Shipping lines and shippers are apoplectic following a court ruling that suspended direly needed emergency dredging operations to restore a draft of 13.2 meters (43 feet) at the port of Santos.
Previous draft restrictions led to the rolling of hundreds of containers and unexpected costs for shippers and carriers. A Hamburg Sud executive estimates that the 9,000-plus-TEU Cap class vessels are leaving behind more than 400 TEU per voyage, while Maersk Line put out a statement this week that said its vessels were leaving an average of 220 containers on the Santos piers each voyage.
“Right now most ships calling at Santos are full which makes it even worse,” said Julilan Thomas, head of east coast South America operations for Hamburg Sud. “We urgently need this dredging to come back on stream.”
After struggling with inclement weather, flooding, and the ensuing draft restrictions, the Santos shipping community had thought the situation was improving after emergency dredging increased the Santos draft to 12.6 meters from 12.3 meters. There was even hope that the pre-storm draft of 13.2 meters would have been restored by the end of this week.
However, that optimism was cut short by the ruling of Judge Alessandra Nuyens Aguiar Aranha, head of the 4th Federal Court of Santos, that the emergency dredging works by Dragabras interfered with a contract that had been awarded to Boskalis.
As the legal fight plays out, the Union of Santos Port Operators (Sopesp) is urging authorities to resolve the dispute and ensure dredging proceeds.
"The situation is totally unacceptable and this scenario will lead to new financial losses, as well as serious repercussions on the image of the Port of Santos, with international repercussions," Sopesp said in statement. "The Federal Government needs to act quickly, as there are dire consequences for national economy as well as the Santos complex is responsible for more than 27 percent of Brazil's foreign trade." Sopesp added that the only way to solve the dredging problems at the port of Santos is through the privatization of services.
Santos handled 3.5 million TEU last year, which made up 40 percent of Brazil’s total container throughput, so any issues loading or unloading vessels there have large knock-on effects.
“Just rolling cargo over for long periods is very costly for us. The impact on shippers is even worse.” Thomas told JOC.com “We lose out, but for shippers who want to fulfill their contracts but cannot do so because of the lack of dredging in Santos, this is a very serious problem for them.”
While Sopesp and numerous other port users are now pushing for privatization, Thomas said that efficiency was paramount.
“One option could be privatization, but whichever system you have, it has to be a system that works,” he said. “There are many models that could work, but the big question is who pays.
“The injustice of this situation today is that shipping companies are paying a kind of fee for dredging that is not just used for dredging. The fact is that if there is a new privatized scheme, what we are already paying must surely be refunded to us.”
Meanwhile, Santos is at risk of losing out on the anticipated growth in container volumes forecast for Brazil as the country shakes off the recession it has been mired in for the last few years, a transport economist told a local Santos newspaper.
Contact Rob Ward at firstname.lastname@example.org.