May 2, 2012

CNA Officials Tour Chinese Ports Hope to Improve Brazil Ports

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

As part of their goal of expanding trade relations between Brazil and China, officials from the Brazilian Confederation of Agriculture and Livestock (CNA) recently toured Chinese ports while they were in China to inaugurate a CNA office in Beijing. Led by CAN's president, Senator Katia Abreu, the group toured the ports of Yangshan, Shanghai, and Tianjin to assess what Brazil needs to do to improve its port operations and lower the cost of exporting grain.

The movement of products through Brazilian ports has not been able to keep pace with the expanding grain production. Chronic congestion and inefficient operations drives up the cost of exporting grain out of Brazil. The many problems at Brazilian ports include: a lack of berths resulting in long wait times to load, shallow drafts limiting the size of ships, lack of ship covers resulting in loading operations being suspended any time there is a threat of rain, inadequate infrastructure including storage units and ship loaders, and bureaucratic slowdowns.

The draft of Brazilian ports averages 12 meters, which is not enough to accommodate the largest vessels, whereas the major ports in China have a draft of up to 21 meters, which can accommodate vessels up to 300,000 tons.

At the Port of Tianjin for example, which is the fourth largest port in the world and the third largest in China, the maximum waiting time to berth is three days during periods of heavy traffic. The majority of the time vessels can berth within a day of arrival at the port. In contrast, wait times at Brazilian ports can be as long as two to three weeks during the peak shipping season. In addition to long lines of vessels waiting to load, there are also exceptionally long lines of trucks waiting to unload at Brazilian ports. The Chinese ports are also serviced by efficient rail and highway systems, something that is not available at Brazilian ports.

Many infrastructure improvements in Brazil are slow to materialize due to the lengthy time needed to conduct environmental impact studies. In China, environmental impact studies for proposed infrastructure projects are usually concluded within one year, whereas in Brazil, these studies can take up to five years.

In 2011, the Port of Tianjin (the third largest in China) handled 11 million containers, while at the Port of Santos, which is the largest in Brazil, they handled 1.9 million containers. Each container crane at the Port of Tianjin can handle 35 containers per hour and the port as a whole handled 430 billion tons in 2011 and it is expected to handle 450 billion tons in in 2012.

Getting the grain to the ports of Brazil is also very inefficient. Over 60% of the grain in Brazil is transported by trucks over very long distances and poor roads. At the peak of the soybean harvest season, it can cost more than US$ 3.00 a bushel to transport grain from central Mato Grosso to the ports of Santos and Paranagua in southern Brazil.