Between trucks and vessels: infrastructure bottlenecks hamper fruit exports in Brazil’s Ceará

A melon planted in Ceará soil goes a long way before being sold in Spain. It goes through potholed roads, inspection posts at customs facilities, and crosses the ocean in an air-conditioned container.

Fruits are among the main export products from Brazil’s Ceará. According to data from the Secretariat for Economic Development and Labor (Sedet), this market segment has moved US$ 26,475,157 in the first half of 2022.

See below the track record of fruit shipments from Brazil in terms of TEUs from January 2021 to June 2022. Datamar’s business intelligence team collected the data below through the platform DataLiner, available for a demo here.

Fruit exports | Jan 2021 – Jun 2022 | TEUS

Source: DataLiner (click here to request a demo)

Business

The year’s first fig harvest from Japanese producers in Ceará should lead to 100 tonnes of yields. However, the number represents a drop of 13.8% compared to the same period last year, a reflection of adverse weather conditions, which reduced productivity, according to the Executive Secretary of Agribusiness at Sedet, Silvio Carlos.

He points out that Ceará’s producers have suffered from the increase in freight costs, but there is still foreign demand and interest in exporting, especially for fruits with higher added value.

For producers and specialists, the export figures could be higher with investments that improve the logistical infrastructure for sending the fruit.

Time is a central issue when it comes to fruit transport. As perishable items, any delay can cause a total or partial loss of cargo, harming the producer.

With international logistics still struggling to recover from the pandemic’s production shock and bottlenecks observed in the state of Ceará, delays have become the norm, affecting exports.

Problems in international logistics and rising costs

When the pandemic arrived, global logistics turned upside down. The need to close ports to contain the Covid-19 infection caused bottlenecks on ships, difficulty in obtaining containers, and, in general, delays in departures and arrivals.

According to Larry John Rabb Carvalho, a lawyer specializing in international commerce, transportation, and infrastructure, international transport has lost its predictability, which was critical for freight transit. “Eighty percent of the docking windows were followed at the terminals. And then, we came to the point where only 30% of the vessel schedules were correctly followed due to port congestion, which directly impacts fruit logistics, since everyday matters,” explains.

The logistics director of the Brazilian Association of Exporters of Fruits and Derivatives (Abrafrutas), Alexandre Duarte, points out that these circumstances have reduced the competitiveness potential of Brazilian producers in the international market.

“Before the pandemic, a maritime container loaded with 25 tonnes of melons used to cost US$ 3 thousand to leave Fortaleza for Europe. Today, that same container costs US$ 8,000 because there is a lack of containers, vessels, and workforce. He contextualizes that the cost has tripled, a topic of discussion in Brazil, the United States, and Europe”.

This entire scenario is not expected to be fixed this year, at least not yet. For Larry, it’s a matter of time.

“When we talk about ship logistics, we have to deal with a lot of supply and demand; there is a limited amount of ships and an increasing need. This caused a collapse in several nations’ port economies, as they were overcrowded due to the increased demand, making them unable to remove cargo rapidly. On the other side, the Asian market, particularly China, is closing terminals in a zero-tolerance approach, causing a damming of ships and cargo,” he says.

Race against time

Every minute counts when transporting fruit. A truck’s delay, for example, might cause the goods to miss catching a ship that won’t arrive until the following week.

Similarly, a closed or bottled port might extend the travel to the final customer by many days. Meanwhile, the entire shipment may spoil.

“The need to coordinate timing is the market’s greatest challenge, which is why [fruit export] logistics need 24-hour attention. Any cargo omission, any missed container, can result in more fruits perishing. The logistics are really hard,” Larry explains.

The fruit is picked when it is still green to extend its shelf life. Containers require refrigeration throughout the whole transit process, whether on the truck or the ship.

Alexandre Duarte explains that each fruit has a special treatment to delay the ripening process and avoid wear and tear on the product. For example, if a banana is subjected to too low a temperature, the skin can be burnt, harming the sale later.

Larry believes that a 24-hour operation of inspection and consent bodies is required to grease the gears of all port logistics, preventing operational delays.

“I feel that modernization and an increase in the number of professionals in consenting bodies, as well as 24-hour operation with the essential staff, are two aspects that may be improved. You end up choking if you don’t have the organs operating at full capacity to allow things to flow,” he says.

Plane or ships

Time is essential, but fruits are low-value-added products, and costs speak louder when defining the best mode of transport. As much as a trip by plane is much faster than by ship, the prices are also proportionally higher.

According to Alexandre Duarte, while a maritime container takes around nine days to leave Fortaleza to Spain, a plane arrives at its final destination at 6:30 am. So, naturally, the lead time weighs on the producer’s pocket. “Today, the average fruit fare from Fortaleza to Europe is US$ 0.40/kg. It is US$ 0.30/kg for non-perishable goods. If you take the same item and fly it, the cost is $1.2/kg,” says Abrafrutas’ logistics director

Another issue that makes fruit transport by air unfeasible is the limited capacity of planes. According to Abrafrutas’ logistics director, while an aircraft carries a maximum of 10,000 kilos, the ship has no weight limit.

