Cargo Giant Maersk Seeks Increased Investments in Santos Port for Draft Expansion

Port Of Santos Is One Of Those In The Privatization Process Through The National Bank For Economic And Social Development (BNDES), Commissioned By The Ministry Of Infrastructure.

In a statement sent to the Press, Maersk in Brazil informed that its president, Julian Thomas, has requested an increase in investments to develop the infrastructure of Brazilian ports, especially the Port of Santos in São Paulo. The location is in the process of privatization in a project coordinated by the National Bank for Economic and Social Development (BNDES), commissioned by the Ministry of Infrastructure. The giant in cargo handling wishes to see the draft expanded to 17 meters already in the first phase of the concession.

Currently, the Port of Santos – the main port complex in Brazil – operates with a draft of 14.45 meters. “This is the most critical investment to maximize the potential of the country’s largest port complex,” analyzes Thomas.

According to data from the privatization process of the Port of Santos, if the draft reaches 17 meters by 2026, it would generate savings of approximately R$ 45 million.

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This anticipation would generate additional costs with maintenance dredging of about R$ 40 million annually, from 2026 to 2033. The benefits generated by economies of scale, as well as the potential for an expansion of export and import markets created by a deeper port, outweigh the additional cost of maintenance dredging.

“The direct expansion will make the port more competitive. Therefore, splitting it into two phases would not be efficient,” emphasizes the president of Maersk in Brazil. “Almost every container ship that comes to Brazil also stops in Santos. If the Port of Santos has a limitation that prevents the operation of the most efficient ships in the country, it impacts all other ports, as well as the development of the Brazilian economy,” justifies Thomas.

Increase in Channel Depth Will Allow Access for Larger Ships

Increasing the channel depth to 17 meters will allow larger ships to access the Port of Santos, such as those of 15,000 TEUs, compared to the 9,000 TEUs ships that currently dock there. The anticipation for a draft of 17 meters would allow the additional transport of 1,700 to 2,300 TEUs per call in the first year of the new depth establishment.

The demand for maritime transport at the beginning of the coronavirus pandemic increased due to e-commerce. The import freight from Asia to Brazil reached US$ 11,150 in January of this year, representing a value 5.7 times higher than that of January 2020 (pre-pandemic period). The surge was over 470%.

Thus, there was an increase in investments in the hiring of new ships globally. According to Julian Thomas, the new ships expected to enter operation in 2023 have a capacity of 22,000 TEUs. 

Container Terminal Auction at the Port of Santos Has Controversy Involving Maersk

The possible participation of Maersk in the bidding for a megaterminal of containers (STS10) has generated debates among representatives of naval sectors. There is a fear that there will be excessive market concentration by the global giant or MSC, another company operating in naval logistics worldwide, which may also lease the space.

The opinion of the Brazilian Association of Terminals and Customs Warehouses (Abtra) is one of concern. Shipping companies choose where to park their ships and pay terminals for that. Naturally, the company prefers to dock at its own terminal.

On the other hand, the opinion of Terminal Investment Limited (TIL- MSC) is that the fear is unfounded, as the complaints come from parties interested in the STS10 auction who do not want competition.

“The history of Terminal Investment Limited in the world is not predatory; it is one of development, job creation, and maintaining prices at market values. Those who are speaking out (against the companies) want to participate and do not want us to enter the competition,” comments the director of terminal investments at TIL, Patrício Júnior.

The government has prohibited the participation of Maersk and MSC in the auction for the megaterminal at the Port of Santos. However, companies will be able to compete separately or in a consortium with other groups.