Dispute over new container terminal at Port of Santos mounts

The future of the STS10 area at the Saboo pier, which is a strong candidate to house a new container terminal for the Port of Santos, remains a point of contention. The Ministry of Ports and Airports (MPor) has consistently stated that it evaluates expanding Santos’ capacity through leasing and densifying existing terminals.

This prolonged uncertainty has intensified the competition among major port companies, each lobbying for an outcome that best suits their business interests.

Despite years of debate over STS10, Minister Silvio Costa Filho recently announced at the Valongo Park inauguration on July 5 that his department had recently engaged in a discussion with the President’s Chief of Staff to “qualify the area” and “discuss the model.” However, 20 days later, no concrete decisions have been made. In a statement on July 27, MPor mentioned it is exploring all possible alternatives to meet the needs of the port, including market demands.

The ministry stated, “We are considering new specific terminals or expanding existing terminals to increase capacity, meet demand, and improve service levels.”

Preceding facts

In March, the minister had promised to present a definitive proposal for the concession and operation of STS10 in the second half of the year. There is a possibility that this terminal, initially intended for containers, could be relocated to Ilha de Bagres or Vila dos Criadores in Alemoa. Both solutions, however, are long-term.

Consequently, the Saboo area might be repurposed for a new cruise terminal, retain Ecoporto, which currently operates under a provisional lease extension, and expand the Terminal Portuário Brasil (BTP) operations.

Urgency

Luis Claudio Montenegro, a civil engineer, port consultant, and columnist for A Tribuna, emphasized the urgency of STS10. He stated that the Port of Santos’ current capacity is insufficient to meet market needs efficiently.

“Today, the port’s current infrastructure is currently capable of handling 3.4 million TEU without excess costs, maintaining adequate and competitive services. In 2023, we had a throughput ranging between 4.2 million and 4.8 million TEU, exceeding capacity,” he said.

Montenegro added that the port’s capacity was likely exhausted in 2019. “If the economy grows, demand increases, and costs rise, the cargo will be diverted elsewhere,” he warned.

He highlighted that, with a 63% berth occupancy rate, STS10 could add 2.4 million TEU capacity. “This would increase the Port of Santos throughput from 3.4 million TEU/year to 5.8 million TEU/year, slightly more than current volumes. But, considering a 4% to 5% annual growth rate, this capacity will be exhausted in a few years,” he explained, stressing the necessity of STS10 and other additional expansions.

“STS10 is urgent. The project is ready for submission to the Federal Court of Auditors (TCU) for validation and bidding, which takes six months. Changing this project for one that will take ten years is impracticable,” Montenegro asserted.

He reiterated the need for idle capacity to avoid port queues. “In 2019, we had a nine-hour queue, which was the minimum cost. But queues have reached 40 hours. When the occupancy rate hits 63%, investment is needed. The container berth occupancy rate at the Port of Santos last year was 87%, indicating chaos,” he said.

Please refer to the chart below to see how the Port of Santos fared regarding container exports and imports between January 2021 and May 2024. The information was derived from DataLiner.

Container Exports & Imports at Santos Port | Jan 2021 – May 2024 | TEUs

Source: DataLiner (click here to request a demo)

Diverging Views Among Container Terminals

Container terminals at the Port of Santos have differing opinions on the urgency of installing the STS10 terminal. BTP, with shareholders Maersk and MSC, believes expanding container operation capacity in Santos is “fundamental and urgent.” However, it also emphasized the need to improve access, dredge the navigation channel, upgrade highways, and increase rail and coastal shipping connections.

BTP pointed out that demand for cargo is growing, and terminals are operating at rates exceeding 85% of capacity, which is above the OECD’s recommendations.

“Even with ongoing investments, the port’s capacity is expected to collapse in 2026 if no action is taken now. A swift government decision, with an effective solution and action agenda, is needed so private initiatives can invest in their infrastructure to meet demand,” BTP stated.

Bruno Stupello, Director of Port Terminal Operations at Santos Brasil, said short-term capacity is being addressed through accelerated investments, like expanding Tecon Santos’ capacity from 2.4 million containers to 3 million by 2026. He noted other terminals also announced expansions. Stupello argued that “three large terminals will work better than four smaller ones” and that “densification is faster than bidding for STS10,” adding that a large terminal could overload Santos’ entrance. He suggested Vila dos Criadores and Ilha de Bagres as long-term options.

Stupello also emphasized that Santos Brasil supports the best solution for the port ecosystem, provided it does not unbalance competition, as might happen with shipowner participation in an STS10 bidding process—a matter currently before the Administrative Council for Economic Defense (CADE).

DP World called for careful assessment regarding the creation and leasing of new container terminals, noting that the port complex’s growth over the past five years has not been exponential. The company plans to increase its container capacity from 1.4 million to 1.7 million over the next two years, with a potential expansion to 1.9 million.

Ecoporto Santos, which handles over 90% of project cargo at the port, noted that it has operated more than 500,000 containers annually from smaller shipowners. Ecoporto argued that transferring its operations to a new area would not hinder container operation expansion and would result in efficiency gains.

“Maintaining Ecoporto operations in the Port of Santos is a solution to enable necessary and immediate investments,” the company stated.

Source: A Tribuna

Click here to access the original text: https://www.atribuna.com.br/noticias/portomar/indefinic-o-amplia-a-disputa-por-terminal-no-porto-de-santos-1.428352

Sharing is caring!