Closed port in Turkey concerns cotton exporter

The effects of the earthquake that hit Turkey and Syria at the beginning of the week are worrying Brazilian exporters of agricultural products, especially cotton. The Turkish port of Iskenderun, hit by fire after the earthquake, remains closed. The country is the fifth main destination for cotton exports from Brazil. A total of 221,000 tons of lint were sent to that market in 2022, 13% of total shipments for the year.

The National Association of Cotton Exporters (Anea) does not have an estimate of how many ships with lint containers are en route to Turkey. The port of Iskenderun, in the south of the country, is the main entry point for Brazilian cotton into Turkish territory and it may take up to six months for operations to return to normal.

“The region affected by the earthquake concentrates a large number of companies in the Turkish textile sector and suffered a lot of material damage, in addition to loss of life,” said Miguel Faus, president of Anea.

“We have received initial estimates that it will take six months to return to normal operations. Cargoes are being diverted to the port of Mersin [also in Turkey], which was already quite congested. As a result, new cotton exports are already being impacted by this tragedy,” he added.

Brazilian and Turkish traders exchange preliminary information on the impacts. There is a special concern with the city of Karamamaras, one of the main centers of cotton consumption in the country, and which was one of the epicenters of the earthquake that hit the country.

There is no forecast for the reconstruction of the site or the resumption of normal business. It is there that the headquarters of Kipas Mensucat Isletmeleri AS, the largest Turkish textile industry, are located.

Turkey’s General Directorate of Maritime Affairs said on Twitter on Wednesday that the fire has been brought under control at the Port of Iskenderun, but that services are unavailable. “Ships on hold must head to other facilities. There are no obstacles to operations at other port facilities in the Gulf,” he said in the publication. On Thursday, the authority said that more than 1,000 containers are separated at the site and that “rehabilitation of the port will begin immediately”.

See graph below for a history of Brazilian cotton exports to Turkey from 2019. The data is from DataLiner:

Brazilian Cotton Exports to Turkey | Jan 2019 to Dec 2022 | WTMT

Source: DataLiner (click here to see a demo)

The A.P. Moller Maersk, one of the world’s largest shipping companies, said on Wednesday that it will not be able to deliver cargo currently in waters bound for the Port of Iskenderun, but will keep containers at nearby ports and hubs for the next three weeks at no extra cost.

The company also offered agreements to change the destination of cargo to other ports in Turkey, with repackaging, operational and administrative fees. To divert cargo to ports outside Turkey, Maersk will waive these charges, but customers will be responsible for “extra stowage and displacement costs, in addition to the difference in sea freight from the new destination”.

Frederico Favacho, from Santos Neto Advogados, said that the company’s movement is positive. The charging of extra fees for changing ports, for example, could be discussed in view of the force majeure clause that governs this type of contract. “I understand that Maersk is anticipating possible discussions and taking the opportunity to make a good strategy for customer loyalty”, he told Valor.

Specialist in agribusiness and logistics, Favacho serves the main associations of exporters in the sector. According to him, there is a double challenge for traders in this situation, as the ports where ships can be diverted are overloaded due to the war in Ukraine.

He emphasizes the importance of analyzing the contract, talking to contractors and understanding the specific situation of each load to find out the best alternative. “You have to see what is more worthwhile. For some it may be a case of terminating the contract, paying the fine and selling the product to another location, ”he pointed out. “It’s a matter of putting costs into the spreadsheet,” he explained.

Brazil also exports soybeans, sugar and cellulose to the region. At least three ships are under way right now – the journey takes around 20 days. Two vessels carry soybeans. They set sail from Santarém and Itacoatiara, in Pará. From Rio Grande (RS), a soy bran shipment was destined for Turkey, according to information from the National Association of Cereal Exporters (Anec).

Source: Valor Econômico

To read the original report, visit: https://valor.globo.com/agronegocios/noticia/2023/02/12/porto-fechado-na-turquia-preocupa-exportadores-de-algodao.ghtml

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