Auction of New Santos Port Terminal Risks “Running Aground”

The lease auction for the so-called Tecon 10 – involving a 50% expansion of the STS 10 container terminal at the Port of Santos, which is currently operating at full capacity – may be postponed, despite being originally scheduled for this year.

On Wednesday, May 28, Lucas Rocha Furtado, Deputy Attorney General at Brazil’s Federal Court of Accounts (TCU), requested the suspension of the auction process for the Tecon 10 megaterminal – a project expected to move BRL 5 billion – until the court decides on the case.

The request was submitted to Antaq (National Agency for Waterway Transportation) and the Ministry of Ports and Airports.

Behind the Public Prosecutor’s initiative lies a controversy involving the current container operators at the port – including global giants – whose participation in the bidding was rejected by Antaq, as stated in the final proposal for the auction submitted by the agency to the Ministry of Ports and Airports.

In the proposal, signed by Antaq’s Acting Director General, Caio Farias, the auction would take place in two stages. In the first stage, bidding would be restricted to companies without container operations in the Santos port area to prevent market concentration. Only if no competitors show up in that phase would the process be opened to current operators.

The veto came as a surprise to the companies already operating at the port. These include BTP, controlled by the world’s two largest shipping companies, MSC and Maersk, and Santos Brasil, now under the control of the third-largest shipping company, CMA CGM.

DP World, a UAE-based company operating terminals in 75 countries, was also affected. Unlike the two aforementioned giants, DP World operates as an independent terminal operator (also known as a “white flag” operator), separate from its shipping lines.

When contacted, the operators declined to comment.

The sector highly anticipates the auction. Santos is the largest port in Latin America, responsible for 40% of Brazil’s cargo throughput. The winning bidder will build a new container mega terminal and a cruise passenger terminal.

The planned infrastructure will cover 423,000 square meters along a 1,300-meter quay. The terminal is expected to become operational in 2027 and, starting in 2034, will handle 3.5 million TEUs (twenty-foot equivalent units). The promise is a 40% to 50% increase in port throughput.

Operators are reportedly upset not only by the restricted bidding process but also by what they consider to be lax requirements for prospective bidders — including the need to have operated a terminal handling just 100,000 containers per year, less than 5% of the capacity of the future terminal, a level viewed as too low for the market.

Below is a historical overview of container throughput at the Port of Santos. The chart was prepared using DataLiner data:

Container Throughput at the Port of Santos | Jan 2022 – Mar 2025 | TEUs

Source: DataLiner (click here to request a demo)

Other major container ports, such as Shanghai, Singapore, Ningbo-Zhoushan, and Shenzhen, have highly concentrated operations. In Singapore, for example, a single global operator, PSA, handles 99.46% of container throughput across six terminals, four of which it directly operates.

The counterargument to concerns about market concentration is that having fewer operators reduces the average cost per TEU due to the larger volume handled.

In addition to the debate over whether excluding current operators – who already have scale and experience at the port – undermines efficiency at the new terminal, attention has also turned to the potential foreign bidders interested in the auction.

These include China’s Cosco – the world’s fourth-largest shipping company – and other port giants, such as Hudson Ports (USA), ICTSI (Philippines), and JBS Terminais, owned by brothers Joesley and Wesley Batista.

Risk of Market Concentration

In the proposal sent to the Ministry of Ports, Antaq’s acting director general followed a recommendation from the agency’s Regulation Department, citing the risk of container market concentration at the Port of Santos if one of the current operators were to win the contract.

According to Farias, agency intervention is necessary to protect “the public interest and users,” given the many competition-related conflicts stemming from shipping lines controlling port terminals. He also noted that Antaq has made similar decisions in past port lease processes.

In a statement, Antaq said it “champions competition and believes market concentration should be avoided.”

The agency confirmed that current operators will only be allowed to participate in a second auction phase “provided they agree to exit their existing stakes in terminals at the port complex.”

Antaq stated that the decision was based on technical criteria focused on two main indicators: market share concentration, which would exceed the 30% limit if a single operator controlled Tecon Santos 10 and another terminal, and the Herfindahl-Hirschman Index (HHI), which also showed concentration levels above acceptable thresholds for a competitive environment.

These arguments failed to convince the TCU’s deputy attorney general, who requested the preemptive suspension of the auction. According to Lucas Rocha Furtado, excluding current port operators “significantly narrows the pool of interested parties who could enhance competition and increase the asset’s value in the auction.”

He argued that violating the principle of equal opportunity among bidders would ultimately harm public finances, as “one of Brazil’s most valuable assets would be privatized under non-ideal competitive conditions.”

Felipe Kfuri, a partner at L.O. Baptista Advogados and an expert in logistics law, noted that some port auction notices do include clauses prohibiting market concentration and that the TCU has previously ordered changes to ensure fair competition.

However, he also pointed out that Antaq’s decision excludes operators already familiar with the relevant market, who, in theory, could submit more feasible bids.

“For a decision to bar certain port operators from participating in the Tecon Santos 10 auction to be legitimate,” said Kfuri, “it must be grounded in economic, regulatory, and situational factors, among other necessary analyses.”

Update: After publication, the Ministry of Ports and Airports issued a statement saying that the “National Secretariat for Ports approved the technical studies carried out by Antaq, following inputs from the public hearing. However, no value judgment has been made regarding the competition aspect, which the TCU will confirm. Nonetheless, throughout the ongoing discussions, the Ministry will continue contributing to the debate in search of the best path to strengthen the Port of Santos.”

Source: NeoFeed

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