Brazil Unveils Investment Plan for Port Privatization

Courtesy Port of Santos

Published Dec 1, 2024 2:58 PM by The Maritime Executive

 

 

Last week, the Brazilian Ministry of Ports and Airports unveiled an investment plan for the upcoming privatization of the country’s major terminals. The plan targets over 50 projects, including port leases and concessions slated for the next two years. The privatization plan is expected to attract investment worth over $3 billion in the Brazilian port sector.

At least five leases are planned at the Port of Santos, including concessions for three terminals and the navigation channel. One of the most notable projects is the auction of the STS10 Terminal, scheduled in the last quarter of 2025. The terminal will increase the container capacity of the Port of Santos by 2 million TEUs. The government will lease the terminal for 25 years for an investment of $580 million. The other auctions will be held across 12 states that host ports critical to Brazil’s foreign trade. Other port areas planned for auction next year include Paranaguá (PR) and Rio de Janeiro.

“The Ministry is closely working with the National Waterway Transport Agency (Antaq) to ensure that these projects are expedited. During President Lula’s four-year term, we aim to hold 55 port sector auctions. To put this into perspective, approximately 45 auctions were conducted between 2013 and 2022. This will secure increased investments and promote modernization and efficiency across our ports,” said Silvio Costa Filho, the Minister of Ports and Airports.

Meanwhile, the government also announced competitive credit lines and tax incentives to attract investors. Specifically, the Merchant Marine Fund(MMF) will allocate 30 percent of its budget to the port sector. The Ministry of Ports added that the port regulatory environment has been streamlined, reducing authorization process by three months.

Separately, a recent analysis by APM Terminals and Brazilian firms A&M Infra and Navarro Prado Advogados, opines that improved efficiency in Brazil’s port sector would help attract the ultra-large containerships, with significant savings on maritime transport costs.

“Historically speaking, new classes of ships generally begin to scale the Brazilian coast 8 to 15 years after they begin operating in European ports. For 366-meter-long ships, which have been operating in Rotterdam since 2006, have not been accommodated in Brazil mainly due to lack of infrastructure. If the appropriate infrastructure were available, these ships could theoretically have been calling at Brazilian ports since 2018,” the study found.

In addition, the use of mega ships linking the East Coast of South America (ECSA) to Asia would help develop the hub-and-spoke system in Brazilian port sector. This model could bring significant operational gains, allowing for reduced layover times (the connection times of a container between the long haul ship and the cabotage ship), which today are 5 to 7 days in Brazilian ports.

“The consolidation of one or more hub ports in Brazil would mean a potential increase of up to 4.6 million TEUs of transshipment (in 2023 volumes). In comparison, the total transshipment movements carried out in Brazil were approximately 2.4 million TEUs in 2023. That is to say, in a more ambitious scenario for the implementation of the hub ports dynamic, the transshipment volume in Brazil could triple,” observed Leonardo Levy, Investment Director of APM Terminals for the Americas.

Port of Darwin's Chinese Operator Comes Under Financial Scrutiny

Courtesy Port of Darwin

Published Dec 1, 2024 10:42 PM by The Maritime Executive

 

Australia Begins Financial Scrutiny of the Chinese Operator of Darwin Port

The Australian Northern Territory government has revived scrutiny of the lease of Port of Darwin to the Chinese operator Landbridge. In a statement on Wednesday, the state government said that it is reviewing its rights on the Port of Darwin, and is concerned about the financial status of the lessee. The recently released 2023-24 annual report for Landbridge revealed that the company made a loss of more than $22 million.

“There is a material uncertainty that may cast significant doubt on the Landbridge Group’s ability to continue as a going concern,” said a PwC audit. Northern Territories Treasurer Bill Yan said that he has written to Landbridge seeking further information about its financial situation, and ability to meet its payment obligations. In addition, the province will work with the Federal Government to assess further steps regarding operations at the port.

“Our immediate focus is to ensure the port remains operational while its longer term future is confirmed,” added Yan.

However, Landbridge Australia said that Port of Darwin operational performance remains strong. The loss incurred in the FY2024 is as a result of a long-standing debt by the parent company, which is due to be refinanced.

“Darwin Port’s [parent company] is in the process of refinancing an overdue corporate bond amounting to $70 million, which we expect will be settled by Q2 in 2025. The Group is considering specific asset sales in China through 2025, but not Darwin for avoidance of doubt,” said Non-Executive Director Terry O’Connor.

Port of Darwin has been at the center of controversy since 2015, when the Australian government leased to China’s Landbridge for 99 years. At the time, the transaction was even criticized by the U.S government. The port’s strategic location serves as an important naval base in the Indo-Pacific region, which includes hosting U.S. Marines.

As part of his campaign in 2022, Australian Prime Minister Anthony Albanese had promised to review Darwin Port’s lease. Last year, the Prime Minister’s Office and the Cabinet completed the review but found it unnecessary to cancel the lease contract.

“There is a robust regulatory system in place to manage risks to critical infrastructure including the Port of Darwin,” concluded the review.