November 4, 2014

Brazil's "Northern Arc" of Ports take on Bigger Roll

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

With Brazil potentially producing another record large soybean crop in 2014/15, there are concerns if Brazil is increasing its infrastructure fast enough to handle the added influx of exports. The best long term hope for infrastructure improvements in Brazil is probably the development of ports in the northern and northeastern regions of Brazil known as the "Northern Arc" of ports.

These ports are located on the Amazon River and the northern Atlantic Coast. The Amazon River ports include: Itacoatiara in the state of Amazonas, Santarem in the state of Para, and Vila do Conde in the state of Para. The ports along the Atlantic Coast in northern Brazil include: Itaqui in the state of Maranhao, Salvador in the state of Bahia, and Ilheus in the state of Bahia.

There has been a lot of emphasis in recent years to expand the capacity of the existing ports in northern Brazil and to locate new ports in the region as well. These six ports are in the midst of increasing their export capacities by 6 million tons, but the biggest increase in export capacity is expected when numerous barging operations come on line over the next few years.

Most of those new barging operations are located at the city of Miritituba, on the Tapajos River. The Tapajos is a tributary to the Amazon River and there are seven grain companies in the process of constructing barging operations at that location. Bunge's operation is already up and running and they expect to barge two million tons of soybeans in 2015 to the mouth of the Amazon River where the grain would be loaded onto ocean going vessels. After all these barging are operational, it is estimated that 20 million tons of soybeans and corn will move through these facilities to ports on the Amazon.

The grain that these barges will haul will come from the state of Mato Grosso. Mato Grosso is the largest grain producing state in Brazil and the major highway in the state, BR-163, runs straight north from the grain producing regions of the state to the Tapajos River. Eventually, it is expected that the majority of grain exported from Mato Grosso will go north to the Amazon River instead south to ports in southern Brazil.

The increased capacity of these northern ports will take some of the pressure off the two main Brazilian ports of Santos and Paranagua. These two ports have traditionally been the main exit point for soybeans, corn, sugar, and meat exports from Brazil.

Both ports made significant improvements in their operations in 2014 that increased their capacity and eliminated some of the chronic congestion problems at the ports. The Port of Santos made strides this year in controlling the influx of trucks arriving at the port. They instituted a computerized scheduling system which only allows trucks to enter the port if they were called in by the port. This has eliminated the chronic congestion on the local highways to the relief of local residents.

The Port of Paranagua improved operations by opening an "Express Line" for vessels loading from a restricted number of warehouses. This express line is thought to have improved the efficiency of the port by 10%. Both ports have improvements underway that will further increase capacity and improve operations.