The Hidrovía waterway project, in which Paraguay plays a leading role, unites five of Latin America’s great nations, joined in a common goal to send positive shockwakes throughout the logistics world of the Southern Cone
B R I E F I N G / BY J. Andrew Carter, Jr.
Major infrastructure is undoubtedly the foundation for increased economic opportunity and society-building. For Paraguay, the Hidrovía project provides promising and wide-ranging economic benefits through the restructure and renovation of the existing north-south shipping canal in the Paraguay and Paraná river systems, which connect Argentina, Bolivia, Brazil, Paraguay and Uruguay. Through the development and expansion of a 3,400-kilometre canal, river-based logistical services for the Hidrovía will not only enable ocean-going ships and cargo to navigate the entire region, but will also significantly increase the volume of products and resources shipped efficiently throughout the Southern Cone.
Paraguay’s geographic location and lack of access to the sea complicate the expansion of commerce within the domestic economy. The country’s inability, along with Bolivia and Western Brazil, to access sea trade routes means that the region’s export industry has to deal with complex logistics and increased costs in transportation. Over 90% of the region’s cargo travels to port cities on the Atlantic Ocean via interstate motorways. Transporting grain from production facilities to costal ports is estimated to cost between US$60 and US$90 per tonne. Economists predict that the extended Hidrovía will reduce costs to between US$30 and US$50 per tonne. Along with the ability of a 2,000-tonne barge to carry the load of 70 trucks, the Hidrovía will reduce transportation costs and increase profitability in the regional agriculture sector, as well as accommodate the shipment of a higher supply of products to existing markets.
Through the development and expansion of a 3,400-kilometre canal, river-based logistical services in the Hidrovía will not only enable ocean-going ships and cargo to navigate the entire region, but also significantly increase the volume of products and resources shipped efficiently throughout the Southern Cone
The project will successfully open up new trade routes and markets, and will simultaneously benefit established regional markets. With optimal cargo travelling on the Hidrovía, the downstream transportation of soya beans, oil, corn, cotton, manganese and iron ore will also permit easier upstream movement of inter-continental products, such as diesel, canned food and manufactured goods, providing new economic and commercial outlets. The Hidrovía project will generate increased traffic and accommodate new investment opportunities along the ports of the new route, especially in Asunción, the vibrant Paraguayan capital, which will emerge as a major inland port along the Hidrovía to coincide with the completion of its expansion. Asunción has a population of 600,000 but the economic benefits from the Hidrovía are expected to reach a wider population of 17 million people along its banks across all five countries. The expansion of the river will directly result in the commercialisation and expansion of economic opportunities for local people and investors within the region, bringing immeasurable economic benefits to local producers and almost guaranteeing increased activity in developing cities along its route. The promises of infrastructure development and increased economic opportunities, coupled with the potential economic sustainability of the project, are just two of the anticipated outcomes of the project.
The construction and expansion of the Hidrovía waterway would transform the dynamics of trade and regional integration in greater South America
Through the expansion of the Hidrovía through Paraguay, the optimisation of South American river transport coincides with the promotion of regional initiatives and economic alliances. The transformation of the Hidrovía is currently the largest engineering project planned for the physical integration of the sub-regional trading bloc Mercosur. The principal objectives for the Hidrovía include regional integration and the establishment of mutual economic interests, the reduction of transportation costs and an increase in the volume of inter-regional trade and infrastructure development, transforming the dynamics of Mercosur trade and economic integration. The benefits of the Hidrovía for Mercosur members come from the common desire to reduce physical and regulatory trade barriers between nations and to enable quicker and more efficient transportation through the region. The construction and expansion of the Hidrovía will stimulate the development of secondary infrastructure and will open the way to economic expansion, which will in turn transform the dynamics of commercial and regional integration in more areas of South America.