After two years of lobbying Santos Brasil signs up for US$324m expansion plan
After the longest of waits Santos Brasil, South America’s biggest box terminal operator, has finally been granted a 25-year extension to its original concession agreement at the port of Santos and will now spend more than US$324million on expanding its Tecon Santos facility, where it expects to handle around 1.85million TEU by the end of this year: a 33 percent share of the overall total.
With the Special Ports (SEP) Minister Edinho Araujo signing the new contract extension into law, Santos Brasil will now uphold its promise to invest a further Reais 1,276,859,296.07 billion (the exact amount reported by Santos Brasil to the Sao Paulo Stock Exchange and SEP which is $324.397million) into its Tecon Santos terminal by the year 2047.
“The early extension of Santos Brasil will provide the largest port in Latin America with yet another high-capacity container terminal with extra efficiencies that will allow Santos and the country to receive larger, even more modern ships for the coming decades. It will boost our international trade and reduce the transport costs for Brazil,” the minister Edinho said in a statement to the press. 700 and 1,200.
The money will be spent on extending the current pier from 980 metres up to 1200 metres (allowing for the berthing of vessels up to 13,000 TEU capacity and for three ships to berth simultaneously, as opposed to current two), a much improved rail connections, six new post panama Ship to Shore Gantry Cranes (SSGCs), 44 new RTGs, 16 more RMGs and 140 new terminal tractors. Dredging from port authority will also improve the current draft of 13.2 metres down to 15 metres.
Works and tenders for new equipment will commence next year and be completed by 2020, promised Santos Brasil.
This will thereby boost capacity up to 2.4 million TEU per annum (up 20 percent from 2million TEU) and create even more capacity in South America’s leading port for containers (with 3.685million TEU handled last year). Of that Santos Brasil handled 1.37million TEU or about 38 percent of the market.
Santos Brasil put in their application for an extension shortly after the new Brazilian Port Law – which was enacted in July 2013 – allowed for such early extensions as part of a sop to private port terminal operators operating in the public, organised port areas. They had been arguing, especially through Abratec (the association representing this category of container terminal) that the new Private Use Terminals (TUPs such as Portonave in Navegantes, Porto Itapoa, near Sao Francisco do Sul, and Embraport in Santos) had an unfair advantage because they did not have to use the expensive unionised port labour force from OGMO.
The Santos Brasil expansion and extra capacity for Tecon Santos will be pleasing to shippers, especially in the industrialised state of Sao Paulo which is served by Santos, who have seen terminal handling charges fall by around 30% over the past 18 months but will not be music to the ears of Ecoporto Santos, one of the smaller terminal operators which is losing business as carriers slash services and/or switch to the larger terminals in Santos.
Santos Brasil’s managers and shareholders have been holding back from investing more money into their Tecon Santos facility because of the “lack of a level playing field” vis a vis the various TUPs but now it will be full steam ahead to add more capacity that will allow the Guaruja facility to handle vessels of up to 13,000 TEU capacity: today they can barely handle 10,000 TEU ships.
Since becoming one of the first port terminals to be privatised in Brazil back in 1997 – following the previous port law of 1993 – Santos Brasil has spent some Reais3.2 billion on the Tecon Santos terminal and has also opened up box handling facilities in Vila do Conde (in the north of Brazil) and at Imbituba (in the south).
Sources in Santos told Port Finance International that the file to extend Santos Brasil’s contact, which is due to expire in 2022, has been sitting at the top of Araujo’s In-Tray ever since he took over the role of Port Minister, back in January of this year. It was also understood to be at the top of the pile of his two predecessors – Cesar Borges and Antonio Henrique Silveira.
And many of those same sources have been mystified as to why there was such a long delay in approving the extension especially when Libra Terminais got extensions to their two terminals (T-35 and T-37) in controversial circumstances and despite owing Codesp, the Santos port authority, Sergio Salomão, the president of Abratec (which represents the private container terminals operating in the organised port area) has been lobbying for several years for a “more level playing field” ever since Portonave (where MSC Line has a strong connection) came on the scene back in 2007, to be followed by Porto Itapoa and Embraport.
“It is a good thing that first Libra Terminais and now Santos Brasil have been granted concession extensions,” Salomão told PFI. “We now hope that extensions for Wilson, Sons’ two port concessions – in Salvador and Rio Grande – plus TCP in Paranagua will follow soon.” Santos Brasil is the sixth existing concession to be granted an extension, and the second container terminal, after Libra Terminais
Source: Port Finance International
Source: Port Finance International