BEING ON A WAR FOOTING

Although protests from stevedores did occur to the COVID-19 pandemic over safety issues/lack of personal safety equipment, it did not disrupt the cargo flows for very long.

Neither did the threats of strikes in Santos, the key port in South America with 4.17 million TEU handled last year (up 1 per cent over the 3.87 million TEU for 2018, according to statistics from the Santos Port Authority) or at any smaller ports.

In fact, not only have all Brazil’s leading container ports – all 23 of them out of 35 ports in total – remained open during the crisis to date, but container volumes have actually risen, significantly at many of them.

This is due to increased demand for Brazilian foodstuffs from around the world, especially from China, where the virus originated. In addition, import demand has also been very strong, especially throughout late February and into March, owing to the backlog that developed out of China, when several of that country’s ports were partly closed or even paralysed back in late January and early February, when the virus was particular virulent, and production closed down.

Chinese New Year, from January 24 to February 1, also occurred. This position caused congestion in key ports such as Shanghai, Xingang, Tanjin and Ningbo, which only recently eased up with the knock-on effect impacting on imports into Brazilian ports some 30 to 40 plus days later.

Impressive growth

Overall, the throughput figures at Brazilian ports for both imports and exports have been really impressive. During the first two months of 2020, the three box terminals in Santos – DP World Santos, Santos Brasil and BTP – handled 682,300 TEU, which was up 19.6% over the same period of 2019.

These two months saw imports rise by 19.3 per cent to 343,800 TEU and exports rise 20 per cent up to 338,500 TEU, according to Santos Port Authority figures.

“Initially Brazilians were hoping that the coronavirus was going to be a Chinese and a European problem only, especially with President Bolsonaro downplaying it and calling it ‘just like a bad flu’, but as it spread around the world, stevedores, especially in Santos, became more and more worried,” said a Santos based shipping agent.

He added, “Brazil has gained new markets in China owing to its trade spat with the US and this continued even with the corona spread. The virus came late to Santos, only in early March, and the workforce have adapted admirably with rising, indeed record, volumes of containers, and despite numbers pegged back about 10 per cent by self-isolating stevedores and truck drivers.”

Even today (late April as we go to press) Brazil has still only registered 40,500 COVID-19 cases and 2,575 deaths, relatively low compared to the total population of 212.6 million. Some 14,500 of those are in Sao Paulo, the most populous state which includes Santos.

Demand for Brazil’s exports

Specific Brazilian export sectors showed even more highrising figures. During January and February of this year China imported 115,400 metric tonnes (around 8,500 TEU) of Brazilian chicken, up 59 per cent over the same period of 2019, with most of that being shipped from the southern ports of Paranagua, Porto Itapoa, Itajai and Navegantes.

Brazil is also among the leading global exporters of beef, cotton, coffee and orange juice and all these exports have been strong out of Santos so far this year.

The South American country’s total beef exports hit a record $7.5billion in 2019, up 20 per cent over 2018, with China accounting for 26.6 per cent and Hong Kong a further 18.4 per cent of the total revenues.

Volume was up 11.3 per cent from 1.63m tonnes to 1.83m tonnes (or approximately 120,000 TEU) for beef. In March too, total Brazilian agribusiness recorded a rise of 18.8% in volumes and 13 per cent in revenues, up to $9.29 billion, which accounted for 48.3 per cent of all Brazilian exports, with fresh beef leading the way with $555million worth of sales.

China now accounts for 43 per cent of all Brazil’s agribusiness exports, up from 34.2 per cent during March of last year, according to Ministry of Agriculture figures.

During March 2020, China bought $451million worth of Brazilian meat (beef, Chicken and pork), double the amount of March 2019 and comprises a third of all Brazilian agribusiness exports.

Leandro Carelli Barreto, a director with the Solve Shipping consultancy, said that although Brazilian ports suffered a few “teething” problems during the first few days and weeks of the coronavirus arriving on Brazilian shores (in mid-March) the overall impact has been “far less than anyone could have imagined”.

“Although there were some problems in Santos at the beginning, until the dock workers there signed a fixed solution that kept them working, and a few teething problems with space because of the weakening Brazilian currency, the Real, (making exports much more attractive than previously) overall the ports in Brazil are in really good shape,” explained Mr Barreto, talking to Port Strategy in early April.

Strike threat?

However, it was uncertain for a while as the powerful Santos dockers’ union, Sindestiva, threatened an all-out strike until face to face talks with Brasilia saw them back-down.

Rodnei Oliveira da Silva, the leader of Sindestiva, said that he would recommend a 30-day strike if requests for protective equipment and practises and job security were not met.

Two weeks later he claimed he was only trying to improve safety and was not serious about striking. One ship-to-shore crane operator said that most Santos stevedores saw it as their patriotic duty to keep working and keep the port open.

According to Deyvis Araujo it is important to stay safe for his young family (he has two children under three years old), but it is crucial for his country for him to keep working, as long as safety measures are in place. “

We are not thinking just about the micro, but also about the macro, in Brazil. Everyone is responsible, it is a difficult time, and we have the feeling that we are at war. This is the feeling that passes through our hearts,” he told the Folha newspaper.

Importance of Santos

In Brasilia Tarcisio Gomes de Freitas, the Minister of Infrastructure, and the Santos Port Authority (SPA, formerly Codesp) responded strongly and promptly to the pandemic.

SPA issued a 10-point plan of safety measures and called upon the Emergency Co-ordination Committee to supervise procedures. Meanwhile De Freitas underscored how important a fully functioning port of Santos was to the country if it was to remain open for business during such a crisis, comparing it to “being on a war footing”.

On top of that, management at the three main Santos box terminals moved all non-essential staff out of their offices to cement social distancing. A quick Port Strategy survey found the three container terminal operators had, on average, converted about 90% of their office staff into home workers, with a handful of key personnel visiting the office just once a week.

However, Mr Barreto remarked that the impact of the pandemic on Brazilian trade during the first few weeks and months may have been surprisingly positive, but he cannot see that continuing into the second quarter of the year.

“The problems at the ports in China were over a month ago and they have been resolved now,” said Mr Barreto. “Brazil is also selling a lot of iron ore to China and we also had a record crop of soya beans so that too will be exported to China. This means that China is already over the low points of the crisis and is now buying strongly from around the world and Brazil and Santos are happy to help that process, at least until it dries up.

“Due to several blank sailings, most ships are full for April and May and many carriers are only taking bookings for June, but by then this ‘mini boom’ will likely be fading.”

Barreto’s view was backed up by a commercial manager at one of the three leading Santos container terminals (BTP, Santos Brasil and DP World), who said he did not want to be identified, but did explain the position further.

“Looking at the forecasts and talking to colleagues at other terminals, here in Santos we seem to have a lot of cargo booked in for April and May and we are optimistic until the end of June,” said the veteran commercial manager.

“On the export side there are strong exports of cellulose [especially from Suzano and Eldorado], cotton, orange juice and many countries are panic buying coffee now because of the Coronavirus,” he added.

However, he did also sound a note of caution. “I am convinced we will all be busy enough despite the Corona virus, until the end of June, but after that? Well, God help us!”