March 15, 2013

Brazilian Ports Could Have Record Large Lineup of Vessels

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

Within one or two weeks, the number of vessels waiting to load grain at Brazil's two main grain ports is expected to surpass the record level set just one year ago. At the Port of Paranagua, there are already 89 vessels waiting in the harbor and another 20 are expected to arrive within the next 24 hours. Of the vessels in the Paranagua harbor, 70 are waiting to load soybeans or soybean meal. At the Port of Santos, there are 81 vessels waiting to load and half of them are waiting for grain or soybean meal.

The vessels that have already arrived or confirmed to arrive at the two ports represent a total of 9.1 million tons of grain or at least 10% of Brazil's total soybean production. Just to fill the current lineup of vessels, the Port of Paranagua will need to unload 148,000 semi-trucks and the Port of Santos will need to unload 80,000 trucks.

One of the problems at the Port of Paranagua is that many vessels arrived ahead of the contracted date or without any confirmed cargo contract at all. Of the 70 vessels at Paranagua, only 4 (6%) have confirmed contracts for their entire cargo, 13 (19%) have partial contracts, and 53 had no contracts when they arrived at the port. Every shipping company in the world knew Brazil was going to have a huge soybean and corn crop to export so they sent vessels to Brazil without confirmed contracts. Vessels with confirmed contracts are allowed to load as well as those with partial confirmed loads. The vessels without contracts negotiate their cargos while they are waiting in the harbor.

Last year the number of ships waiting in the harbor at Paranagua passed 100 on June 22nd. This year, that number may surpass 100 within the next week due to the loading process being slowed down by wet weather.

Over a hundred thousand trucks will arrive at the port of Paranagua over the next few weeks just to supply the soybeans needed to fill the vessels waiting in the harbor and to avoid congestion along the highways leading to the port, they have instituted a new protocol for the trucks.

They have established a Cargo Online system where every truck must be pre-registered with the port and they will not be allowed to unload at the port if they were not registered in the Cargo Online system. The new system is designed to avoid thousands of trucks just showing up at the port and wanting to unload.

The lack of storage space at the ports and limited loading capacity are the biggest cause of congestion all throughout the transportation chain in Brazil. Brazil will produce 185 million tons of grain (16 different types), but it only has storage space for 121 million tons. The farmers are years ahead in production compared to the infrastructure needed to efficiency handle the ever increasing production.

To fill the vessels waiting right now at Paranagua, it would require 2.7 million tons of soybeans and 330,000 tons of corn. The Port of Santos has the capacity to store 1.5 million tons of grain. At Santos, the vessels waiting represent 2.3 million tons of soybeans and 255,000 tons of corn.