Norcoast ventures into Brazil cabotage; operations to begin in January

By the end of January 2024, Norcoast will commence its cabotage operations in Brazil with one ship, and by February, three more will be added to the fleet, serving the ports of Paranaguá, Santos, Pecém, and Manaus in a full rotation scheme. Born from a partnership between two maritime transport giants, Hapag-Lloyd and Norsul, the company will be the fourth player to operate in the Brazilian cabotage market.

According to Gustavo Paschoa, Norcoast’s CEO, “In 2021, we, at Norsul, initiated a project focused on business diversification and identified container cabotage as a great opportunity. Studies showed that Brazil has over 8,500 km of coastline and almost 23,000 km of navigable rivers. If we compare this with countries with coastlines as large or even larger than ours, the share of cabotage in the transportation matrix of these countries hovers around 50%, while in Brazil, it is less than 5%.”

The CEO of the fourth and newest entrant in the cabotage market in Brazil emphasizes, “We saw a great opportunity there and began discussions with Hapag-Lloyd and Norsul. We identified a strong need for connection in international trade because the ships arriving on the Brazilian coast have increased in size from 10,000 TEUs, or 11,000 TEUs, to 14,000 TEUs. This creates a need for a connection between the main ports, the so-called hub ports, and the smaller ports. That’s where the concept of cabotage in feeder transportation comes in, connecting exports with imports at the Brazilian coast.”

The joint venture that created Norcoast emerged thanks to the two founding companies’ track record in the Brazilian economy. They are motivated by the Cabotage Incentive Law, known as BR do Mar, which relaxed some entry barriers to the market and brought new possibilities for new entrants like Norcoast to start operations.

For the past 20 years, Brazilian cabotage navigation has been dominated by only three companies, and Norcoast has emerged as the first new entrant in this segment in two decades. Therefore, the company’s CEO states, “Norcoast’s arrival is a very important milestone for national logistics, foreign trade, and the Brazilian economy in general.”

Growth Prospects

Last year, the cabotage sector moved 1.2 million TEUs, a figure expected to be repeated in 2023. For the next five or six years, projections indicate significant growth, reaching 2 million TEUs. Norcoast hopes to secure a relevant market share in the first year of operations, especially from March onward, when the four ships will complete rotations across the four Brazilian ports.

Integrated Logistics

To occupy spaces potentially created with reduced truck usage in cargo transportation, the company will explore new paths by working with integrated logistics, allowing it to deliver cargo directly to clients’ doors.

As Gustavo Paschoa explains, “Because we aim to shift cargo from trucks to cabotage, we face a challenge. Trucks pick up cargo from the shipper at the point of origin and deliver it to the destination. We won’t assist our shippers if we only focus on cabotage and port-to-port. Hence, our idea of integration, using multimodality to remove cargo from ports and take it to its final destination, using trucks and railways, connecting cargo consolidation warehouses, and the actual activity in the transshipment terminal in the case of feeder service (which occurs when a ship from a hub port distributes cargo to other ports for logistical reasons and more). There is demand, and we have prepared to meet it by launching our service to provide access to clients who do not use cabotage but can use this logistic integration to accommodate within their value chains.”

Source: Comex do Brasil

To read the original news article, click on: https://comexdobrasil.com/norcoast-iniciara-operacoes-em-janeiro-apostando-no-futuro-da-cabotagem-no-brasil/

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