Peru’s Chancay Port, a $3.6 billion megaproject, is set to revolutionize trade between Latin America and Asia. Located approximately 78 kilometers north of Lima, this state-of-the-art deepwater port represents a significant milestone in China’s Belt and Road Initiative (BRI) in South America.
The Chancay Port is a joint venture between China’s COSCO Shipping Ports, which holds a 60% stake, and Peruvian mining company Volcan, owning the remaining 40%. Construction began in 2021, with the first phase costing $1.3 billion. The port features four berths with a maximum depth of 17.8 meters, capable of accommodating ultra-large container ships with a capacity of up to 18,000 twenty-foot equivalent units (TEUs)
Strategic Importance
The Chancay Port is poised to become a game-changer for regional and global trade. As soon as the port becomes fully operational, it will serve as a pivotal entryway, promoting trade connectivity between Latin America and Asia. In addition, it will play an indispensable role in the redistribution of cargo from its neighbours, including Brazil, Chile, Colombia, Ecuador, and Paraguay.
- Enhanced Efficiency: The port will reduce sea shipping time from Peru to China to just 23 days, cutting logistics costs by at least 20%.
- Increased Capacity: With an initial annual throughput capacity of 1 million TEUs, expandable to 1.5 million TEUs in the long term, Chancay Port will serve as a key hub for trade between Latin America and Asia.
- Economic Impact: The project is expected to generate $4.5 billion in annual revenue for Peru, equivalent to 1.8% of the country’s GDP, and create over 8,000 direct jobs.
- Regional Hub: Chancay Port will function as a pivotal entryway for trade between Latin America and Asia, potentially benefiting neighboring countries like Brazil, Chile, Colombia, Ecuador, and Paraguay.
Operational Details
The USD 3.5 billion endeavour has received backing from a group of prominent Chinese financial institutions. This colossal project represents an important step forward for the BRI, China’s global infrastructure initiative.
Upon the port’s debut, initial operations will establish a direct shipping link to Shanghai, with the possibility of expanding its services to additional destinations in Asia subject to demand. The “test conditioning” stage is set to kick off at the end of November and is expected to continue through May of next year. Throughout this preliminary trial period, cargo operations can already commence, with two direct vessels scheduled to arrive weekly.
The port’s strategic location and advanced infrastructure will significantly alter trade dynamics:
- Direct Shipping: It will establish a direct passage between the west coast of South America and China, bypassing the Panama Canal.
- Multimodal Connectivity: Connected to the Pan-American Highway via a tunnel, the port provides direct access to Lima and other major cities.
- Future Expansion: Peru has initiated plans to develop a railway and highway network linking Chancay Port to major cities across the country, with potential future connections to transportation networks in other regional countries.
Regional Context and Implications
The Chancay Port project is part of a broader trend of Chinese investment in Latin America, reflecting China’s growing economic influence in the region. To date, 22 nations in Latin America have formalized partnerships with China under the Belt and Road Initiative (BRI). This expansive infrastructure program has seen the development of other notable projects across the continent, including Argentina’s Belgrano Cargas railway and Brazil’s ultra-high-voltage transmission line for the Belo Monte hydropower plant.
The development of Chancay Port has significant implications for regional trade dynamics. Primarily, it could potentially reduce Latin American countries’ dependence on ports in North America for Asian trade. By offering a more direct route, the port has the potential to create new trade corridors that bypass North America entirely, reshaping established shipping patterns and potentially altering the balance of economic influence in the region.
Furthermore, Chancay Port is poised to support the efficient export of goods from various South American countries to Asia. Its strategic location and advanced infrastructure make it an ideal hub for regional trade, potentially benefiting not just Peru but also neighboring countries such as Brazil, Chile, Colombia, Ecuador, and Paraguay. This could lead to increased regional integration, as countries may seek to develop or improve transportation networks connecting to Chancay to take advantage of its efficient Asian trade links.
The port’s impact extends beyond mere logistics. It has the potential to stimulate economic growth across the region by providing improved access to Asian markets for Latin American exports. This could be particularly beneficial for countries rich in natural resources and agricultural products, which are in high demand in many Asian economies. Additionally, the success of Chancay Port could serve as a model for future infrastructure collaborations between China and Latin American countries, potentially leading to more such projects across the continent.
How CW CPA Can Help You
At CW CPA, we have a specialized Latin Department that focuses on serving Latin American clients doing business with China. This department, which accounts for a significant portion of our firm’s activities, is well-positioned to assist with opportunities arising from the Chancay Port project.
Our team includes professionals from Mexico, Brazil, and Portugal, enabling effective communication with Latin American clients in their native languages. We offer services such as audit, tax, corporate secretarial, and business process outsourcing, tailored to the needs of businesses operating between Latin America and Asia.
Over the years, we’ve developed relationships with various Latin American and Spanish organizations in Hong Kong and mainland China, including consulates, trade offices, and chambers of commerce. This network, combined with our understanding of both Latin American and Chinese markets, allows us to provide informed support for cross-continental business activities.
As the Chancay Port development progresses, we are prepared to assist businesses navigating the evolving trade landscape between Latin America and Asia. Our experience in this niche area can be a useful resource for companies looking to understand and engage with these emerging opportunities.
CW CPA was recently interviewed by the South China Morning Post (SCMP), Hong Kong’s leading English-language newspaper. The feature highlights CW CPA’s pivotal role in fostering business connections between Latin America, Hong Kong, and the Mainland of China.
In the article titled “Can Hongkongers make it big in Peru? The country’s Chinese community, experts weigh in” written by SCMP’s Senior Reporter Edith Lin and Correspondent Willa Wu, our co-founding partner, Thomas Wong, shared insights on:
Emerging opportunities in Peru as a “blue ocean” market for Hong Kong and Mainland Chinese businesses.
CW CPA’s contributions to helping Latin American companies establish operations in Hong Kong and the Mainland.
How Hong Kong’s low tax system, robust legal framework, and multilingual talent make it an ideal gateway for international trade.
