A LIMBO OF ORPHAN IMPORTS

A LIMBO OF ORPHAN IMPORTS

The port here is packed with cargo that no one seems to want.

Thousands of containers holding imports - mostly cars and other consumer items - are sitting in warehouses throughout the port district. Importers refuse to claim the goods, according to shippers and other port businesses,

because of the recently levied 70 percent import tax. Now other shippers say they have nowhere to put their containerized cargo.The lack of space means more congestion, shipping delays and lost opportunities for shippers, especially exporters, who cannot find room for their outbound cargo.

Such is life in Santos, which is handling twice as many containers as it was built to accommodate. It's a problem facing many South American countries that lack the terminals, warehouses and general ability to accommodate the recent trade boom. And in Santos, the biggest South American port, the problems are magnified.

"It's mainly a problem with our laws," said Lilian Girotto of Armco do Brasil SA, a steel exporter. "They are very old."

Last week, the port administration, Companhia Doca Do Estadado, or Codesp, agreed to give shippers more room for their containers. But exporters like Ms. Girotto said more changes are needed if the port is to ease its congestion.

"What they are doing, I don't think it is enough," Ms. Girotto said.

Brazil has seen an explosion of imports in the past two years, mostly from the United States. In the first quarter of 1995, the volume of containers from the U.S. East Coast carrying goods to the East Coast of South America increased about 70 percent compared with the first quarter of 1994. Most of that cargo has gone to Brazil through Santos.

Brazil recently opened its doors to imports. The country adopted a new currency, the real, and its economy improved, giving Brazilians enough money to buy goods from abroad. As the U.S. dollar decreased in value, U.S. exports became hot items for Brazilians.

"It was like a fever," said Reiner Weitbrecht, the marine-sales manager for ZF do Brazil SA, an auto-parts importer and exporter.

"But we were closed for so long," he said. "And you cannot open it so suddenly. The port was not prepared for it."

Imports flooded Santos. The container terminal, Tecon, which was built in 1982 to handle two ships at a time and about 144,000 containers a year, has been handling about three ships at a time and moving about 280,000 containers a year.

Containerships can wait up to 10 days to get to Tecon, said Cyro Marcondes, the traffic manager for Hamburg-Sud, one of the ocean carriers serving the South American trade. When cleared, ships have to run an obstacle course of other vessels anchored six miles from Santos waiting for berths.

Some ships in the trade have their own container cranes. These the port shoehorns along the terminals opposite Tecon. The ships often have to shift daily to make room for more vessels.

But the work is slow at the other terminals because they lack the space, cranes and other equipment to handle a large containership adequately. Trucks picking up the containers don't have enough room to move around for the boxes. On the average, workers load and unload between eight and nine containers per hour. At Tecon, workers can almost double that rate.

STRONG DOCKSIDE UNIONS

The physical constraints of the port are only part of the problem. The Brazilian dockside unions are strong, and some of the work rules in Santos can cost time and money.

While the dockworkers will work at Tecon for 23 hours, they work at the other terminals for only 18 hours, not including breaks for lunch and dinner.

Carriers have to pay for full 12-man gangs even though they only use about three people from each gang at a time, said Oswaldier Vaghetti Perez, South American operations manager for Crowley Agencia Maritima, the agent for Crowley American Transport, the shipping line that handles more volume in the trade than any other.

Exporters agree. "We have to pay for people even if we don't need them," Mr. Weitbrecht said. "They'll say you (need to) hire 40 people to work, even if you only need 10."

ILL-PREPARED FOR CARGO GAINS

Mr. Weitbrecht said that with its outdated equipment, terminals and working practices, Santos was ill prepared for the increase in cargo it has seen in the past two years.

But foreign goods were usually cheaper and of better quality than those made in Brazil, he said. So importers kept bringing in the cargo. Containers packed the ports, and the terminals struggled to keep up with the flow.

In an effort to slow the volume of imports and ease the congestion, the Brazilian government started to increase the import tax. It went from 10 percent to 30 percent, but importers could still make a profit, Mr. Weitbrecht said. They kept bringing in the cargoes, stockpiling them cargo around the port.

A few months ago, the Brazilian government raised the tax to 70 percent. It was no longer profitable to import cargo. "A lot of importers, they just got out of the business," Mr. Perez of Crowley said.

CARGO LEFT BEHIND

And, since goods are paid for after they are picked up from the port, the importers decided to leave their cargoes behind. Containers of imports filled up the bonded warehouse.

Shippers and shipping agents had to scramble to find room for other goods, especially containers of Brazilian exports. The country has had a trade deficit, and it has been trying to increase the volume of goods it ships out of the country.

As it turned out, containers were lost. Ships were missed. Cargo had to be rolled to other ships. "We were supposed to have parts at this plant in two weeks," Mr. Weitbrecht said. "Instead, it took four. People like it just in time."

Luciano Bastos of Sifco SA, another auto-parts exporter, said, "Our biggest problem is where to put the cargo."

By law, importers are supposed to move the cargo out of the bonded warehouses within about three weeks. After that, it is supposed to be put for sale at a public auction. "But there is cargo here that has been here four to six months," Mr. Bastos said.

"Four months," Mr. Weitbrecht said. "That's incredible."

YEAR IN WAREHOUSE NOT UNUSUAL

It's not uncommon for cargo to sit in the bonded warehouses for a year, Mr. Perez said. Shipping agents have to find places to put other containers, and then they have to find them when the ships come in for cargo. It only adds to the relatively long port calls for ships in Santos. The longer the ships stay in port, the more money it costs the ocean carriers. To make up for some of the lost time and money, the carriers have tacked on surcharges to their rates.

Port officials said a new board of directors has recently taken over the port and is studying the problems. Last week, Santos opened up more warehouse space for import and export containers.

Exporters and other business people at the port say it isn't enough. They want to see better terminals, altered work rules, and changes in customs and other regulations to move cargo faster through the port.

Ms. Girotto said, "They have to review everything."