SANTOS: TO HUB OR NOT TO HUB?

Does the port of Santos, Brazil have what it takes to achieve major hub status? An interesting question in itself but all the more interesting as it is an issue that has a major bearing on the forthcoming off er of a new concession, STS10, for container handling as well as on the planned privatisation of the port management body.

There are basically two camps as regards the STS10 privatisation – one that argues that the port needs another container terminal to promote competition and another whose participants contend that the port should scale up container terminal facilities as part of a serious effort to achieve major hub status. In effect, this would allow Maersk and MSC, 50: 50 partners in BTP, the port’s largest container terminal, to jointly bid for the new area which sits adjacent to their existing terminal and in the event of a successful bid join the two facilities together into one large entity. As it stands, however, Maersk/MSC have been told they are not allowed to bid together but can bid independently or in a consortium which does not involve their existing partner in BTP.

Understandably, there is a push on by the promoters of the hub concept aimed at seeing the concept gain acceptance at a government and other influential levels. But, of course, this depends on whether Santos has all the qualifications to make it as a front -ine hub.

The first important point is location and in this respect it can be said the port is good for serving Sao Paolo, the main industrial centre, plus it has the potential to feederRio and Porto Alegre. On the negative side, it is too far south to feeder the northern part of Brazil.

The next issue is depth and there is scope for improvement here. According to Maersk, the port operates with a dredge depth of 14.45m but 17m is a more realistic requirement in terms of accommodating larger vessel sizes and coupled with this realising the associated economic benefit.

Third, Santos would function as a hub and spoke hub and as such requires good feeder coverage but at present, and up until 2027 when there is a rule change, there are cabotage rules restricting feedering to high-cost Brazilian flag vessels.

The overall conclusion is, therefore, that given the foregoing the concept of a large hub port at Santos makes only limited sense. On this basis, the best development path for the port appears to be the second option – the introduction of another operator to consolidate and expand the competitive environment.