June 20, 2013

Lack of Inspectors is an Underlying Problem at Port of Paranagua

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

The Port of Paranagua in southeastern Brazil has been able to move 12% more grain during the first five months of 2013 by improving the efficiency of their operations. In spite of these efforts to improve efficiency, the port continues to have a huge lineup of vessels waiting to enter the port to load grain and other agricultural products. Part of the underlying problem is understaffing of federal employees that are required to inspect the grain and other products and authorize their departure from the port. Without their authorization, vessels cannot enter or leave the port.

The efficiency of the port has been increased by monitoring all the loading operations to insure they are operating at maximum efficiency. This monitoring effort alone has allowed the port to move more products during the first five months of 2013 in spite of more rain delays (40 days and counting) compared to the first five months of 2012 (30 days).

Another way they have improved efficiency has been the installation of the "Cargo Online System". Under the new system, a truck is only allowed to enter the port if it has been authorized ahead of time. This has helped to eliminate long lines of trucks and congestion along the highways leading to the port. During May of 2013, 41,200 trucks unloaded grain at the port, which was 18% more than during May of 2012. The average time to unload a truck has fallen from 36 hours to eight hours.

In spite of efforts to improve efficiency, one of the underlying deficiencies at the Port of Paranagua is the understaffing of federal employees that are required to inspect the grain shipments and authorize their departure from the port.

In order to improve port operations, the federal government launched its "Porto 24" program a month and a half ago at eight ports throughout the country with the goal of having the ports in full operations for 24 hour a day. The program has had little impact at the Port of Paranagua due to the lack of federal inspectors needed to staff their operations 24 hours per day. The vast majority of their inspections are still done during the daytime with only a single inspector on duty at night.

The Ministry of Agriculture currently has 19 employees working at the Port of Paranagua - 5 veterinarians, 11 agronomists, and 3 administrative personnel. According to the head of the Ag inspection service, the number of federal employees at the port has not increased in 20 years despite a huge increase in grain shipments. He maintains that his workforce is already understaffed during the daytime and that it would be impossible to extend inspections 24 hours per day without jeopardizing their daytime activities. Ideally, he feels they should add 5 more veterinarians, 4 more agronomists, and 8 more administrative personnel to handle the 500 operations per day that currently occur.

The port is in the process of installing four new shiploaders that will replace obsolete loaders that were installed in the 1970's. The new shiploaders will increase the port's loading capacity by 33%. Longer term plans include the construction of a new "T" shaped pier that will add numerous new berths, but the completion of the pier is still years away. In the meantime, without additional staff of federal inspectors, the port is only going to be able to make incremental improvements in the volume of grain moving through the port.

The demand for products from the port is very high as indicated by the huge number of vessels waiting in the harbor. Over the last several months, the number of vessels waiting has generally exceeded 100. The port handles grain from Parana, and part of the grain production from Mato Grosso, Mato Grosso do Sul, Goias, and Sao Paulo.