The Port of Chancay as a key factor in the commercial and geopolitical competition between China and the United States
- Lucas García
- Jul 11
- 12 min read
Peru's new deepwater port and its impact on global geopolitics
Ninety percent of global trade moves in containers, so there's no doubt that the maritime transport industry plays a crucial role in the ups and downs of the global economy. The ability to manage the entry and exit of goods, whether as a transshipment point, origin, or final destination, highlights the logistical challenges of our times and positions ports as fundamental links in supply chains. This article will analyze the details of investment in technologies applied to port logistics and their influence on the sovereignty currently disputed by the world's most powerful countries, taking the new South American megaport as a starting point.
By 2024, the Port of Chancay, located 70 kilometers north of Lima, Peru, has established itself as a flagship project in South American port infrastructure. This deepwater port not only promises to transform supply chain logistics in the region, but also represents a strategic pivot in the dynamics of international trade and regional economies.
Investment and Development
This is the first privately owned, publicly used port terminal project. This means that it has not been granted as a state concession to the private sector. However, its service offering is open to the entire local and international market, generating more than 9,000 direct and indirect jobs in the first phase alone, boosting the local economy.
Since its inauguration on November 14, 2024, until the end of January, the Port of Chancay has handled 15,866 containers, 112,000 tons of bulk cargo, and more than 2,100 electric vehicles.
“Cosco Shipping Port Chancay Perú” was born as a foreign and national investment project through a joint venture between COSCO Shipping Ports Limited (the world's top two port company) and the Peruvian consortium Volcan Compañía Minera. It is backed by an initial capital of more than $3 billion, and its initial stages of operation represent a profit of 1.8% of Peru's GDP. It is one of the largest infrastructure investments in the country's history.
The economic impact of the Port of Chancay will be significant not only for Peru, but for all of South America. This port is expected to be a key driver for generating employment, attracting investment, and facilitating exports, especially of minerals, agricultural products, and fisheries, to Asian markets and other continents.
State-of-the-art works and infrastructure
The Chancay project has 141 hectares of port capacity in its first phase. Its natural depth of 16 meters allows it to accommodate deep-draft vessels, such as Post-Panamax and Neo-Panamax class vessels. The first equipment for port operations was transported aboard the 172-meter-long specialized vessel "Fu Zhou Guo Ji." This consists of the arrival of the first five gantry cranes (electric), three multipurpose and two for bulk cargo.
Now in its first phase, the project consists of four docks capable of handling the world's largest vessels (18,000 to 24,000 TEUs) at full load. Two docks are for handling container ships and two are for multiple uses (general cargo, bulk, and RORO). Its design includes specialized terminals for containers, liquid cargo, and dry cargo, giving it unique versatility.
In principle, the three main components that stand out are:
Entrance complex.
Operational area.
Underground access tunnel.
The three aforementioned elements are being built in a synchronized manner, reaffirming the project's commitment to port change and progress.
As mentioned above, the first stage begins with the operation of four berths and culminates in the fourth stage with the completion of all 15 berths.
The integration of automated technologies, such as cranes and electric vehicles, ensures safety and optimizes operating times, improving efficiency and reducing margins of error.
Its infrastructure offers technical features that make the Port of Chancay an attractive option for shipping companies seeking to reduce transportation times and costs. Expansion plans include a total of 15 docks and the modernization of the regional logistics infrastructure through 2032.
Logistics Operation
The port is designed to optimize the supply chain, offering efficient loading and unloading services.
It features automated container handling systems, allowing it to operate sustainably on a 24/7/365 schedule. This significantly reduces operating times and improves accuracy.
It also offers integrated logistics services, including land transportation and rail connections for the distribution of goods.
Regarding storage-related activities, the following stand out:
Discharge
Upon arrival at the port, the docking boats bring the vessel closer to the mooring. Once secured, the unloading process begins.
The 90-meter-high gantry cranes unload a container unit from the cargo ship and place it on an automated guided vehicle. This process is repeated until the ship is unloaded. These cranes can be operated manually or automatically.
