Brazil ro-ro challenges

While Ford is closing production in Brazil, TEV is now importing Ford Rangers into Brazil from Mexico

After a torrid 2020, operators of Brazil’s ro-ro terminals are hoping for a significant improvement in vehicles handled this year but challenges remain. Rob Ward investigates.

During the pandemic afflicted year of 2020 Brazil exported only 324,330 vehicles, down 25.2 per cent from the 433,512 units in 2019, which, according to the Brazilian Association of Automobile Manufacturers (ANFAVEA), is the lowest since 2002. Another major factor affecting exports is the dire straits of the Argentina economy, as this is the main destination for car exports out of Brazil.

In terms of imports to Brazil the number of units was down 28.9 per cent from 297,658 in 2019 to 211,619 items last year, the lowest for at least 20 years. Imports are never again likely to reach the peak of 858,037 units in 2011, according to figures from Sindipecas, the Brazilian National auto-parts Association.

VOUMES DOWN BUT SHARE UP AT TEV, SANTOS

Terminal de Veiculos (TEV) in Santos is the biggest car terminal in Brazil and last year handled around 30 per cent of all vehicles exported out of the South American country. Despite that it also suffered a 15 per cent drop in export units down to 130,000 vehicles.

Overall handling at TEV was down from 175,000 units to 152,000 vehicles, but despite this being a 14 per cent fall TEV’s share of the Brazilian market actually increased due to bigger losses elsewhere. TEV’s imports totalled 22,000 units, down around 25 per cent from 2019.

Ford Motor Co, already dealing with falling demand in Brazil owing to the COVID-19 pandemic and economic uncertainty, dealt a heavy blow in January 2021 when it announced it would be closing all production facilities there – it already began closing its plant at Camacari, in Bahia, near Salvador, but is adding Sao Bernardo do Campo and Taubaté to the redundant list.

This decision is having an immediate detrimental impact on TEV but the ro-ro operator – part of the Santos Brasil container handling group, which operates Tecon Santos and the Vila do Conde box terminal in the north of the country – is already offsetting some losses by importing Ford vehicles from Mexico.

Historically car imports into Brazil have gone to ports such as Vitoria, in the state of Espirito Santo, which has offered import and state tax concessions/exemptions but the government of Jair Bolsonaro, and his Economy Minister Paulo Guedes, have done away with many of these incentives. This means that ports with superior logistics infrastructure – such as Santos, Paranagua and Rio de Janeiro – will now handle more auto imports in the future.

FORD BEING REPLACED BY FORD

Ricardo Santos Buteri, Chief Commercial Officer and Commercial Director, TEV, is optimistic that imports from Ford can compensate for the loss of Ford exports and from other auto makers. “It was sad news for the auto sector that Ford is leaving but we are currently importing the Ford Ranger SUV from Mexico as a new product,” Buteri told Port Strategy.

“Last year was terrible for our volumes, due to the pandemic and all the other related reasons, but we have made a good start to this year with almost a third more vehicles handled so far [up to the end of March].”

He explains further: “During the first three months of this year we have imported 4,315 Ford vehicles from Mexico, and we are confident this trial will continue as it makes up for some of the Ford exports that will no longer be manufactured at Sao Bernardo and Taubaté. [Ford auto plants located close to Sao Paulo].”

He adds that more than 90 per cent of those Fords were Rangers and that TEV had “got off to a flying start” in 2021 as it handled 30,750 vehicles, 30 per cent higher than the same period of 2020.

Buteri further notes that one of his key clients, who imported/exported 50,000 automobiles last year “is forecasting at least 30 per cent more units this year”, and so there is “good cause for optimism”. The TEV executive says he expects around nine calls from car carriers each month, and its key clients are K Line, NYK and Wallenius Wilhemsen Ocean.

TEV used to have competition in Santos from Deicmar, on the right bank of the port, but it closed its operations about six years ago, although the multi-purpose terminal of Ecoporto Santos (ex Tecondi) has been hosting a regular roro service from Grimaldi Lines since 2019. It brings Land Rovers from Tilbury (UK) and BMW/Mercedes Benz from Hamburg (Germany).

Grimaldi previously called at Deicmar and executives from the Italian owned company were disappointed to hear that Diogo Piloni, the Minister for Ports, has refused to grant a concession extension to Ecoporto Santos from 2023, when its current term expires, as this will leave TEV with a virtual monopoly.

