Change afoot at Imbituba
Santos Brasil weighs its future options at Imbituba, finds Alex Hughes
In November 2017, Santos Brasil announced that it was evaluating strategic alternatives to its investments in Imbituba Container Terminal and Imbituba General Cargo Terminal. The "strategic alternatives" under analysis include attracting partners or strategic partners, or selling it off, adopting the option that "adds more value", said the company.
Santos Brasil was awarded the 25-year concession for the two terminals in 2008; the contract has a clause potentially allowing that term to double. Since then, it has invested around $300m at today’s rates. This has been spent on expanding the terminals, upgrades and equipment acquisition.
Marcos Tourinho, Santos Brasil’s commercial director notes that, in 2016, the box terminal handled 37,837 teu, which was 4% less than the previous year’s throughput of 39,424 teu. This he attributes to the end of a container service linking the port with the Gulf of Mexico.
For the third quarter of 2017, traffic was up 87% to 19,497 teu, while in the first nine months traffic rose by 47% to 42,939 teu. While cabotage grew by 50.4%, the start of a new service to Asia (ASAS), in September, boosted long distance traffic by 764.8%. Mr Tourinho calculates it should generate an additional 75,000 teu annually, of which 70% will be exports and 30% imports. The joint venture is composed of five shipping lines and makes weekly calls at the container terminal, on route serving 19 ports in Asia and South America. In all, 13 vessels provide the service, among which is the Hyundai Loyalty, the largest container vessel currently operating in the Brazilian market.
“In just three months, the ASAS service can be seen as a success," says Mr Tourinho. "In September alone, five vessels were handled, generating 4,138 teu of traffic, with 682 per teu being the average exchange per call. Operations in the terminal are ever more efficient. At present, we are achieving a monthly average in the region of 67 moves per hour, broadly similar to other terminals in Santa Catarina state.”
Mr Tourinho notes that, in October, the ASAS service set a new record of 69 moves, which was higher than expected. With MSC and Maersk now effectively in control of the Navegantes port complex, Imbituba is probably now the only independent container handling operation in Santa Catarina. However, there are two other terminals in the Port of São Francisco do Sul that handle containers, in addition to general cargo and dry bulk.
As to whether there is traffic for all Santa Catarina’s box handling terminals, Mr Tourinho notes: “In March 2018, many of the existing fleet of vessels in the Brazilian market are due to be replaced by bigger ones. This is going to benefit Imbituba, because we are already prepared to handle them.”
'Best ever year'
Rogério Pupo, director-president of port operator SCPar Porto de Imbituba, told Port Strategy that, in spite of the economy, the port had its best ever year for total traffic volume in 2016. Indeed, traffic amounted to 4.803m tonnes, equivalent to growth of 41.6%.
For 2017, the outlook for results is “encouraging”, particularly with the start of the new container service to Asia, which was on course to grow box traffic by around 85% when compared to 2016. However, 2016 has been a particularly difficult one for the port in terms of containers handled, with throughput amounting to 27,191 teu compared to a figure of 30,602 teu for 2015.
In fact, the recent history of container handling at the port has been highly unstable. In 2013, for example, throughput was 13,887 teu, increasing by 201% the following year to 41,909 teu, only to then drop dramatically in the next two years to 30,602 teu (2015) and 27,191 teu (2016).
While Mr Pupo says that 2016 was a difficult year for container traffic given the state of the Brazilian economy, he is delighted by the return to form for 2017. Between January and November, for example, throughput amounted to 43,334 teu, which is an improvement of 60% over the first 11 months of last year.
“This significant increase in handling was driven by the start of the Asia line operation in September 2017, which in itself was made possible by the conclusion of dredging works and the availability of tariff discounts,” says Mr Pupo.
Public and private competition
There are several factors influencing why Imbituba has yet to reach the levels of traffic generated by other ports in the state. There is not only strong competition from two private container terminals, which are among the most efficient in the country, but Imbituba must also compete with two public ports.
“Our aim is to be a multipurpose port, in which the focus is on the movement of all types of cargo in a balanced way. In addition, it should be noted that SCPar Porto de Imbituba took over management of the port in December 2012 ” notes Mr Pupo.
SCPar Porto de Imbituba, in partnership with operator Santos Brasil, has a policy of attracting cargo that is based around strategic planning, whose primary goal is “to bring in as many customers as possible".
That work, he stresses, has already been done, since part of the overall plan has been to find ways to reduce costs and increase operational efficiency. Logistics and port costs at Imbituba are said to be 30% cheaper than regional rivals.
Imbituba is one of few ports in Brazil with a deep draft, 14.5 metres at its maximum. This means it can accommodate container ships of up to 10,600 teu. Indeed, Hamburg Süd’s Cap San Juan, Cap San Vincent and Cap San Lazaro have all called at the port and are all in this type of range.
“The vast majority of our container traffic is generated by Santa Catarina state,” says Mr Pupo. “But we also handle a lot of boxes from the neighbouring state of Rio Grande do Sul.”
Currently, container traffic has two maritime outlets through the port, one of which is a cabotage service, the other being the aforementioned Asia service (Asia NGX2), which calls at Buenos Aires and Montevideo along with five Brazilian ports, before crossing the Atlantic by the Cape of Good Hope to serve ports in South Korea, China, Singapore, Malaysia and Hong Kong.
Given that in Santa Catarina, TIL/MSC operates Portonave and APM Terminals both Itajaí and Itapoá, Imbituba is perhaps the last remaining independent container handling operation in the state. Commenting on this, Mr Pupo says that “independent” is perhaps not the best label, because Imbituba is available to take a larger share of the overall container market, which means that it is open to all shipowners serving the Brazilian market.
Asked whether SCPar Porto de Imbituba believes this would be to another independent operator or a shipping line, Mr Pupo comments, “The market could accommodate various situations and we are open to discussing all of them.”
TALKING UP ITS SELLING POINTS
Unlike other Santa Catarina ports, such as Itajaí and Navegantes, Imbituba is not closed for 30-40 days a year and terminal handling charges are half those of Rio Grande. Currently, Santos Brasil claims to offer its customers direct and indirect costs that are up to 60% cheaper than rivals.
“We are able to attract traffic because we are cheaper," says Offering a logistics alternative for cargo from various sectors of the southern regional economy, along with a very attractive cost benefit and superior quality, is one of Tecon Imbituba’s differentials”, says Marcos Tourinho, Santos Brasil’s commercial director.
Imbituba’s draft is another selling point: the access channel has draft of 17 metres and the basin 15.5 metres, meaning that the largest vessels deployed in the South American market can berth there. In recent announcements, the box terminal acknowledged that it was targetting traffic to and from neighbouring Rio Grande do Sul state.
According to Mr Tourinho, the aim is to attract cargo flows from the mid-West and South of Brazil. This is because Imbituba is strategically situated in the south of Santa Catarina, equidistant between Porto Alegre and Curitiba, and just 90 kilometres from the city of Florianópolis, with road access to the BR-101 and also the local rail network.
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