Shipping giants race to speed up China-Peru trade with new route

[LIMA] Competition to accelerate maritime trade between China and Peru is heating up after a sprawling Chinese-owned port opened along the country’s Pacific coast.

MSC Mediterranean Shipping is launching a weekly direct service to ship goods from the port of Ningbo, China to Callao, outside the Peruvian capital of Lima. Last year, Cosco Shipping completed its US$1.3 billion port in nearby Chancay, which allowed the Chinese company to launch a similar direct shipping line that leaves weekly to Shanghai.

MSC is the world’s leading container shipping firm, while Cosco ranks fourth. The two routes are complementary for now: One goes to China in 21 days, the other comes to Peru in 23. But they underscore the ever-rising importance of trade between the two countries, even as it raises eyebrows in Washington. China is Peru’s top trading partner and the main buyer of its No 1 export, copper, while Peruvians buy all sorts of Chinese goods, from textiles to electronics to cars.

“Imports from China traditionally arrive in Peru after docking at a big market such as Mexico and then going south to Central America, Panama, Colombia and then arriving after 40 to 45 days,” said Fernando Fauche, chief commercial officer at APM Terminals Callao, which operates part of the Peruvian port.

Slashing travel times between China and Peru was the main selling point of the Chancay facility, which President Xi Jinping personally inaugurated during the Asia-Pacific Economic Cooperation summit in Lima last year. But MSC’s new route shows that Chancay’s impact was broader, forcing other ports to find ways to link the two countries more quickly, a feat long considered unprofitable because of Peru’s relatively small size.

The ports of Callao and Chancay are only about 50 miles apart, or a few hours by truck, and both are close to Lima.

“MSC decided that it was time to create a direct service from Asia,” said Gonzalo Santillana, MSC’s managing director in Peru, adding it has deployed 14 ships. “We trust that the market will respond appropriately because we see great enthusiasm and the ships are really full.”

Santillana said the vessels currently unload in Callao and then go to Chile to pick up cherries to ship to Asia because it’s the harvest for the next few weeks. But he hopes that once that season is over, MSC will launch a direct route from Callao that can serve Peruvian exporters, particularly fruit producers who could benefit from the longer shelf life that a fast route offers.

“This is the beginning of something unstoppable,” Fauche said. “Peru is going to become the logistical hub of South America and we are going to have many more services going directly to Asia.” BLOOMBERG