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Santos: Latin America's top port faces logistical woes
by Staff Writers
Santos, Brazil (AFP) April 11, 2013

A bumper soybean crop that sparked a mammoth traffic jam has shone an unflattering light on Santos, Latin America's largest seaport, which is moving to clear huge logistical hurdles as it aims to triple capacity in coming years.

Located 60 kilometers (38 miles) from Sao Paulo, this city, through which millions of European immigrants entered the country in the 19th century, has witnessed a spectacular growth of its port traffic, largely powered by a booming trade with China, Brazil's main commercial partner.

With a population of 530,000, Santos today accounts for 25 percent of Brazil's foreign trade and handles most of the production of leading grain-producing states such as Sao Paulo, Mato Grosso, Mato Grosso do Sul, Minas Gerais and Goias.

The port's future expansion is also key to the bi-oceanic corridor, a 3,450-kilometer highway that connects Santos to Pacific ports in Peru and Chile.

The $2 billion project, conceived by the presidents of Brazil, Bolivia and Chile in 2007, is meant to spur the integration of South American infrastructure to allow the transportation of goods from Brazil and the region to Asian markets and vice versa.

Its official inauguration, scheduled for this month, has been postponed to an unspecified date.

Santos' cargo handling volumes made a strong start to 2013, with the port hitting a record high of 7.9 million tons, up 27 percent year-on-year, according to Santos' Port Authority CODESP.

If the trend continues, the port is expected to close 2013 with total cargo traffic of 109 million tons, up from 104 million last year and 97 million in 2011.

But a record soybean harvest this year has clearly overwhelmed its storage and loading capacity.

"It seems that our infrastructure can't cope with the growth in grain production," said Sergio Mendes, executive director of the Brazilian Cereal Exporters Association (ANEC).

Last month, the logistical nightmare reached epic proportions, with a 64-kilometer traffic jam of trucks waiting to unload their soybean cargo outside Santos port.

And the port congestion and resulting shipment delays led Sunrise Group, China's largest soybean importer, to cancel an order to buy 2 million metric tons of Brazilian soybean.

The problem has been compounded by legislation curbing truck drivers' work hours, rising fuel costs, excess rainfall that stopped port activity and dockworkers's restiveness over government plans to privatise more port terminals.

According to Sao Paulo state's maritime navigation trade union Sindamar, the local naval shipping sector lost at least $15 million in the period between February 25 and March 10 due to the congestion at Santos.

CODESP said it is taking steps to improve the control and monitoring of arriving trucks at the port complex.

"Capacity over the past 10 years has more than doubled but the rail, highway and river access networks are overwhelmed," CODESP official Sergio Coelho told AFP during a tour of a government-owned terminal, including soybean-filled warehouses.

"Soybean has low added value and a high volume and therefore is suitable for rail transport because the rail transport is cheap," he explained.

"But today only 25 percent of soybean cargo is transported by rail, that's very low."

Coelho insisted that a key issue is a storage deficit in the grain-producing regions.

"Brazil in general can store around 60 percent of its harvest in the producing area. In the United States, they have 130 percent capacity, meaning that they can store in the producing areas the entire harvest plus 30 percent of the next one," he said.

He noted that soybean producers have been complaining of a shortage of trucks to offload their output.

"Well, it's their fault. They think the storage must be done at the end of the chain. Well, the port is not meant for storage, it is for rotating freight in and out. It's a question of planning."

But Coelho says he is optimistic about the port's future prospects, given its strategic importance not only for Brazil but for the South American region and the booming trade with China.

"The port is crucial to trade with China, which has a growing appetite for Brazilian commodities. It is a lucrative business. It is of strategic interest for Brazil and also has a great appeal for foreign investors," he added.


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