The Future of Brazilian Ports

Despite the catastrophic predictions made due to the effects of the coronavirus pandemic (COVID-19), the reaction of the Brazilian economy is better than expected, with indicators showing growth. So much so that there were difficulties in exports, especially from agribusiness during the second quarter of the year, which persist in the second half, due to a heated demand that not even exporters were able to predict.

According to data released by the Brazilian Institute of Geography and Statistics (IBGE), in the second quarter of 2021, there was a 9.4% growth in exports compared to the immediately preceding three months, which represented the best result since the 10.9% advance in the first quarter of 2010. With this, the obstacles raised by deficient logistical infrastructure that hampers competitiveness in shipments become increasingly clear.

These obstacles, obviously, will only be overcome if there is a political directive that prioritizes reducing bureaucracy and fees, encourages the opening of maritime routes, and allows the arrival of new shipowners, which could stimulate competitiveness and reduce shipping costs. It is noteworthy that in the country today, only 19 shipping companies dominate 97% of the trade carried out by sea.

Therefore, greater public investments in improving port, road, and railway infrastructure would be welcome. However, there are already mechanisms such as public-private partnerships (PPPs) and concessions that can expedite these investments without requiring the government to tamper with its budget. Scheduled for the first half of 2022, the privatization of the Port of Santos, the largest in Latin America, if well conducted, is expected to generate, according to the Ministry of Infrastructure, R$ 16 billion in investments, resulting in improvements such as the enhancement of land access, deepening of the channel, and the construction of a submerged tunnel to the other side of the estuary channel, in the municipality of Guarujá.

If all of this materializes, this endeavor will undoubtedly serve as a model for the other ports in the country, which currently, with the fleet change by shipowners, are not prepared to accommodate large vessels or the additional vessels already in use due to increased demand. All of this has caused a shortage of containers because the country imports a low volume of refrigerated foods such as meat and fruits.

If the situation is already like this, it is not difficult to imagine what it will be like in a post-pandemic scenario where demand is expected to triple or even quadruple. Therefore, it would not be unreasonable to recommend that the government makes a concerted effort to expedite the concession processes for organized ports, doing what previous governments refused to do, which is not granting any public port concessions, prioritizing only leases of parts of each port, unnecessarily keeping purely business functions in the hands of the state.

In any case, the Ministry of Infrastructure has been doing its part well to reverse this situation. In two and a half years, the federal government has already held 74 auctions, with R$ 80 billion in contracted investments, according to information from Agência Brasil. In the case of port auctions, the funds raised are transferred to port authorities, used to resolve liabilities so that the next step, which is the privatization of port companies, can be taken. The task is not easy, considering that Brazil currently has 37 public ports and 232 terminals within these ports. There is no more time to waste.

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Liana Lourenço Martinelli, lawyer, postgraduate in Business Management and International Trade, is the Institutional Relations Manager of the Fiorde Group, composed of the companies Fiorde International Logistics, FTA Transport and Warehouses, and Barter International Trade. Email: fiorde@fiorde.com.br. Website: www.fiorde.com.br

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