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Wednesday, 14 June 2017

Port of Itajai, Brazil opens after 3 weeks closed due to heavy rains, dangerous flows

The oft afflicted Brazilian port of Itajai, the second biggest for containers in Brazil, finally opened on Friday to container ships for the first time in nearly three weeks after heavy rains and unsafe currents caused major disruptions and heavy financial losses for shippers, carriers and terminal operators alike.

According to the Itajai Port Authority (IPA) and Itajai Praticos (the pilots association for the Itajai Port Complex or IP), took a reading from the River Itajai-Acu of 1.2 knots (1.38 Mph) and so the Praticos finally gave permission for the port to open at noon on Friday.

A spokesman for the IP told Port Finance Interantional that some 30 vessels had failed to berth at the IPA over the previous 21 days and that the first vessel to be escorted by pilot and tug through the River Itajai-Acu was the MSC Meline, and she eventually berthed at the Portonave container terminal on the left bank having waited in the lanes for two days.

The pilot said that river flow of less than 2 knots was required for small vessels and less than 1.5 knots for the size of container ship (3,000 to 8,000 TEU capacity) which calls at Itajai, and are recently as Thursday the river was running at 2.5 knots, and on Wednesday it was way over the limit at 3.69 knots. If there is no rain today two other container vessels currently waiting in the shipping lines outside the IPC will be able to berth over the weekend.

The re-opening for the IPA is great news for shippers but poultry and pork exporters at the Itajai Port Complex (IPC) – which includes the Portonave and AP Moeller Terminals Itajai container facilities and handled 1.1 million TEU last year – are now at looking at losses of millions of dollars due to the port being closed almost every day since May 18.

AP Moeller Terminals has been considering expanding its current 25 year concession in Itajai for a further 25 or 35 years, but is taking its time before making a decision in view of the frequent port closures due to current and flooding.

Carriers too face heavy losses from the long-term closure of the IPC – which vies with neighboring Paranagua for the role of Chicken Export Capital of the World – and a manager at the IPA estimates that every time a vessel fails to call it costs the shipping line some $50,000 per day, so 30 calls means an immediate loss of $ 750,000 due to the closures, plus other extra costs incurred by re-routing to alternative ports.

Ricardo de Gouvêa, the executive director of Sindicarne (the meat association for the state of Santa Catarina), says that the amount of losses for many of his 85 meat producing members has been huge but are difficult to quantify because of various specific commercial agreements, which involve insurance and contractual clauses. Using alternative ports, such as Imbituba and Porto Itapoa (both in Santa Catarina) or Paranagua (in the neighboring state of Parana) are costly for shippers, and he hoped that force majeur (due to flooding) could be used as an excuse to avoid some payments.

“Our members have clearly lost a lot of money over the past few weeks as all the alternatives open to them cost more money to get their pork and chicken to their intended markets,” De Gouvea told PFI. “Many have 100s of reefer containers stored in the Itajai port complex which is expensive, and others are having to change their logistics by trucking the frozen meat from their meat-packing polants in the interior of our state to alternative ports.

“Also the carriers are suffering too and are racking up losses running into thousand s of dollars evry day. It has been a mess really.”

Among SIndicarne`s members are BRF Foods, the biggest chicken exporter in the world, Seara, Aurora and Fricasa.

In October of 2015 Itajai was closed for more than a week after heavy rains upriver caused the River Itajai Acu to flow at more than five knots and silting up to reduce from 42.6 feet to 36 feet and the port complex has still not recovered all of that depth.

And Antonio Dominguez, the CEO for Maersk Line in the East Coast of South America (ECSA) trades, said that a few days closures can be dealt with, but more than two weeks cause massive logistical problems, especially once reefer plugs get taken up and storage facilities are full.

“If no plugs then shippers need to go to cold storage but there is limited space there,” he told Port Finance International. “They have seven major cold storage units in the Itajai port area and that is clearly the port complex with the best infrastructure.

“Itapoa [in which Maersk purchase Hamburg Sud has a 20 percent share] is at the entrance to the channel [that leads to the port of Sao Francisco do Sul] so it is in a better position in terms of the heavy rains and strong currents but they don’t have much in the way of cold storage. Therefore it offers options for the displaced vessels but not for the reefer shipper customers.

At Portonave, in Navegantes, which accounts for the largest port movement in the state, 30 vessels had had to skip their scheduled berthing up to Wednesday of this week, and so will be the most relieved to get the port open again. More than 19,000 containers with several cargoes were affected by the cancellation of calls, according to Sindicarne.

A week ago the river calmed just enough to allow the Evergreen Valor and the ER Seoul (operated by Hapag Lloyd) to escape from Portonave, but they had to depart with draft restrictions and then further heavy rains closed the port once more.

Of the 1.1 million TEU that passed through IPC last year some 121,000 TEU was reefer containers; mostly chicken and some pork.

Date: 12 may 2017 by R.Ward


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