay. It connects Paraguay, and the hinterlands of Brazil and Bolivia via Paraguay, to the rest of the world and makes it possible for the country to transport its goods by water. But to do this in an effective way the maritime sector must be in good shape. Investments are necessary and that is good news for the maritime industry.
Good business climate
“Paraguay is a small country in comparison with Brazil and Argentina”, says Martin de la Beij. He is the Dutch ambassador for Argentina, Paraguay and Uruguay. “But despite the small size of the country there are opportunities for the Dutch maritime sector.” He points out that Paraguay meets the critical factors necessary for a good business climate. Since the early nineties it is a stable democracy.
“Also in the last years there has been steady economic growth of between three and five percent”, ambassador De la Beij continues. This puts the country in the top three economic growers in the region. With this kind of numbers, it is no surprise that there is financial stability in Paraguay. Recent years there has been no big fluctuations in the price level. Another big advantage is that Paraguay can rely on hydroelectric power, giving the country a steady supply of electricity. The dams Itaipú, Acaray and Yacyretá have such a big output, that surplus of electric power is exported to neighboring countries.
Agriculture is the mainstay of the economy. In recent years Paraguay’s export have increased at an annualized rate of 18 percent, from EUR 3,02 billion in 2009 to EUR 6,94 billion in 2014. The exports are led by soybeans which represent 29.8 percent of the total amount, followed by soybean meal, which accounts for 15.1 per cent. Top export destinations are Brazil, Russia, Chile, the Netherlands and Italy.
70 percent of its exports leaves Paraguay by the river. This requires a good inland waterway fleet. “The country heavily depends on its inland fleet”, says ambassador De la Beij. In 2014 the Netherlands exported EUR 9,3 million worth of tug boats and EUR 1,3 million worth of other floating structures to Paraguay.* The fleet of Paraguay consists of 2,000 barges and around 200 tug boats are operative.
Damen Shipyards Group is active in Paraguay. The company sees the region of the Paraguay‐Paraná river as a target market for pusher tugs. As a sales manager, Alex Westendarp Knol deals with the company’s business in Paraguay. He visited the country many times. Westendarp Knol also noticed that Paraguay has been in an upward economic trend in the last decade, although lately the business has slowed down a bit. “A lot of the vessels on the river have been in service thirty years or longer. This creates opportunities for Damen.”
Especially for the Paraguay‐Paraná river Damen designed a series of pushers with shallow draft and a cargo capacity ranging from 15,000 till 45,000 tonnes. Five vessels were developed with a design draft ranging from 1.85 to 2 metres. “The goal is to create ships with very little draft. We want our pushers to be able to sail as far up the river as possible, especially in the dry season when the water levels are low.” Also the meandering of the Paraguay‐Paraná river was kept in mind during the design process. This is reflected in the maneuverability of the pushers.
To make shallow draft possible, Damen used innovative concepts. For this purpose design guidelines and tools were developed by conducting studies on the hydrodynamic effects of sailing on shallow and restricted waters. But on other technology the shipyard had to restrain itself. The pushers use conventional propulsion methods, something the market demands. “The river runs through remote areas. If you run into trouble there, it is a big plus if you can fix the problem yourself.” Damen kept that in mind when designing the pushers. “If the technique is not too sophisticated, the chance mechanical problems can be dealt with on site is bigger”, explains Westendarp Knol.
The drive to be self-reliant can be bad for business, Westendarp Knol admits. “There are a lot of old, second-hand ships sailing the river. Most of them once served on the Mississippi. Ship-owners know them very well and are confident that they can be repaired quickly. They are not open for new designs.” But he is confident about the future. “Our innovative pushers are proving themselves. And let’s face it, new vessels are more reliable than forty year old ones.”
Since a couple of years, VEKA Group is also active in Paraguay. The shipyard recently delivered two pushers, the Herkules XVII and Herkules XVIII. The ships are designed to operate on the Paraguay‐Paraná river. In September, they will be christened by the president of Paraguay, Horacio Manuel Cartes and his wife.
The Herkules XVII and Herkules XVIII are innovative powerhouses with seven rudders and five independent steering gears. They have low draft, but there is something else that distinguishes them. “The push boats have retractable flanking rudder systems, a world premiere”, says Peter Versluis. He is the owner of VEKA Group. Because the curvy nature of the river, the flanking rudder system is necessary for extra maneuverability. “But this also makes a ship more vulnerable. In the dry the season the river is shallow, increasing the chance of hitting rocks. Also floating tree trunks can damage the rudders.” That is why Versluis and his team came up with a flanking rudder system that could be retracted. VEKA Group asked the company Van der Velden Marine Systems to help them realise the concept. It was tested independently by the Development Centre for Ship Technology and Transport Systems (DST) in Germany.
VEKA Group knows the world of riverboats and has good contacts in that market. The shipyard made the Herkules pushers for Imperial Logistics International, a leading inland waterway shipping company. Since 2012, the German company also operates on the Paraguay‐Paraná river. “The river has its own specifics. If you are going to build a ship that operates on it, these specifics must be kept in mind”, says Versluis. He is happy that they were able to include innovative solutions in the ship’s design.
Retractable flanking rudders optimise water flow to the propellers, reduce vessel drag and increase propulsive efficiency, directly resulting in increased fuel savings. Versluis also acknowledges that it is important that ships can be self-reliant. “There are a lot of spare parts on board and we placed a crane on the ship in order to carry out repairs.”
Versluis thinks that in the future more new ship designs are going to sail on the Paraguay‐Paraná river. “The Herkules XVII and Herkules XVIII are the pearls of the river. This kind of new ships are going to prove themselves.” He thinks they will form serious competition for the designs based on the Mississippi model. “Until five years ago there was cargo to be shipped for every available ship. Now there is more competition and the new pushers have an advantage.”
The ships can be state-of-the-art, the river must be in good shape too. And the Hidrovia needs maintenance. Ambassador De la Beij sees that the infrastructural problems are high on the local agenda. “The government is now working with the private sector to get things done.” Prominent issues are port development and dredging projects. Also studies look into what requirements and investments are necessary to sail at night. All those developments create new opportunities for the maritime industry.
Although maritime companies know their way in the region, the Dutch embassy is there to help. This year the embassy will be one of the exhibitors of Navegistic 2016. This maritime fair will take place on 19, 20 and 21 October in the capital of Paraguay, Asunción. It is the fifth edition of the fair and the Dutch embassy has been present before. “We have a Holland stand”, says ambassador De la Beij. “This year, our team is going to promote Dutch businesses in the supply chain.” Other Dutch companies that will be present are Radio Zeeland DMP, De Kaap shipyard, Concordia Group and Damen.
Alex Westendarp Knol has been on Navegistic before. Damen Shipyards Group has been present on four of the five editions of the fair. “It is a good place to do business.” For those who are planning to go, Westendarp Knol has some advice. “Doing business in Latin America is about forming relationships. Be visible and invest in one-on-one meetings with possible clients.”
The statistics in this article are provided by the Dutch Embassy.
*) The Observatory of Economic Complexity.
This article was previously published in Maritime Holland edition #5 – 2016.