Material published in Gazeta Mercantil, edition of Wednesday, May 27, 2009:
The chairman of the Board of Directors of Multiterminais, in Rio de Janeiro and Santos-Brasil, in São Paulo, businessman Richard Klien, in a time of crisis in the global economy, decided to avoid the simple and unfair decision to cut the workforce to accommodate a 20 to 25% reduction in container handling, in addition to continuing to invest in the country's port sector.
Santos-Brasil, through the subsidiary Union Armazenagem and Port Operations, has just offered the best offer, of goodwill of R$ 114.3 million, over the minimum amount of R$ 105.7 million, to lease and manage the vehicle terminal (TEV) at the port of Santos under a concession regime for 25 years, renewable once, for the same period. The auction won, the result of which will be confirmed by the company Docas do Estado de São Paulo (Codesp) within 20 to 30 days.
Santos-Brasil employs around 1,600 workers in São Paulo, and plans to expand its workforce to 2,100 in 2011, and 2,360 in 2015. Multiterminais already occupies approximately 500 employees in Rio de Janeiro, a number it plans to expand to 600 in two years and for 700 by 2015.
- The crisis arrived and we decided to avoid layoffs, maintaining an understanding with the unions and seeking to rationalize work. In Santos, we adopted the hour bank, and in Rio, we adapted the work teams, by computerizing the control of the loading and unloading of ships. Avoiding layoffs and streamlining operations gives the administration more work, but it is much fairer, explains Klien.
The businessman, an enthusiast of the results of 15 years of port modernization in Brazil, comments that the economic crisis has already reduced the port handling of containers in the country and the world by 20 to 25%, which represents less than one million containers/year for the 14 specialized terminals. Klien says he is passionate about business excellence and conveys optimism:
- Brazil, in this, is much better than a decade ago. Paid quality gives profit, positive result. Therefore, it is worth prioritizing quality.
In his opinion, Brazil has come of age in the port system, operating at levels of cost and productivity similar to its global peers.
- We cannot make the mistake of comparing the port of Santos (which handles 2 million containers a year), with Rotterdam (10 million), Hong Kong (20 million) or Singapore (22 million). The scale of operations and the size of the ships are totally different. In Asia-Europe traffic, for example, ships carry 15,000 20-foot containers; those in Brazil at most 6 thousand. In Santos, we use an average of 3.3 cranes to unload the largest ships; there they employ up to 10 cranes per ship.
Lower Costs
Port efficiency in Brazil has been growing every year. It jumped from 1.2 million containers in 1996 to 4.5 million last year. The handling capacity, in 2015, will be 8 million containers/year. The containers have a standard length of 20 or 40 feet, and carry up to 25 and up to 35 tons, respectively.
- Costs fell from U$ 550 per container, before the privatization of the ports, in 1997, to the current U$ 200 to U$ 225, in Santos, in an operation that involves taking the container from the ship, placing it in a truck, transport it to the cargo piles at the ports, guard it, make it available for inspection and deliver it to customers, and vice versa.
Richard Klien recalls that the cost at the port of Rio is even lower, U$ 160 to U$ 180 per container, because here bids prioritize the lowest operating cost, and not the highest payment for the concession, as happened in Santos and in rest of Brazil.
- Even so, the cost of operations in New York is still higher than that of the port of Santos, which accounts for 40% of tonnage of containers handled in the country. The bidding of Tecon Santos, which accounts for 40% of container tonnage handled in the country. The bidding for Tecon Santos, won by Santos-Brasil guaranteed Codesp, in the privatization in 1997, the highest premium in the bidding for the concession (about U$ 250 million).
Today Tecon Santos is the largest container terminal in South America, where we handled 839 thousand containers last year, with a high productivity of 53 movements per hour, per ship.
There are also, in development, several actions for the port expansion in Rio de Janeiro, such as the adaptation and expansion of the ports of Rio and Itaguaí, the deepening of the access channels of Cais do Caju and Sepetiba, according to the businessman.
Idleness and opportunism
Santos-Brasil has already invested, over the first 12 years of the concession (which is 25 renewable for another 25), around R$ 1.5 billion, from the initial payment to CODESP to the TEV bid, who won this week.
- Today, our sector operates with a large margin of idleness. The activity requires that the supply of capacity anticipates demand. Therefore, it continues in constant expansion, with expansion of the mooring quays, acquisition of longer reach gantry cranes (at a cost of around U$ 9 million each), and dozens of cranes to store containers in the yards (Rubber Tyred Gantrys - RTGs, which cost $ 1.5 million each). More than 70% of the overall cargo in global trade is handled in containers and economies of scale continue to drive growth in ship size. These mega-ships demand super-ports, which also requires the adaptation of Brazilian ports.
For Klien, by 2015 Brazil will have an additional capacity of about 3 million containers / year in its terminals, a fact that reveals an unprecedented opportunity for the country.
- The government may encourage the construction of new vessels for cabotage transport (between national ports), or allow shipowners to buy them cheaply abroad, taking advantage of this window of opportunity. There are more than a thousand ships stopped without a job due to the crisis in the Straits of Malaga. It is a relatively small investment that would relieve Brazilian highways, with benefits for the environment and the economy. On routes over 2,000 kilometers, such as those from the South to the North / Northeast, transportation by sea is much cheaper and environmentally friendly.
Private Initiative
The chairman of the Board of Directors of Santos-Brasil and Multiterminais also highlights the strength of the private initiative in the country's 14 port terminals, affiliated to the Brazilian Association of Public Use Container Terminals (Abratec).
- They invested U$ 1.5 billion until last year and have more than R$ 2.5 billion available for the ongoing expansions. The operation of ports requires large investments, such as high risk, remembering that all this investment is reverted to the Union at the end of the concessions. That is why the business margins are relatively high, as in all other infrastructure concessions, to make the necessary investments feasible.
Richard Klien recalls that the government of Itamar Franco published the port modernization law, but highlights the decisive role of President Lula in its implementation.
- We have a president who looks out to sea and knows that there is the entrance and exit gate for more than 90% of our international trade. During his government, the Brazilian trade chain dislodged the level of U$ 100 billion in which he skated a decade ago, to U$ 380 billion, last year. This was the biggest contribution to the growth of the Brazilian GDP, which reached R$ 2.9 trillion last year, according to the Brazilian Institute of Geography and Statistics - IBGE.
The businessman emphasizes that without the privatization and unblocking of ports, Brazil would not grow as much.
- The current government has promoted a virtuous cycle in the sector, through the Special Secretariat of Ports and ANTAQ. Long-term planning of port infrastructure; dredging of road-rail access channels; adequate expansion of container terminals; reduction of transit times with the use of mega-ships; and increase in the cabotage network, promoted the progressive reduction of freight and port costs.