February 6, 2017

Brazilian Government Announces Upgrade of Port of Santos

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian government announced late last week an R$ 369 million upgrade of the Port of Santos. The upgrade includes dredging the channel leading to the port, dredging the berths, and improvements at the berths.

The improvements were announced by the Minister of Transportation, Ports, and Civil Aviation, Mauricio Quintella Lessa. The most important component of the project is the dredging. The dredging will increased draft of the channel and the berths allowing for faster and safer entrances and exits from the port. This will speed up loading and unloading resulting in reduced wait times and reduced costs. The company in charge of the dredging will have 17 months to complete the project.

The Port of Santos is Brazil's leading port responsible for moving approximately one-third of Brazil's exports and imports. Santos is the leading port for the export of agricultural commodities such as soybeans, sugar, corn, cotton and meat products. It is also the leading container port in Brazil moving 3.8 million containers in 2015.

The Port of Santos was responsible for moving 113.8 million tons of cargo in 2016, which was 5% less than the record amount set in 2015. A two-year long recession in Brazil has reduced the amount of goods moving through the port. In 2016, a total of 4,723 vessels docked at the port for 81.4 million tons of exports and 32.4 million tons of imports.

With the United States pulling out of the Trans Pacific Partnership (TPP) and threatening to undo the North American Free Trade Agreement (NAFTA), the Brazilian agricultural sector is anticipating a greater market share of the world's agricultural exports.

The Minister did not specifically say that the upgrades to the port were in response to the United States potentially pulling back form world markets, but it is part of a larger pattern in Brazil involving the upgrading and expansion of all the ports important to the agricultural sector.