A worker stands near the entrance of a tunnel at a construction site
A deep tunnel will take traffic from the new Chancay port © Ernesto Benavides/AFP/Getty Images

The once-sleepy fishing town of Chancay, 80km north of Lima, used to be best known as a weekend getaway for residents of the capital. But, today, the beachfront is a sprawling construction site, with cranes shifting pillars as dumper trucks rumble around below.

The town is about to become host to one of the largest deepwater ports in Latin America. Construction and operation will be carried out entirely by private companies — something officials say could be a model for other infrastructure works in Peru.

The project is so huge it has the potential to upend maritime traffic all along the Pacific coast of South America, displacing it from Chile, Ecuador and Colombia. In its initial phase, the port is expected to handle 1mn containers and 6mn tonnes of loose cargo a year.

Cosco Shipping, a Chinese state-backed shipping and logistics company, has a 60 per cent stake in the port, with the remainder in the hands of Volcan, a Peruvian mining company. Of the $3.6bn cost of construction, $1.3bn has already been invested in the initial phase, according to Cosco.

“The intention of the port is to pull South American countries towards Peru as a focal point [for trade to Asia], taking advantage of our strategic location,” says Gonzálo Ríos Polastri, deputy general manager of Cosco Shipping Ports Chancay Peru and a former admiral. “It will be an engine for development across several industries.”

The port will sit on a 280-hectare site. The wave breakers alone used enough concrete to construct 20 buildings of 10 storeys and will protect 1.5km of dock space, capable of berthing some of the world’s largest cargo ships.

A 1.8km tunnel bored beneath Chancay — at some points 900m deep — will connect the pier to a logistics centre and the pan-American highway without disrupting traffic in the town.

Cargo will be able to reach China from Peru in 10 days, rather than 45 at present. And Brazil is also expected to be a beneficiary of the port, which will provide quicker access to Asian markets for the country’s exports. Brazil and Peru are connected by the Southern Interoceanic Highway, which passes through the Brazilian agricultural hubs of Acre and Rondônia.

“There’s a whole part of Brazil that looks much more to the Pacific than to the Atlantic,” says Ríos Polastri. “Chancay has many advantages within Peru, and one is that it is the closest port to Brazil. That’s another incentive for trade.”

The inauguration of the megaport is planned for late next year, when Chinese president Xi Jinping will attend the Asia-Pacific Economic Cooperation (Apec) summit, which Peru is hosting. Cosco says the port will eventually expand. “The master plan is to have 15 piers, though there’s no timeline as we need to see how the port operates in the first few years,” Ríos Polastri explains.

But, despite the commercial advantages that officials say the port will bring for Peru, some observers — including US officials — have expressed concern that it could increase Chinese influence on the country’s infrastructure.

Mario de las Casas, Cosco Shipping Ports Chancay Peru’s public affairs manager, says Peruvian law forbids the use of the port for military purposes without prior approval from the executive branch or Congress. “Without this preapproval, any such entry would be tantamount to an invasion independently of the ownership of the terminal,” he notes.

Some local people have criticised the disruption caused by construction, too, though voters in January overwhelmingly elected a mayor who is openly in favour of the development. “I think that’s a good barometer of where the local population is in terms of acceptance of the port,” Ríos Polastri suggests.

The Peruvian government says the port will boost the local economy, and local developers are hopeful. Along the road into Chancay, billboards advertise yet-to-be-built property developments for sale. “In the area, there are six fishmeal factories and a fleet of around 70 industrial fishing vessels that are the largest source of work in Chancay,” says Raúl Pérez-Reyes, Peru’s transport minister. “The project allows the possibility of direct shipment abroad.”

Two heavy machineries at work building a port
Construction work at the Chancay port, 80km north of Lima © Ernesto Benavides/AFP/Getty Images

Pérez-Reyes adds that, while the port will be operated by private companies, the government will monitor their compliance with safety and environmental regulations. Police and customs offices will be built at the site.

“The government views the development of ports at the national level in a comprehensive manner, with an effort to provide road or rail access, as well as the logistics infrastructure,” the minister says. “These types of investments allow ports to operate more efficiently.”

Congress is considering a bill that would allow for cabotage — for cargo to move between Peruvian ports before coming on land — to reduce traffic around the port.

Ríos Polastri says Chancay could pave the way for similar private infrastructure projects in Peru, easing progress by bypassing friction between the public and private sectors. The country’s decentralised constitution mandates that provincial infrastructure projects be contracted and administered by local government.

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article