Automatic guided electric vehicles move around the perimeter of the container yard toward the receiving area. Cranes lift the container unit from the ship and place it on the vehicle. The vehicles then move along the marked path to the foot of the smaller cranes located on the storage yard.
Once the gantry crane empties the automated vehicle, it heads back to the bypass. The process is repeated until the vessel is unloaded.
If they detect a vehicle or person ahead, they stop and wait for the area to be clear before moving forward.
Automatic guided electric vehicles optimize each movement and reduce the distance traveled between transfer points within the warehouse area. This saves 25% on energy compared to manually operated vehicles.
In the following image, you can see the paths for automated electric vehicles marked with white arrows. And, on the periphery, is the entry and exit path for manually operated vehicles.
Storage
The storage area consists of 15 container yards. Each has 10 longitudinal rows x 30 transverse rows. Up to 6 containers can be stacked in each position.
Automatic overhead cranes are responsible for placing containers in their respective storage positions. They can also automatically perform the reverse process when shipping orders by sea.
(Having all gantry cranes operational reduces the waiting time for automated vehicles and prevents congestion in the storage yard.)
An automated overhead crane is used to operate each zone, moving on rails. The port therefore has a total of 15 gantry cranes to place containers in their respective storage positions.
Gantry cranes use electric motors to move along rails. Their features allow them to store standardized-size containers at high speed.
Monitoring center
From a position of security, professionals oversee port terminal operations. The combination of CCTV systems and data collection programs adds value and contributes to the development of performance indicators. This reduces risk and promotes continuous improvement at all levels.
Sustainability and environment
The Port of Chancay is committed to sustainable practices, implementing technologies to reduce CO2 emissions, marine biodiversity conservation programs, and long-term waste management systems. Social responsibility plans have been implemented to benefit local communities. The use of self-driving electric vehicles in port operations contributes to its environmentally responsible profile.
A Strategic Location
The Port of Chancay is located in a geographically important location for international trade. Its proximity to Lima and easy access from major Asian markets allow for a more efficient and faster connection than other ports in the region. With the capacity to receive Post-Panamax and Neo-Panamax class mega-ships, this port does not require calls at other points in the world, significantly reducing transit times and costs associated with maritime transport.
Given its potential as a regional logistics hub, the Port of Chancay will create needs for products and services, including infrastructure projects of all kinds. If the goal is to manage the entry and exit of goods from South American countries to international markets, it would not be surprising to imagine an exponential transformation of the city of Chancay in the coming years.
Connectivity: A Port Integrated into International Logistics
Control of key infrastructure such as the Port of Chancay gives China a significant advantage in managing regional supply chains and distributing Chinese products in South America. The new maritime routes avoid transit through the Panama Canal and Mexico City. Thus, according to studies conducted by the consulting firm CPCS, Chancay will save four days of maritime transit time between Peru and China compared to other ports in the region.
The Port of Chancay stands out not only for its ability to operate efficiently at sea but also for its land connectivity. It is connected to Peru's national road network and will have future rail connections that will allow for more fluid distribution of goods from the port to the interior of Latin America. Furthermore, its proximity to Jorge Chávez International Airport in Lima enables efficient multimodal integration, further optimizing the logistics process.
The distance between Chancay (Peru) and Shanghai (China) is shorter than that between the Asian terminals and the rest of the South American ports located on the Pacific. Therefore, the port of Chancay represents a direct threat to the logistics services provided by the port terminals located in Chile.
In Brazil's case, the port of Santos will be relieved of congestion, and its goods will reach Asian markets in half the time.
For Bolivia, it will be advantageous not to depend on the main port in Chile when exporting products by sea.
In the cases of Ecuador and Colombia, they will reduce travel times and distances by traveling to Peru, without having to resort to Central American port terminals.
Land connectivity represents an opportunity for countries like Colombia, Ecuador, Bolivia, and Brazil to access Asian markets with competitive products, creating a ripple effect that encourages growth for all stakeholders. However, to achieve this, the training of qualified personnel, the development of technologies, and infrastructure, such as railroads, highways, and roads for heavy traffic, will be key. Likewise, updating trade agreements among those aspiring to participate in international markets in the coming years will be vital.
