Week-long strike at Port of Montevideo disrupts container movementsEverstream Team
December 9, 2021
Starting December 1, the union representing the workers of the Montecon company began an indefinite strike at the Port of Montevideo. According to the union, this was prompted by announced plans to put 30 port workers on unemployment, with that number likely to increase to 50 to 70 workers. The insured wages for workers have also been reduced as part of this plan. As the main operator of the public areas of the port, Montecon is one of the key transporters of containers and general cargo at the port.
In 2020, Montecon handled approximately 60 percent of the containers passing through the port, including cargo from the logging, meat processing, pharmaceutical, dairy, and grain industries. Ongoing negotiations between executives, the Ministry of Labor, and the workers’ union have not led to a permanent solution at the time of reporting. As of December 8, the workers’ union temporarily lifted the port strike following an announcement that port authorities had suspended some of the restructuring plans. However, sources reported that the pause on restructuring is vaguely defined and its duration indeterminate. The strike and its corresponding port disruptions are likely to resume if the restructuring suspension is lifted.
Port strike prompted by ongoing conflict over container traffic regulations
One of the driving factors for the recent port strike in Montevideo has been the government’s controversial agreement with terminal operators. The Port of Montevideo relies primarily on two companies to handle loading and unloading operations across the port terminals: Montecon and Katoen Natie.
The National Ports Administration of Uruguay authorized new docking regulations that give Katoen Natie operational control over 80 percent of the Cuenca del Plata Terminal (TCP), with the remaining 20 percent given to Montecon. In exchange, Katoen Natie agreed to invest USD 455 million (EUR 404 million) to expand the specialized container terminal at TCP. When the regulations were finally approved in November, workers from Montecon launched a series of strikes to protest the lost traffic from the terminal and demand guarantees of their salaries. As Montecon primarily operates out of the public docks in Montevideo, the increased traffic to TCP would result in less container traffic to their terminals. Montecon representatives have claimed that they have already seen a 20 percent drop in traffic in the month of November alone, allegedly due to the new regulations. The new docking agreements are set to remain in place until 2081, further adding to Montecon’s fears that their workers will lose long-term economic opportunity.
Ships diverted as containers build up at port yards amid ongoing strike
Montecon’s announcements regarding staff and wage decreases occur amidst a challenging time for the shipping industry. In November, the company moved an estimated 6,000 fewer containers than in October, with executives at Montecon highlighting the cause as new docking protocols that give priority to the Cuenca del Plata Terminal (TCP). The new agreement between TCP and the government, that started November 1, gives priority to TCP to operate containers in the port. Some shipping lines have already stopped operating with Montecon and now work with TCP, the specialized container terminal in the Port of Montevideo.
The strike has resulted in two container ships diverting from the Port of Montevideo due to the halt in operations. Cargo ships cannot be unloaded, and containers for export are stuck at the port. It was not immediately specified which products have been affected by the operational halt, though it is likely to hit the port’s key industries of grain, meat processing and logging the hardest.
Previous strikes at the port of Montevideo have also focused on the TCP concession. In September, a 72-hour strike by the Union of Port Workers affected a total of 3,400 containers at the port, resulting in two ships omitting the port. This was in response to the inability to reach a collective labor agreement and the government’s decision to provide a concession to Katoen Natie to operate the port until 2081. The meat processing industry was primarily affected, and meat exports were rerouted through ports in southern Brazil.
Further port strikes likely without permanent regulatory changes
On December 8, a tentative arrangement was made to suspend part of the new regulations. Union officials have warned that the suspension of these regulations is for an indefinite period and is not considered a permanent solution. Without a guarantee that the new container traffic regulations will be reversed, further strike action is likely to take place in the coming months at the Port of Montevideo. This seems even more likely when referencing the frequency of strikes at the port, the most recent of which occurred just three months prior to the current disruption. The new regulations will drive container traffic away from the public docks and instead to the TCP, a trend that will disproportionately impact Montecon. Further strikes supported by the union that represents Montecon port workers could lead to reverberating disruptions across the entire port complex. Ships that are unable to dock at the port of Montevideo may suffer cargo delays if they are forced to dock elsewhere. The Port of Buenos Aires in Argentina has received several ships diverted from Montevideo, resulting in longer transit times for cargo to reach its destination.
Companies with business interests reliant on the continuity of port operations in Montevideo should stay abreast of future planned protests and port strikes. Everstream Analytics’ Intelligence Solutions capability monitors these escalations in near-real time to enable supply chain professionals to take preemptive action, increasing preparedness for and resiliency to potential disruptions. Using Everstream Analytics’ Transportation Planning capabilities, companies can also assess the risks associated with critical routes, such as the one going through Montevideo, and decide whether an alternative form of transport will better ensure on-time and in-full delivery.