With Brazil one of the top ten global economies when ranked by GDP it is curious that its container trade is not more prominent, but this is all starting to change.
The South American nation, which has traditionally shipped bulk and conventional cargo such as foodstuffs, has seen a surge in investment in container markets.
The crown jewel of Brazilian ports, Santos Port, has recently approved expansion works for ships of 366m length with capacity of 14,000 TEU.
The port, which handles some 36% of the country’s total containers, has doubled down on its intentions to simulate greater container flows through the nation.
Outside of Santos Port, investments in container capacity are surging to accommodate this shift in cargo; and particularly to benefit from the Ministry of Infrastructure (MINFRA) project BR do Mar, beefing up cabotage services in Brazil.
Cabotage, which involves shipping goods between ports across the coast of Brazil, is an area circled by MINFRA in which ports towards the north and north-east can benefit from growing container flows from economic strongholds including Santos and Rio de Janeiro.
Brazilian cabotage is concentrated by three key shipowners: Aliança (owned by A.P Moller Maersk (Maersk)), Mercosul Line (owned by CMA CGM), and Login, a publicly traded Brazilian company.
“Cabotage currently does not have the capacity to meet the repressed demand, as there is a potential for cargo that is not being served by the three shipowners due to capacity constraints, which could be mitigated by BR do Mar Law Project with a greater supply of ships for transport, by means of chartering,” explained Dr. Newton Narciso Pereira, Adjunct Professor at Federal Fluminense University in Rio de Janeiro.
Although the Br do Mar initiative is currently stalled in the Brazilian Senate, losing government priority in 2021, port stakeholders are eager to see the initiative fulfilled to benefit port communities across Brazil.
The fact that container services from Asia do not call at ports in the north and northeast regions means that cabotage can “act strongly” in a container feeder service from growing demand at the Port of Santos, Dr. Pereira explained.
“In this sense, the BR do Mar project as a proposition and the permission to increase transportation capacity in terms of chartering vessels could help to mitigate these problems at the first moment of expansion of national demand, [and] with a certain speed due to the conditions that facilitate chartering,” he noted.
Nationally, several ports are investing in anticipation and encouragement of this greater flow of container flows across the country. PTI spoke to AP Moller Maersk Terminals (APMT) Pecém and Terminal de Contêineres Paranaguá (TCP) at the Port of Paranaguá to find out more.
APMT Pecém
AP Moller Maersk Terminals (APMT) Pecém entered the second quarter of 2020 in a “dump”, its Managing Director, Daniel Rose, told PTI.
Like much of the rest of the ports industry, international lockdowns and COVID-19 restrictions crippled local supply chain movements but bounced back strongly in the third quarter through increased demand for fruit from Europe and the United States.
“Last year was a special year for everybody. It started nicely and then suddenly it became a whole disaster for everybody’s point of view,” Rose said.
“Then we had a very rapid recovery in July and August, where suddenly everything came back.”
APMT Pecém, located in the north-east of Brazil at the Port of Pecém, achieved the highest level of growth of any terminal in Brazil in 2020.
APMT Pecém is mostly a cabotage port, Rose explained.
The terminal, which handled a record 387,000 TEU in 2020, recorded the vast majority of its delivery of cargo through cabotage.
The cabotage boom continued into 2021, when APMT Pecém handled more than 65,000 TEU in January and February – a growth of almost 16% on the already-positive January and February of 2020.
“At Pecém in the three years before 2020, we have seen a rapid increase in volumes here in the north-east on the cabotage services, taking over from the road,” he added.
The 2018 truck strike in Brazil – which devastated fuel, food, and vital medicine supplies – catalysed logistics to turn to shipping goods from terminals like Pecém, and led to this increase in containerised cargo transporting along Brazil’s coast, Rose said.
The terminal will also benefit from the highly-touted Ministry of Infrastructure’s ‘BR do Mar’ initiative to turbocharge the cabotage sector and increase container volume across Brazil’s ports from to 2 million TEU by 2022.
The surge in cabotage routes from the economic strongholds in the south to the north-east and Manaus region was also driven by the Santos Port’s “chockablock” cargo volumes, according to Rose, and highlights the intention by cargo owners to move goods by ship away from critical logistics nodes such as Santos and Rio de Janeiro.
“Santos is chock-a-block because of exports and imports, which of course affects the whole food chain. In some sectors, [we have seen] strong investments in the north-east and a little bit in the south, whereas you can see [that] Rio de Janeiro, Sao Paolo, and those typical strongholds are losing its share.”