The President of Peru highlighted the projects being developed within the framework of the National Plan for Services and Infrastructure, Logistics, and Transportation projected for 2032. These projects include the improvement of the Pan-American Highway North with the construction of an overpass, the Chancay-Chancaillo road, and the new road to form the Pasamayo bypass. These projects also include the improvement of Néstor Gambetta Avenue in Callao, the Callao Outport, and the Lima-Barranca Railway, which will pass through Chancay. These projects aim to create a complete logistics hub.
Accesses
The port's geographic location, combined with a 1.8-km tunnel, allows for rapid access to land routes, minimizing delays in the transit of goods.
Entrance to the underground road for transporting heavy loads.
Exit to the underground road for transporting heavy loads.
The port terminal's exclusive access allows for the entry and exit of goods, avoiding delays in land traffic. Furthermore, since trucks do not circulate through the city, they also do not affect the activities of the Chancay population.
Context, Policies and Treaties
In official statements and in media coverage of the inauguration, it has been emphasized that the project was carried out within the framework of the so-called "Silk Road Initiative," a foreign policy initiative of the People's Republic of China. Some references also refer to the "Belt and Road Initiative," which is the literal translation of the English name "Belt and Road Initiative." We will now refer to the acronym for the latter, "BRI."
The BRI is a Chinese foreign policy initiative announced by President Xi Jinping in two speeches delivered in 2013: on September 7 in Kazakhstan - on the Asian overland "Silk Road" to Europe - and on October 3 in Indonesia - on the "Maritime Silk Road for the 21st Century", the oceanic trade routes with Southeast Asia, India and Africa. The two components of the Initiative were thus established: the "belt", referring to the physical area of the Central Asian countries, and the "road", which refers to their maritime extension.
Prior to the BRI, China's trade relations with Latin America gained prominence following Deng's reforms in 1978, although it wasn't until 1991 that China implemented an export diversification policy that led to the growth of its trade and diplomatic relations with our continent. Driven by its "Go Out" policy adopted in 1999 and its entry into the WTO in 2001, China launched a push to expand its markets worldwide and also in Latin America, taking advantage of the opportunities left by the United States after September 11, 2001, when it embarked on the "Global War on Terror" in the Middle East and Central Asia.
By then, China had a large accumulation of foreign exchange reserves, a powerful investment capacity, and a gigantic domestic market, all of which enabled it to achieve spectacular growth from a GDP of USD 2.2 trillion in 1990 to USD 6.1 trillion in 2010, when the World Bank recognized it as the world's second-largest economy. This triggered a surge in demand for raw materials and commodities from Latin America, which, under Hu Jintao's administration, saw trade grow from USD 12 trillion in 2001 to USD 270 trillion in 2012.
This growth in trade ties had its counterpart in the international institutional and legal sphere. The BRICS Forum (Brazil, Russia, India, and China) was established in 2009. Between 2001 and 2012, various free trade agreements and global strategic partnerships were signed. The China-CELAC Forum was also established in 2015.
During the 2010-2020 decade, relations between China and LATAM grew. Interest in the region was demonstrated by President Xi Jinping's five visits since 2013. The Chinese government issued two policy papers regarding LATAM, in 2008 and 2016, and reaffirmed the cooperation structure known as "1 + 3 + 6" - "one plan," "three engines" (trade, investment, and financial cooperation), and "six areas" (energy, infrastructure, agriculture, manufacturing, science and technology, and information technology).
Between 2015 and 2016, Chinese investment in Latin America reached its historic peak, only to slowly decline later, due to the slowdown in the rapid growth of the Chinese economy that had occurred at the time. It is in this context of trade and political relations that the BRI entered the Latin American scene, with an invitation to join the BRI extended at the China-CELAC Forum in January 2018.
The institutional expansion of the BRI until 2019 was very rapid, and most of the agreements were signed with the 19 Latin American countries that joined it. Some were comprehensive strategic partnership agreements: with Brazil, Panama, Peru, Mexico, Argentina, Venezuela, Ecuador, Chile, Bolivia, Costa Rica, Uruguay, and Jamaica. The founding of the BRICS forum also led to the creation of the New Development Bank and the connection of Latin American countries with the Asian Infrastructure Investment Bank.
