Big bucks to modernize Brazilian ports.

Author:Ogier, Thierry
Position::LOGISTICS
 
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Brazilian ports have been upgraded thanks to investment worth billions of dollars in the past 20 years. Foreign investors and the shipowners themselves have now taken the upper hand.

Twenty-one years after the first container terminals were privatized in Santos and Rio de Janeiro productivity has increased significantly. Instead of moving less than 20 containers per hour, some terminals now manage to handle three times as many.

Massive investments have reached the piers along the 5,000-mile long Brazilian coast. But pioneer domestic investors such as Santos Brasil have been recently overtaken by large multinational companies, which have invested massively in the port.

Lava Jato (the famous anti-corruption investigation) has also had an impact, as Odebrecht, a partner in the Embraport terminal, had to sell its 67% stake to Dubai Port World (DPW), which already owned the remaining 33%, late last year. Meanwhile, two giants of the sea, MSC and Maersk, have joined forces to build yet another large, modem container terminal in Santos, called BTP.

The main shipping lines have decided to go to these new terminals. "Santos Brasil used to be the dominant player in 2012, but BTP has taken over the lead in the past five years. And you can now expect a big increase [in business] from DPW," says Andrew Lorimer, managing director of Datamar, a shipping consultancy.

Investments worth $13 billion have poured in the past five years alone. China Merchants Port invested in TCP, a Paranagua container terminal in the south of Brazil, in September 2017, while China Communications Construction Company (CCCC) is currently building a new port in Sao Luis, on the northeastern coast, Meanwhile, other carriers have invested in ports, such as APM, with two terminals in Pecem (northeast) and Itajai (south), while MSC owns another terminal in Navegantes (south).

"There are a lot of terminals in Brazil. It is too expensive for shipping lines to do it that way [go from port to port]. A natural logistics solution would be to have regional hubs," says Lorimer. Containers would then be shipped along the coast to smaller ports, but this alternative would still be too costly in Brazil. In addition, there has been a strong trend towards consolidation of the trade along the east coast of South America, following the acquisition of Hamburg Sud by Maersk (as a result, Maersk's cabotage shipping line Mercosul Line was sold to CMA CGM).

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