River Amazon resourcefulness

The terrible drought that afflicted the Amazon region of Brazil last year led to major dislocations and delays for shipping lines using the jungle port of Manaus. This is a key facility for the Manaus Economic Free Trade Zone (FTZ), the main employer of the region with 120,000 workers and dozens of multi-national companies (600 in total), especially in the electronics sector.

Cabotage and deep-sea liner services had to re-schedule their services and arrange for expensive transshipment from faraway ports such as Belem (capital of Para state) and Pecem (in the northern state of Maranhão), respectively 1584 km and 2900 km from the usual loading/unloading port of Manaus.

The drought is proving to be even worse this year but the two port operators in Manaus – Porto Chibatao and Superterminais – have acted promptly to try and avert the chaos of last year and at the start of September introduced a new logistics system to keep the boxes flowing so that companies like Honda, Panasonic can continue normal operations.

The duo of plucky operators are taking their port operations downriver by some 200km to meet the transshipment cargo there, in the middle of the Amazon River, instead of leaving slow-moving and expensive barge services to carry out the transshipment across 1000s of kilometers.

“Yes, indeed,” says Jhony Fidelis, Executive Director, Porto Chibatao, “we have taken part of our port operations downriver to meet the ocean-going vessels near Itacoatiara, some 200km from our Manaus home base. It is an Out of the Box Solution to a terrible problem of drought and low water levels.”

This amazing operation is indeed, according to all Brazil and Amazonas experts and analysts, a “Unique event”, and it does appear to be the first time it has ever been attempted and many stakeholders and service providers have been involved.

AVOIDING CHOKE POINTS
By “moving the port” facilities downriver the vessels can avoid the two choke points in the Amazon River – one at Tabocal and the other at Enseada do Rio Madeira – where the ocean-going vessels would not have enough draft to pass by fully, or even half loaded. Incredibly, the mighty Amazon River is around 40 metres deep at most points (in high season and 31m in low-water season) but it is the various choke points -usually located near river islands – that cause the problems for larger vessels. It is at those locations where the river level reduces to around 7.5 to 8.5m, even after significant dredging, and with the water levels reducing there is a fear that vessels sailing beyond the choke points may get grounded on their return voyage.

Knowing that the drought was coming shippers and shipping lines have been moving more boxes earlier this year. Superterminais moved 84,067 containers during the first seven months, up 60% over the 50,527 boxes for the same period in 2023. Overall movement for Manaus is forecast to reach 757,716TEU this year, up 12% from 681,000TEU in 2023, and that will be a record for the port, and reflects the recovery of the Brazilian economy since Covid. Basically, the Manaus FTZ is producing and loading many more white and electronic goods. It also shows that the lack of movement from September to December last year pushed many shipments into January to March of 2024.

GOVERNMENT PLEDGE
The federal government in Brasilia has pledged Reais92.8M (US$16.8M) for a dredging scheme but the local dredgers are inadequate and local logistics and port managers say that money is “mostly wasted”, as the Amazon River silts up very quickly again. Many said it was all “too little, too late when it comes to dredging” and hinted that some of the dredging money “just disappears”.

A manager at one of the shipping lines affected by the switch from Manaus to Itacoatiara notes that the move represents a “huge benefit” to shippers and shows the “ingenuity” of logistics managers and port operators in the region.

And after the first day of the “unique operation”, on the Log-In Jacaranda, Felipe Gurgel, Commercial Director, Log-In, was full of praise for the PC solution and stated: “Last year we had one of the biggest crises in cabotage… due to the worst drought ever recorded. To get the boxes to Manaus, Log-In, like several carriers, used container barges to transship from Vila do Conde (where Santos Brasil has a box terminal) to Manaus, but that system was costly and created some “logistical problems.

“In a brilliant way Fidelis has led one of the largest, and let’s say daring, projects I have ever seen in my 20 years of logistics and navigation,” he said. This is large-scale innovation that impacts millions of people and industries in the country.”

He notes that container barge company Companhia Norte de Navegação would transship from Itacoatiara to Manaus, and that it will be likewise for Mercosul Line and Alianca.

DIFFERENT SOLUTIONS
The two terminal operators have slightly different solutions in store, matching the different clientele they currently cater for.

Porto Chibatao (PC) has set up its operation midstream on the left bank of the River Amazon and vessels of up to 4484TEU (and up to 47,800 grt) will begin by unloading sufficient boxes to reduce the draft of the vessels and thereby allowing them to continue upriver to Manaus, where the bulk of the boxes will be dispatched. PC handles nearly all cabotage cargoes in/out Manaus, so its clients are Log-In Logistica (the Brazilian flag carrier now owned by MSC), Mercosul Line (owned by CMA CGM) and the market leader Alianca Navegacao (another Brazilian flag carrier, that is now part of the Maersk group, and formerly Hamburg Sud).

