Caribbean & Central America - September 2023

A cargo ferry between the Puerto La Unión port in El Salvador’s La Unión department and the Puerto Caldera port in Costa Rica’s Puntarenas province made its maiden voyage on 10 August.

The ferry, which can carry 100 trucks and 200 passengers, will make two return trips per week, providing an alternative route for cargo which previously had to pass through Honduras and Nicaragua overland. In six months, the operator, Panamanian firm Blue Wave Corporation, plans to add another trip each week, as well as offering berths to passengers, with 73 cabins and a restaurant onboard. Blue Wave Corporation is represented by local firms Transmares and Consorcio Maritimo Centroamericano (CMC) in Costa Rica and El Salvador respectively. The pair are responsible for handling customs procedures and ticket sales.

From port to port the voyage will take around 22 hours, compared to the 96 hours it takes to make the same journey by road, which involves four border crossings in Honduras and Nicaragua. Luis Amador, Costa Rica’s minister of transport and public works, said that the ferry will cut journey times, reduce costs, and improve competitiveness for both countries.

Industry bodies in El Salvador, such as the Corporación de Exportadores (COEXPORT) and the Asociación Salvadoreña de Industriales (ASI), encourage members to use the new ferry. COEXPORT president Silvia Cuellar told the Associated Press (AP) that the ferry reduces bureaucracy and time spent waiting to cross borders, as well as the risk of robberies, blockades, and traffic problems.

However, Raúl Alfaro, president of the Salvadorean association of international freight carriers (ASTIC), questioned how much time the ferry would save given the fact that trucks have to arrive at port the day before each sailing. In a blog posted on 31 July by the Central America Group (CAG), a conglomerate of firms with operations located throughout the region, Alfaro also raised the possibility of delays in disembarking at Puerto Caldera, which is already saturated, and estimated that the journey from San Salvador, El Salvador, to San José, Costa Rica, would take three days via ferry, compared to four by road.

The CAG blog also cites Alfaro as questioning whether there would be any financial benefit to the ferry. Shippers sending products from capital to capital will still have to pay US$800 for the drive from San Salvador to La Unión and Puerto Caldera to San José. This means that the journey would cost US$2,160 with the ferry ticket (maritime plus land), compared to US$1,400-US$1,500 currently, he said.

For Ricardo Castaneda, economist at the Guatemala-based think tank Instituto Centroamericano de Estudios Fiscales (Icefi), the Salvadorean and Costa Rican governments may have different expectations for the ferry. Salvadorean officials are “much more motivated” by these kinds of projects, Castaneda told the BBC in an article published on 10 August, whereas even just a few months ago their Costa Rican counterparts were sceptical that there would be any benefits to the ferry as Puerto Caldera is already working at capacity. Castaneda also said that “the impact it will have on trade will not be significant”.

However, Salvadorean officials may be hoping to use the ferry to drive investment and activity at La Unión. The port, located 210km east of San Salvador, was renovated by former president Tony Saca (2004-2009), but it has not attracted as much investment as hoped since then.

If the ferry can attract enough customers to maintain services during the first few months of operations, then it will be well placed to benefit if there are problems crossing Nicaragua or Honduras by road in future. In the meantime, many shippers are likely to see how the service performs under real-world conditions, including any delays in unloading at Puerto Caldera, before committing to changing their routes.

Bypassing Nicaragua?

Beyond reducing costs and journey times, others say that another benefit of the ferry is to avoid passing through Nicaragua. President Daniel Ortega has closed the borders on multiple occasions in recent years, in response to the coronavirus (Covid-19) pandemic as well as civil unrest, incurring huge costs for business. Nicaraguan economist Enrique Sáenz was cited by local news outlet 100% Noticias as saying that he believes that the ferry will help to stop Ortega from “blackmailing” other Central American nations with the threat of border closures. However, as Salvadorean presidential adviser Cristian Flores points out in an AP article, the ferry will only be able to handle 3%-5% of total freight traffic, meaning that the vast majority will still have to travel by road through Nicaragua.