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Rivalry Hots Up
STS10 RIVALRY HOTS UP
There are two schools of thought about the role of the forthcoming STS10 terminal concession in Santos, Brazil – an ECSA hub or another terminal to promote greater competition. Rob Ward examines the arguments
The “Talk of the Town” at the recent Intermodal South America trade show, held in Sao Paulo, was: Who will compete for and who will win the bid for the STS10 site? This is the prime area in Santos that will be concessioned out for a new Reais3.3billion (US$703.4million) container terminal, scheduled for the third quarter of this year?
Just over a year ago it seemed that the biggest container handler in Santos today, BTP (a joint venture between APM Terminals and TIL), would win the bid and spread its operations into the neighbouring areas - which used to be operated by the Deicmar car terminal, the Citrosuco fruit terminal, Termares, and the currently operating ro-ro and general cargo terminal Ecoporto. The latter entity was of course formerly known as Tecondi, the one-time thirdlargest box terminal in Santos, with a 19 per cent market share and 500,000TEU handled in 2013 but now, in its new guise, down to just a handful of boxes and a mere 0.5 per cent of the market.
However, these assumptions were blown out of the water by the concerted efforts of rival port terminals (such as Santos Brasil across the channel in Guaruja) and concerned associations such as ABTP (the Association of Brazilian Ports and Terminals) and Abtra (the Brazilian Association of Bonded Port Terminals), who do not want to see a quasi-monopoly developing in the port.
Over the past year they collectively lobbied the Brazilian state monopoly watchdog, Cade, to do something to stop a further concentration of terminal ownership, arguing that a successful BTP bid could see its share of Santos throughput (totalling 43.7 per cent of 4.83 million TEU in 2021) ramp up to as much as 80 per cent. The other two terminals, Santos Brasil and DP World Santos, accounted for market shares of 35.6 per cent and 20 per cent respectively in 2021.
There are also fears among shippers in Brazil that the “Verticalisation” process, which has seen shipping lines, namely Maersk Line and MSC, add logistics services and port terminal operations to their roster – MSC at Portonave in Santa Catarina and Multi-Rio in Rio de Janeiro, and then Maersk Line with APM Terminals Itajai, Itapoa and Pecem, plus BTP of course – is making them too powerful.
Flavia Takafashi, a director at Antaq (the powerful National body for waterborne transport), told Valor newspaper recently that during recent “skipped calls/rollovers” by shipping lines, they seemed to be favouring those port terminals in which they had an equity interest against those “white flag” terminals without such connections.
Cade quickly reached a decision to ban BTP from bidding for STS10 but is still allowing the stevedoring arms of its two shareholders – Terminal Investment Limited (MSC) and APM Terminals (Maersk Line) – to bid separately. Abtra is still crying “foul” and continues lobbying Cade to stop TIL and APMT bidding altogether, and also, even louder, for a two-orthree year delay in the process, which would suit Abtra members such as Ecoporto Santos and Bandeirantes/ Deicmar whose contracts are due to expire in 2023.
CAPACITY AND HUB PORT ISSUES
Angelino Caputo, Executive President, Abtra, tells Port Strategy that BTP, which he says has the support of the Santos Port Authority (SPA), is under-estimating the current
8 Fears of a
monopoly have resulted in Maersk and MSC, partners in the BTP terminal in Santos, being excluded from bidding as a joint entity for the new STS10 container terminal concession
container capacity in Santos and that the rush to push for new capacity is being engineered purely by political interests.
“We do not believe the tender is as urgent as SPA says it is, but it has been steamrollered ahead because the Infrastructure Minister Tarcisio Gomes de Freitas [he has since been replaced by Marcelo Sampaio, as De Freitas steps forward to stand for Sao Paulo State Governor] wants to leave a legacy,” suggests Caputo, reflecting the views of his 43 members. “They are claiming that the tender is urgent because Santos is close to its capacity, which it is not. They claim it is 5.3 million TEU per year, but it is 6.0 million TEU and it will soon be 6.8 million TEU, so there is no need to rush.”
Capacities are disputed by the two sides, but one shipping agent put it at between 5.7 million TEU and 6.0 million TEU, with the higher figure including Ecoporto Santos which still has three ship-to-shore gantry cranes in situ, and could still accommodate one or two cabotage services thereby adding an extra 300,000TEU if the demand is there. Although BTP has been operating close to its capacity (estimated at around 2.0 million TEU, annually) Santos Brasil (2.5 million TEU) and DP World (1.2 million TEU) reportedly still have some space to spare.
Also, it is worth noting in this context Minfra’s (Infrastructure Ministry) and SPA’s fears that the recent exponential increases of boxes through Santos, which was up 14.2 per cent last year, may not be repeated this year or next with the Brazilian economy struggling. The first two months of this year saw only 754,600TEU handled, down 1.1 per cent compared with the first two months of last year.
Caputo, who was once President of SPA (from 2014 to 2015) says that the “Verticalists” – as he calls the MSC and Maersk brands, as they have added trucking and other inland logistics to their portfolios in Brazil – currently have between 40-42 per cent of the Santos market, via BTP. This will, however, rocket to between 75-80 per cent if either one wins STS10, as it will add an extra 2.5 million TEU. That will be “too close to a monopoly” which will lead to shippers “paying much higher prices”, he argues.
The SPA, Minfra, De Freitas and BTP factions – backed by the Rio de Janeiro Abratec container port association, which used to support Santos Brasil and the anti-Verticalists but switched sides – say the competition is not just within Santos but also with other ports but Caputo argues that some Sao Paulo shippers already ship their containers from the nearby states of Parana (TCP in Paranagua) and Santa Catarina (namely ports of Itapoa and Itajai), but they incur “significant extra trucking costs”. Those supporting the Verticalists also argue that if Santos is to achieve its ambition to become THE hub port for the East Coast of South America (ECSA) it will need to possess a very large terminal with a deep draft so that the next generation of vessels (upwards of 14,000TEU capacity in Brazil’s case) can be accommodated.
“I think the best solution here is to allow BTP to move into the STS10 area and also allow Santos Brasil to expand its yard, thereby giving Santos two large terminals instead of four medium sized ones which would build in inefficiencies with cabotage having to double and treble dip when calling,” said one Sao Paulo based consultant. “An STS10 without MSC or Maersk involvement would impede plans for Santos to become the ECSA hub. With the claim that rollovers worked against White Flag operators, I think that was more to do with operational difficulties, not favouritism.”
Executives for BTP and APMT were contacted several times across a two-week period, and in person at the Intermodal South America conference, to provide their views to Port Strategy but did not respond by the time the magazine went to press.
RIVALRY HOTTING UP
One veteran shipping agent based in Santos, who has no axe to grind, notes that animosity is growing between the two factions and that a wave of public consultations held in Santos throughout March and April have only added to the rancour.
“I can see it from both sides. If Santos wants to be a hub port then it makes sense to have just two big terminals, but if you want proper competition then it is better to have a new operator winning STS10, such as PSA, ICTSI or China Merchants, who are said to be interested,” said the shipping agent. “If they are going to publish the tender document before the Presidential elections in October, they will need to get a move on.”
…who will win the bid for the STS10 site, the prime area in Santos that will be ‘‘ concessioned out for a new container terminal?
8 STS10 – another
