MercoPress. South Atlantic News Agency

Brazil exporters anticipate May/June port chaos with soy, sugar and corn crops coincide

Logistics costs and operational inefficiency are distancing Brazil from globalization, warned de Castro

The logistics chaos in the Brazilian port of Santos (one of the busiest of the country) in mid March with the first shipments of a record soy crop will become even worse in May and June, according to the Jose Augusto de Castro, president of the Brazilian Association of Foreign Trade, AEB.

“The problem was evident with the shipment of small loads of soybean, imagine when this coincides with the rest of the crop plus that of sugar and corn”, said de Castro who described the March difficulties as ‘virtual’ which he anticipated will become ‘real’ in May and June.

De Castro further warned that in the event of a drop in the international price of commodities and the current logistic loading difficulties, it will make Brazil lose competitiveness.

“Currently we can live with it; as long as prices remain high, but if we were to return to prices of say 2000, the country can go broke” said de Castro during his presentation last week at the Infraportos conference parallel to the Intermodal fair in Sao Paulo.

The expert recalled that trading prices for soybeans, sugar and minerals (iron ore) have started to slide with “soybeans that reached 580/590 dollars a ton down to 530 dollars currently and should fall even more when the US crop reaches the market”.

De Castro also warned that the very high logistics costs and operational inefficiency are distancing Brazil from globalization and making the country far less attractive for investors.

Pedro Brito, head of Brazil’s National Agency of Aquarian-transport, Antaq, also confirmed that the country needs desperately to improve the ports’ infrastructure to increase the competitiveness standards of Brazil.

Brito said that a framework of clear, stable and long term rules, plus a considerable reduction of the bureaucracy is essential to attract investments.

“It takes 5/7 days to liberate a full cargo in Brazil compared to one day in advanced countries and two in the Asian countries. That is not what we need or what we want, it must change”, said Brito. He added that “the cost of this end bill then has to be paid by the freight, the end consumer, the exporter or the importer”.

Brito said it was necessary to develop alternative storage capacity, cheaper and more competitive, and mentioned the Porto Vila do Conde and Itaqui as examples for soybeans.

But he also insisted in storage investments since Brazil only has sufficient capacity to store 30% of the current soybean crop, while “in the US they have a two-year crops capacity”.