Several years ago, Grimaldi looked at the possibility of building its own ro-ro terminal somewhere in Santos, possibly at a greenfield site close to the entrance to the port, but the plan got bogged down in “bureaucratic red tape”.

The second biggest port for vehicles is Paranagua, with Rio de Janeiro third. Along with Santos these ports collectively account for around 75 per cent of all exports from Brazil.

VW EXCLUSIVITY IN PARANAGUA

In Paranagua, VW has its own terminal and proudly protects its exclusivity but its stevedoring, as with the other two main users of the port – Renault and Audi – is currently being carried out by Marcon Logistica Portuaria.

Last year Paranagua handled 69,940 export units and 18,311 import vehicles, which was 37.7 per cent down compared with the 141,779 units handled during 2019. Import volumes plummeted from 53,590 to 18,311 units, while exports fell from 88,189 to 69,940 vehicles.

Marcon Logistica handled 60,289 vehicles during 2020 from 74 car carrier calls, which saw the struggling Argentine carrier, Maruba, leading the way with most calls, followed by NYK and K Line. Wallenius Wilhemsen Ocean made 19 calls but with much smaller loadings per vessel.

Patrick Ferreira Tavares, Commercial Director, Marcon, says VW has a contract to run its own storage and warehousing in the port until 2028 and his company has a contract to undertake stevedoring until then. “There will also be new competition here over the next three years or so because Ascensus has won a concession to build a new car terminal on a greenfield site near the port,” Tavares explained.

Grimaldi, the Italian ro-ro operator, has not been the only one seeking its own terminal in Brazil. NYK – split from NYK Line box carrier which merged into ONE – is still a key player in the Brazilian car carrier scene and was looking closely at investing in its own terminal in Suape, the northeast port in Brazil which has a superb strategic location that would make it an ideal hub port for carriers of various cargoes; but especially containers and ro-ro.

A shipping agent who works closely with NYK in Brazil notes that the Japanese line had shown a “keen interest” in the proposed tender process to operate a ro-ro terminal in Suape back in 2015 but, again, bureaucratic red tape (involving promises to keep rate concessions for existing port users and not allowing a concession winner to set market rates), saw the plans falter.

RIO DE JANEIRO TAKES MASSIVE HIT

Some 200 miles East Northeast from TEV and Santos lies the port of Rio de Janeiro and MultiCar, the third biggest handler of automobiles in Brazil. After taking a massive hit from COVID-19, total units handled fell from 7000 per month at the start of 2020 down to just 100 in May 2020.

On both the container and auto front, Rio de Janeiro is more of an import port/city than an export source but in recent years export of vehicles – especially Fiat and Peugeot/ Citroen – have boosted exports. By 2019 there was a 46 per cent share for imports and 54 per cent for exports, but during 2020 this trend reversed to 55 per cent for imports and 45 per cent for exports.

Luiz Henrique Carneiro, CEO, MultiCar, explains that 2020 was “an extremely tough year”. “MultiCar was virtually closed during May because the car manufacturers closed down their plants for a period but then we went from close to zero in May to just over 7000 units in November and then 7,605 vehicles in December. Demand was definitely improving at the year’s end and those results were about the same number that we had in November and December of 2019.”

Overall for 2020, MultiCar handled 50,435 units, down 26 per cent on the 68,500 vehicles of 2019. Of this total, imports were down zero per cent to 28,735 automobiles, but exports were down 41.2 per cent to just 21,706 units. However, 2021 has started positively. MultiCar has made a solid start with imports which rose by 33 per cent during the first three months compared to Q1 2020, with 9,888 vehicles handled compared with 7,435 units.

Unfortunately, exports dived dramatically by 55.6 per cent, from 8,058 units down to 3,576 vehicles, to give a total for the first quarter of 13,464 units, down 13.1 per cent. Exports crashed due to the fact that 80 per cent of the vehicles are usually destined for Argentina, which is struggling economically.

Owned by the diversified Multiterminais Group (itself owned by the Klien family), MultiCar has served the giant Rio de Janeiro conurbation (with a population of 13 million people) for several decades. As well as Fiat and Peugeot/ Citroen, the operation also serves Jaguar Land Rover, Chrysler, Iveco and MAN (VW Trucks).

Culled from Port Strategy

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