March 20, 2012

Director of the Port of Paranagua Replaced

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

The Governor of Parana, Beto Richa, announced late last week that he is replacing the director of the Ports of Paranagua and Antonia as of yesterday, March 19. The new director is Luiz Henrique Dividino and he will replace Airton Maron. The Governor and the secretary of Infrastructure and Logistics for the state indicated that the change was made in order to insure a more rapid pace of modernization at the two ports in the state of Parana. Mr. Dividino is 48 years old and was director/president of a private terminal at the Port of Antonina.

The Port of Paranagua, which is administered by the State of Parana, used to be the principal port for grain exports from the state of Mato Grosso, but it has been surpassed in recent years by the Port of Santos in the state of Sao Paulo. One of the problems at the port has been the lack of significant increase in the grain handling capacity even though grain production in Brazil increased greatly over the last decade.

The soybean production in Mato Grosso has nearly tripled since the year 2000, but the amount of soybeans from the state that are exported through the Port of Paranagua is nearly identical to what it was in 2000. The increased production and exports from the state has been directed to the Port of Santos and to other ports in northern Brazil. The principal reason for the increased exports at Santos is the fact that the only railroad operating within the state of Mato Grosso is operated by America Latina Logistica and it terminates at the Port of Santos. Therefore the Port of Santos is the natural beneficiary of the increased rail activity and 63% of Mato Grosso's exports now move through the Port of Santos.

Even though the railroad terminates in Santos, the Port of Paranagua could remain competitive were it not for the ongoing congestion that continues to plague the port. A case in point occurred just this past weekend when one of the grain terminals at the port was closed on Friday due to alleged problems with documentation with the company that administers the terminal. As a result, the line of trucks waiting to unload at the port quickly swelled to nearly 17 kilometers. While the line of trucks has since dissipated, there are still 33 vessels waiting to dock at the port and the wait time to load grain is in excess of 20 days. This ongoing congestion at the port increases the cost of operation and makes Brazilian exports more expensive than they need to be.

There have been multiple plans put fourth for modernization and expansion at the port, but no construction has actually begun and the change in directors may be due to the lack of progress on implementing the modernization plans.