In addition, flight logistics are more competitive, given the lower availability of cargo flights from Fortaleza to Europe. Because of this, the modal is prioritized for fruits that are too sensitive for maritime transport or have more added value.

“Papaya is very sensitive. If it takes ten days, it has a high chance of reaching a high ripening point and being unable to sell. It may be much more expensive, but you make fruits arrive on time”, he exemplifies.

Larry John adds that some countries are willing to pay more to get the freshest fruit, but that rarely happens.

It is not by chance that Ceará has been investing in producing fruits with greater added value, such as pitaya and cocoa.

Choosing a port

The port chosen for cargo shipping is determined by the weekly availability of ships sailing through the country. Therefore, producers from Ceará can use other ports in the Northeast, such as Natal or Salvador, in addition to Mucuripe and Pecém, depending on availability and pricing.

For the director of Tropical Nordeste, Edson Brok, given the current high freight costs, prices are crucial to choosing from where cargoes will be shipped. For example, the company exports Cavendish bananas weekly to Spain and England.

“Some ports are more bureaucratic than others, but we can tolerate it depending on the price. For example, I wouldn’t pay extra to ship from Pecém. However, even though Pecém may be more modern, the access road is terrible, which makes me prefer Mucuripe,” comments Edson Brok, director of Tropical Nordeste.

The company produces bananas daily on the farm in Limoeiro do Norte, in Ceará’s hinterland. Part of the cargo ships instate, and part can be taken to Natal to embark on a second call before the vessel departs to Europe.

On top of the costs, Brok points out the lead times are also fundamental for choosing a port.

“Pecém and Mucuripe get a strategic position because they are specialized in refrigerated containers. It takes 12 days to travel from Mucuripe to Europe and 15 days from Salvador. How much do these three days cost?” he inquires.

Agrícola Famosa’s partner, Luiz Roberto Barcelos, says that the company sends cargo in two ships a week during the harvest period between August and April. However, according to him, it has not yet been decided which port will be chosen for this year since there were losses due to delays last year.

“We prioritized Pecém till the last harvest, which took our largest volumes. We are discussing our approach for the next crop, so we are unsure what will happen. We may see a drop given the particularly high lead times. The previous two harvests were challenging, he complains”.

From the port and beyond

The ports work in berthing windows, according to calls. A ship usually stays between 12 and 24 hours stopped in the port for the operation, and, after that, it may not return until the following week.

It is common for cargoes to arrive at the port before the ship docks to avoid delays. Containers can wait for 1 to 3 days, plugged into outlets, so they don’t lose refrigeration.

The commercial director of Companhia Docas Ceará, Mário Jorge Cavalcante, explains that the cargoes that arrive at the port undergo inspections by the Ministry of Agriculture and the Federal Revenue.

‘These bodies inspect according to their regulations. They set the limits, the volumes. After being inspected and cleared by these two bodies, the container is released. When the ship arrives, the operators arrange the loading,” says Mário Jorge Cavalcante, Commercial Director of Companhia Docas Ceará

According to him, the port of Mucuripe receives one ship to send fruit per week between the two main crops and two in the harvest period, from August to January. In total, each ship supports between 200 and 300 containers.

The fruits that leave Ceará go mainly to the ports of Rotterdam in Holland, Algeciras in Spain, and Antwerp, in Belgium. This journey can take between 9 and 12 days.

After the fruits arrive at their destination, they are removed from refrigeration and exposed to ethylene, allowing the ripening process to begin. Then, once they mature, they are spread throughout the countries.

Investment in infrastructure

For specialists and business people, the export of fruits from Ceará could be leveraged with greater investment in infrastructure, whether in port or road.

Alexandre Duarte considers that there needs to be a decentralization of logistics modalities in Brazil beyond the Rio-São Paulo axis, but this also depends on the state’s economic development.

“What is the point of an aircraft or vessel departing from China and arriving in Ceará empty? It cannot be empty; it must contain something. The goods that arrive and depart are what make the round journey possible. Airlines and seafarers ponder what they will bring to the Ceará port. Then, they take them to São Paulo since there is minimal demand,” explains Alexandre Duarte, logistics director of Abrafrutas.

According to him, little has evolved in logistics in Brazil in the last 20 years, and Ceará is just one piece of this puzzle. Moreover, he considers that investment and government control are lacking for the situation to improve.

“There is little investment in ports and airports to improve Brazilian logistics. It’s no use selling and not being able to export. We have requests from people in Israel and Qatar. But how will we get there, at what price?” he criticizes.

Edson Brok also points out that the state’s infrastructure has to be renovated.

“Infrastructure cannot depend on economic growth. It has to be done before growth. Here, unfortunately, we don’t have one or the other. All infrastructure is outdated. It needs maintenance and versatility,” he says.

Source: Diário do Nordeste

To read the full original article, please go to: https://diariodonordeste.verdesmares.com.br/negocios/de-caminhoes-e-navios-exportacao-de-frutas-enfrenta-gargalos-de-infraestrutura-no-ceara-1.3259227

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