Peru's new port will change international trade

International Trade is the backbone of all of the largest economies in the world. China, the world’s largest exporter of goods, has completed the construction of a new port that will open a new trade highway in the Pacific Ocean.

This week, Peru is expected to announce the completion of the largest deep-sea port in South America. Backed by a Chinese state-owned company, COSCO, the large port is expected to impact the surrounding area and the global trade landscape significantly.

The Chancay Port will be introduced at the 31st APEC Economic Leaders’ Meeting later this week. The importance of this port is found in the trade patterns it can create. It takes 35 days for goods to be shipped between South American and Asian countries. With the available resources and ports, all of the fastest ship navigation methods currently require transit through either North America or Central America. With the Chancay Port in place, a new possible path through the Pacific Ocean is open. Transit between the two continents is expected to take only 25 days, down ten from the previous pathing. Not only is it quicker, but it will also have less logistical costs.

Peru will see significant economic impacts immediately following the opening of the port. Chancay, a city of only 60,000 people, will see thousands of expected jobs created over the next year. This has caused the country to start the construction of new roadways and railways connecting the city to Lima, Peru’s Capital. The new port is estimated to add $4.5 billion to Peru’s economy. This is enough to increase their GDP by 1.8%. This port creates significant economic benefits for Peru, and all South American and Asian countries will be affected by this new trade path.

International trade will have a significant impact on the local economy, as well as the global trade market. Other South American countries, such as Chile, Ecuador, Colombia, and Brazil, will see a change in trade from this port. Due to its size, it is the only port on the west side of South America that can receive the largest ships. This directly affects Chile, which has a lot of smaller ports that cannot house such large vessels and will lose value at these ports. Because this port was built by a Chinese state-owned company, it will also significantly affect China’s exports and imports. The port will be a high-commodity among different countries looking to be cheaper on goods coming in and out. This puts China in a strong position among all Latin and Asian countries looking to trade along the Pacific Ocean.

The port in Chancay, Peru, will open up a new trade market. Brazilian cocoa beans being shipped to Asian markets and spices such as cinnamon and nutmeg being exported from Indonesia to South American markets are a few examples of the markets in which this trade path opens up. With a quicker route over the Pacific Ocean and price cuts for transit, the Chancay port will have a significant economic impact on many markets as soon as it opens up later this week.