Trucks headed to Rio Grande do Sul

Soy trucks drive to Brazil's southern tip to dodge ship queue - RTRS

22-Apr-2013 13:54

• Soy flows to Rio Grande to escape congestion
• Extra road haulage cost offset by lower ship expenses
• Logistic headaches for soy sector worse than ever

By Peter Murphy

BRASILIA, April 22 (Reuters) - Trucks are making a 1,600 km (1,000 mile) detour to avoid Brazil's two most congested ports, instead taking their soy crop to the country's southern tip where wait times for ships are as much as a month shorter, a shipping agent and port authority said.

The detour demonstrates the lengths the grains sector is going to this year to cope with unprecedented logistical headaches as soy output leaps and investment in infrastructure lags.

A soy crop almost one-quarter larger than last year's has strained infrastructure at those ports to the breaking point with long queues not only of ships waiting to berth, but also of hundreds of trucks sitting idle for days waiting to offload.

"This doesn't usually happen," Rio Grande port press officer Loriana Garibaldi said of the rising flux of grains there. "It's because of the queues at other ports. Here the waiting time is a lot less," she said.

Unprecedented long waits due to underinvestment and delays in revamping infrastructure have cost Brazil dearly this year, with its top soy customer, China, reported to have lost patience and cancelled some loads to buy from the United States instead.

The logistics chaos has also overshadowed what is otherwise a jubilant year for Brazil's soy sector which is set to overtake the United States to become the world's biggest producer thanks in large part to tireless research efforts to boost yields.

Pressing on to Rio Grande where queues are shorter than at the two main grains ports, Santos in Sao Paulo state and Paranagua in neighboring Parana, cuts ships' demurrage costs and crew wage bill, offsetting the expense of the longer road trip.

Charterers typically pay between $15,000 and $25,000 in demurrage or ship rental per day.

The queue of vessels at Rio Grande port in the southern state of Rio Grande do Sul is now about three times longer than a year ago, according to shipping agency SA Commodities/Unimar, with 46 ships waiting by last Friday.

But that queue is only half the length Paranagua's and shorter than in Santos where 59 ships were waiting to load last Friday.

"Rio Grande has good infrastructure and is close to the southeast so they're sending quite a lot of ships there," said Isis Markarian, a representative from SA Commodities/Unimar at Brazil's biggest port, Santos, in Sao Paulo state.

She said ships arriving there now would manage to dock by the first or second week of May while ships at Paranagua may face waits extending as far as early June, depending on which terminal they are headed for.

Waiting times were improving at Santos with the soy harvest now having past its peak, but they were still longer than at Rio Grande, depending on the terminal, Markarian said, while Ships were now arriving at a slower pace than a few weeks ago.

Though the extra cargo is a boon for Rio Grande, the grains sector is desperate for investment in railways and ports and for the extension of a highway from the Center West grains belt to closer northern ports to clear logistics bottlenecks long term.

A new river port in the state of Para reachable by that north-bound highway will be one of the first new facilities to ease transport pressures, but it won't be ready until after next year's soy harvest, meaning another tough year lies ahead.

The government has sent a new regulatory framework governing ports to Congress which aims to make the sector more attractive to private investors and it announced late last week that government agencies at the ports would begin operating 24 hours a day, to help speed the flow of cargo.

(Reporting by Peter Murphy; Editing by Leslie Gevirtz) ((Peter.Murphy@thomsonreuters.com)(+55 61 3426 7025)(Reuters Messaging:peter.murphy.thomsonreuters.com@reuters.net))