The concrete applications of the BRI in the region consisted, first, of Chinese investment in infrastructure projects, which to date have had mixed results. Another key area of investment under the BRI is renewable energy. Since 2015, Chinese solar and hydroelectric energy companies have already had a significant presence in Latin America. The electric vehicle company BYD also established itself in Brazil in 2016, and to date has significantly expanded its industrial plants and product lines with a view to exporting to the rest of the region.
The COVID-19 pandemic had various consequences for the relationship, adding to the slowdown in Chinese economic growth during 2010-2020. Trade continued at a steady pace, reaching over USD 300 billion in three years (remember, China is the only country to emerge from the pandemic with a positive GDP). China's role as LATAM's second-largest trading partner and its second-largest investment destination also remained.
However, after the pandemic, China shifted the focus of its public policies. The first is the 14th Five-Year Plan (2021-2025), which places high priority on domestic consumption, technological development, and self-sufficiency; that is, a new focus on the domestic market. The second is the "Dual Circulation" policy (2020) to stimulate domestic productivity with the so-called "Made in China 2025" objective, thus further boosting the development of advanced technologies. What also changed was the US position, both under the Barack Obama administration and, much more so, during Donald Trump's, something that will undoubtedly happen again.
The United States outlined its policy position regarding China's advance in Latin America in its 2017 National Security Strategy, based on the Trump administration's "America First" approach (military supremacy, global leadership in technological innovation, energy supremacy, and a diplomatic offensive in international forums against China and Russia). This approach was tempered in the Biden administration's National Security Strategy Guidelines, but both express concern about China's influence in Latin America. In this regard, the U.S. Army's Southern Command expressed concern in 2021 about the growth of Chinese logistics activities in the region, which could also serve as a means for its military projection.
China's 2015 Military Strategy statement, for its part, makes no specific mention of Latin America, but states that its economic development policies will seek to secure the supply of food, energy, and raw materials, along with capital and knowledge, suggesting that interest in the region will remain focused on these issues.
Despite this increase in Chinese influence in South America, the US remains LATAM's main trading partner, accounting for a third of the region's exports, 11 free trade agreements, eight bilateral trade agreements, and close military ties with the region's armed forces.
The Port of Chancay is an infrastructure project carried out by China within the framework of the BRI, financed, built, and subsequently managed by COSCO Shipping Co. In short, it represents an "exit gateway" for the region's raw materials at competitive prices, a sector China is likely to pursue again in the coming years. It could also serve as an "entry gateway" for very low-cost Chinese imports, which will depend both on the country's apparent focus on the domestic market in the near future and on the Latin American market's capacity to acquire such goods.
Another important geopolitical driver is the reduction of China's dependence on the Panama Canal for its trade routes. The Panama Canal has been a central element of the United States' commercial and military strategy in Latin America. However, the Port of Chancay offers China an efficient alternative to reduce its dependence on this critical route. By having a deepwater port on the Pacific coast, China can ease maritime traffic passing through the canal and optimize its logistics operations. This diminishes the United States' strategic influence over one of the world's most important trade routes.
Conclusions
With the potential to transform regional and global logistics, the Port of Chancay is on its way to becoming a leading logistics hub and represents a milestone in the port infrastructure of Peru and South America.
This project embodies China's long-term vision to expand its economic and geopolitical influence in a region rich in resources and opportunities.
For the United States, this not only weakens its position as a leader in global trade, but also means the loss of control over key infrastructure that facilitates the flow of goods and resources between Asia and South America.
References
This article is based on the lecture entitled "The Silk Road in Latin America," which the author gave on October 8, 2024, at the Center for Global Governance Research at the University of Salamanca, Spain. Available at:
Economic and geopolitical data on the Port of Chancay.
Reports on the Belt and Road Initiative.
Analysis of trade relations between China, Peru, and the United States.
Studies on Chinese influence in Latin America.
By Lucas R. García / Nicolas M. Rueda
