25 July 2024

Congress Approves Foreign Ships for Coastal Shipping in Peru

The Peruvian Congress has approved with 72 votes in favor, 20 against, and 4 abstentions, the Law No. 5175/2022, which modifies the Coastal Shipping Law to promote and facilitate maritime coastal shipping of passengers and cargo, along with other provisions.

The proposal, presented by the Executive Branch, seeks to amend Article 4 of Legislative Decree 1413. The new wording states: “The maritime coastal shipping of passengers and cargo may be carried out by a natural person or a legal entity constituted in Peru or abroad, with national or foreign capital.”

This means that foreign ships can now transport goods between national ports, whereas the original law only permitted coastal shipping by companies established in Peru.

The debate saw criticism of the current law’s modification. Congressman Jorge Montoya from Popular Renewal argued that the proposal “favors foreign companies to the detriment of Peruvian companies.”

He also labeled the proposal as unconstitutional, insisting that “the country should retain the privilege of managing its cargo within national ports.”

Conversely, Eduardo Salhuana, the President of the Transportation Commission from Alliance for Progress, supported the proposal, emphasizing that it will allow “ports in the north and south to transfer agricultural export production, for example, to the port of Callao or the mega port of Chancay, using ships with national or foreign flags.”

The initiative specifies that the Ministry of Transport and Communications (MTC) will promote temporary, supervised innovation programs in public policy and regulation. These programs aim to encourage the consolidation of cargo, the development of logistical and technological infrastructure, and the facilitation of commercial coastal shipping. The focus will be on innovation, consumer protection, regulatory efficiency, and the promotion of free competition.

Port Unions Support the Initiative

The Peruvian Association of Port Operators (ASPPOR) has stressed that this modification will aid in the development of the coastal shipping industry as part of the economic recovery the country needs, as it will help achieve better logistical costs per container.

For instance, the Arequipa Chamber of Commerce and Industry has estimated that local coastal shipping transport costs per container could range between US$1,000 and US$1,500.

“Coastal shipping will help major production centers in the country become even more efficient, providing an alternative for moving large loads and thus relieving congestion on the terrestrial road network,” said Favio León Lecca, President of ASPPOR.