The increased traffic through Pecém has given APMT the impetus to increase its investment in the region: APMT Pecém increased its terminal operational capacity inaugurating Pecém Port berth 10, with a capacity capable of receiving New Panamax vessels with draughts of up to 15.3m.
In May, Rose told PTI he signed a contract for a third STS crane in time for peak fruit season of 2022, as well as intentions to beef up its yard handling equipment and investments on hinterland and warehouse facilities.
“We believe in Pecém, we believe in growth,” Rose said. “This year we’ll do around 250,000 moves. We will firmly hit 500,000 moves before 2030. And this comes from a doubling in the cabotage, we believe over the next five to seven years.”
On where Pecém could most benefit in national investment, Rose lamented the lack of an efficient rail set-up that could push harness Pecém’s growing fruit exports industry and reducing the number of carbon-emitting trucks on Brazilian highways.
“One of the big things that is really needed compared to more developed countries of this size is rail,” he said.
National investments in rail are slow and expensive, Rose outlined, and though Maersk as an international firm is moving further into intermodal logistics, Brazil as a nation continues to hang onto truck transportation to take goods across the country.
“Today, [our rail] is not that efficient. An efficient rail set up is what everyone in the logistics setup is always pushing for, as well as less bureaucracy and making things smart and more digital,” he added.
Looking forward, and if potential BR do Mar and intermodal investments go as hoped, the north-east and Amazonian region of Manaus can continue to lean into its cabotage growth, and potentially roll out European services, supporting fruit demand of European customers.
“I think for us here in the north-east, a big ticket item is the conversion from trucks to cabotage, which has been the major boom over the last three or four years,” Rose said.
“My biggest challenge is to follow the growth, moving logistics corridors to the north-east.
“Success for us is to follow the growth in cabotage and to attract long-haul European full-year services. For Europeans today this is only in peak season. That would very much be on the agenda to get that secured.”
TCP at Port of Paranaguá
Terminal de Contêineres Paranaguá (TCP) at the Port of Paranaguá is seeing record-breaking booms in container throughput at its facility.
The container terminal had record movement in 2020 with more than 983,000 TEU operated, and CCO Thomas Lima told PTI that the terminal is focusing to reach more than 1 million TEU for 2021.
“It is TCP’s goal to be a hub port in South America and one of our major goals is related to volume,” Lima said.
The terminal embarked on a $145 million expansion project at the end of 2019 to increase its capacity from 1.5 million TEU per year to 2.5 million TEU per year, Lima said – the largest increase in South America.
Digitally, TCP is upgrading its TOS system for more LTE-compliant Vehicle Mounted Terminal (VMT) and Radio Data Transmission (RDT) in its Terminal Operating System (TOS).
TCP is planning to upgrade its internal systems in the year ahead, as well as automating its main gate process to allow a paperless seamless transaction for its trucking sector.
“TCP is focusing on projects to increase the powerful logistic platform that supports our core business, the terminal,” Lima said.
“Other investments related to our reefer capacity – which is already the biggest in Latin America with 3.624 plugs – are in the scope to keep TCP as the leader of reefer cargo in the country.”
Though the growth in TEU for 2020 was largely due to the surged in reefer containers, Lima is buoyant on a confluence of cargo transferring through the terminal in the future.
“We believe [Brazil is moving into container markets],” he said. “Our location is in the main axis of container cargo in Brazil, which allows us to attract the main import and export companies in the country. Being specific, we are working hard to increase other cargos such as consumer goods, cotton, pulp and paper,” he explained.
Nationally, Lima echoed the points of Santos and APMT Pecem that Brazil is expanding its shipping portfolio.
Lima also highlighted the transformative potential of the BR do Mar scheme, turbocharging cabotage routes around Brazil and stimulating local economies.
“For the local market the growth potential is huge with cabotage,” Lima outlined. “The BR do Mar project will bring more options to the customer and we are sure that this will make the business growth a lot in the country.”
“For long haul we believe that for many segments Brazil will increase the level of industrialization and change from bulk cargo to container.
“A good example is the meat segment where Brazil is one of the main players in the world and keeps growing every year. The soybeans and corn that was feeding the foreign cattle now is partially remaining here to feed the Brazilian animals and afterwards be exported as high quality meat,” he added.