PC operates at Manaus with several Liebherr mobile harbour cranes, with four new LBS800 HR MHCs, with an outreach of 66 metres, installed a few months ago. It is, however, three post panamax LBS600s (plus one smaller crane), along with four pontoons measuring 277.5m in length and 24m wide, which have been moved downstream 200km to their “new temporary home” by tug. The new set up has 55 tonne moorings, so can “withstand even the most challenging conditions of the Amazon,” says Fidelis. “The first week of this operation was arduous but our initial goals have been successfully achieved,” he elaborates.

Superterminais, on the other hand, is locating its “Operation Itacoatiara” emergency project on the opposite, left bank of the mighty Amazon and will see the carriers it works with (MSC and ONE with their Asia services via Panama and Norcoast, a smaller cabotage joint venture between Germany’s Hapag Lloyd and Brazil’s Norsul Navegacao), unload all their containers onto awaiting barges before sailing back downriver to the Atlantic Ocean. As PS went to press the first vessel, the 2700TEU, 34,600grt MSC Manya, called at the facility and successfully unloaded 1200 boxes onto the awaiting barges. It will take 24 hours for the goods to be transported back to Manaus for unloading and distribution. Superterminais also handles breakbulk cargo for BBC Chartering.

Marcello Di Gregori, CEO, Superterminais, emphasises that “moving our port operations is not something we wanted to do, but it’s something that had to be done.”

“Last year was a terrible drought…and we had three months here in Manaus without receiving a single vessel,” he explains. “It was terrible for our business, but it was even more terrible for the Manaus Free Trade Zone. It is estimated that Reais1.6BN was lost in tax revenues because of the loss of cargoes at the end of last year during the drought. For several months there were no vessel calls so multi nationals like Panasonic, Honda, Coca Cola, etc struggled to keep factory lines functioning and had to enact temporary lay-offs. Apart from 120,000 direct workers another 500,000 have jobs reliant on FTZ companies.

“For this year we had to come up with a solution and we think we have, thanks to Heitor Augusto de Souza Lima and our team.”

Lima, a marine engineer with 20 years expertise and a partner at PGE, a marine engineering services company specialising in big projects, was instrumental, according to Di Gregorio, in “Operation Itacoatiara”. Superterminais module (four floating pontoons and four MHCs) will be 100m from the shore with a draft of 34 meters. “This will allow us to deal with all the types and sizes of ship we currently operate without any difficulty,” he said. Tugs from SC Navegação pulled the four large pontoons with cranes into position and now ONE, MSC and Norcoast will hire their own barge companies to tranship onto Manaus for unloading at the Superterminais facility there.

Another difference between the two operations is that Superterminais owners have bought some land just outside Itacoatiara (which itself has a small port, but not for ocean going ships) and is billeting its staff and storage facilities there, whilst PC has an extra barge midstream and is housing its staff there. Di Gregorio says Superterminais has spent around Reais55M on Operation Itacoatiara so far and Reais260M on new equipment and infrastructure at its Manaus base.

Ramesh Thadani, Manager New Business Ventures, Grupo Simoes, notes that keeping open the lines of transportation during the drought crises was “absolutely vital for the survival of Manaus and its citizens.

MASSIVE BENEFIT
“Manaus is a huge city, with 2.2M people and is locked in the middle of the jungle with no road access to the rest of Brazil, therefore the Amazon River is a vital artery for logistics and for goods, supplies and fuel to reach Manaus and remote villages so that everyday life can continue,” he told Port Strategy. “I think it is a tribute to the people of Amazonas and logistics operators here that we can come up with such Out of the Box and effective solutions when literally life-threatening problems confront us.”

“Last year Black Friday and Christmas sales were badly affected by the lack of vessels getting through so this year, these measures, along with many Manaus FTZ companies getting components in early, should ease those problems.”

Apart from those living in Manaus itself there are some 300,000 people severely affected by the drought, mainly in riverside and indigenous communities, so regular supplies from the south of Brazil and around the world are a lifeline for them.

Breaking News
As PS goes to press, it has been noted that water levels have been “even more dire than first thought,” so the onward voyage of ocean-going vessels to Manaus after unloading 1000s of boxes at the Porto Chibatao operation has been discontinued after just four vessels passed through the two choke points. The PC option -unload half the cargo and continue – is unlikely to re-appear for another month or two, say sources in Manaus.