Brazil’s Port Infrastructure Remains Troublesome
In August of 2012, Supply Chain Matters amplified a report by The Financial Times indicating that global market opportunities were being foiled by Brazil’s logistics infrastructure, specifically its main export port, Santos. Farmers across Brazil, blessed with favorable climate and a second growing season, at the time were expected to harvest a bumper corn harvest and compensate for a severe drought condition impacting farmers and corn harvests across the U.S. Midwest. For the first time in many years, U.S. food producers were calling on Brazil’s farm sector to compensate for needed corn.
During that time, conditions at the port of Santos were described as extremely challenging with trucks waiting to be unloaded for upwards of three days. Warehouse space was described as in short supply and there was over dependence in truck transport vs. other surface transportation methods such as rail to move goods to and from this strategic port.
Last week, we were once again disappointed to read another Financial Times article, Battle looms for Brazil’s clogged ports (paid subscription required or free metered view), indicating that conditions at Brazil’s main port have become even more challenging as the sugar and soya harvest season is winding down. The article describes a truck driver lamenting that he has waited for five days at a nearby truck park 15 kilometers from Santos just to be called to the port for unloading of goods. Showers and washrooms are described as out of order and tempers are short since the rainy season is underway. Thus, as Brazil’s soyabean farmers enjoy their largest harvest, there well may be a global supply shortage of this food commodity because of Brazil’s inefficient export infrastructure.
Brazil is the world’s largest exporter of coffee, sugar, orange juice and soya. This latest FT article notes that Santos is currently the most labor intensive and costly of global ports, requiring up to 11 times more labor effort and 2 to 3 times more costly than other modern ports such as Singapore and Rotterdam. At Brazil’s other port of Paranaqua´, there are reports of ship waiting times averaging 51 days in February. Also noted is that sending a container to Brazil requires 100 forms consisting of 900 pieces of required information. An added challenge, which is now compounding delay times, is a new hours of service regulation requiring truck drivers to have 11 hours of uninterrupted rest in every 24 hour period.
For its part, the government of Brazil has been working on a $23 billion ports modernization package to increase Santos port capacity threefold and address infrastructure efficiency needs. However, port operators and labor unions currently continue to oppose such plans. Companies and commodity firms are continuing to invest in their own privately owned and operated port facilities, which add more distrust and labor unrest for workers within publically operated port facilities.
Transportation and logistics focused readers in Brazil and other global regions can perhaps add more first-hand detail and insights to these logistics infrastructure challenges involving Brazil in the Comments area related to this posting.
The so-termed BRIC emerging market economies, of which Brazil is a member, are often touted as the new economic growth engines in our global economy. If Brazil does not solve its existing port infrastructure challenges, its standing as a global economic player will seriously be stymied.