Dock worker strike exposes fragile Brazil ports
Author: AJOT | Feb 21 2012 at 07:00 PM | Category: Ports & Terminals
Dock workers shut down the movement of global commodities through Brazilian ports early on February 22nd during a six-hour strike to protest the government’s plan to overhaul regulations and put more than 150 terminals in the hands of the private sector.
The short-lived work stoppage provided a glimpse of what could turn out to be a tense harvest for Brazil, one of the world’s biggest exporters of agricultural crops. With a record soy harvest on tap and brewing labor disputes at ports, doubts are mounting about Brazil’s ability to meet delivery contracts and quell growing unease in global commodity markets.
The strike halted 17 of the 26 ships berthed to load and unload in Brazil’s main port of Santos and slowed the flow of soy, corn, sugar, coffee and containers at other big ports, including Paranagua, port authorities said.
Even before stevedores walked off the job, commodities brokers had reported lines of trucks waiting to unload soy shipments and more than 100 ships either waiting or arriving to load bulk commodities for international markets.
Expectations of delays at Brazil’s ports caused top buyer China this week to cancel at least two soy cargoes ordered from Brazil and buy from the United States instead.
“It’s totally stopped,” the general director of the grain exporters association Anec, Sergio Mendes, said referring to Santos port.
Cranes and ship loaders that are normally shuttling containers and bulk cargoes to and from ships at Santos were halted completely. A union plan for an open-ended strike in mid-March still looms if talks with the government break down.
Shipping analysts did not expect major disruptions, given the short duration of the strike. Bulk grain loading, which is done via conveyor belt and requires little labor, is normally uninterrupted at Santos, shipping agent SA Commodities/Unimar told Reuters.
Port workers managed nonetheless to shut down most bulk cargo loading of grains. Loading at the Copersucar and Cosan terminals, two of the world’s largest exporters of sugar, was stopped, Reuters reporters at the port said.
Chicago grains markets rose on news of the disruption at Brazilian ports, even though Ports Minister José Leonidas Cristino, after meeting with union leaders in Brasilia, announced later in the day that port workers called off a strike planned next week.
The local farm sector has managed over the years to dominate much of the world’s agricultural commodities markets by leveraging tropical sun, savanna and rains. But insufficient investments in local roads, railways and ports to keep up with the rapid expansion in the country’s farming potential has raised the costs and risks of doing business with Brazil.
The government’s decision to launch a major push for port reform that was likely to rile some of the country’s biggest unions could not have come at a more delicate moment for Brazil or global commodities markets.
Brazil’s grain belt is struggling to ship record corn and soybean crops that are likely to make it the world’s No. 1 exporter of those grains, surpassing the United States for the first time.
At the same time, global grain stores are at record lows due to severe droughts that hit North and South American output in the previous season, raising concerns over food inflation.
Brazilian dock workers fear a government drive to privatize some 158 terminals starting later this year will lead to a loss of jobs and benefits because private operators would not have to hire through the centralized agency “OGMO” and might bring in labor from abroad.
“We’ve started the mobilization,” said Cesar Rodrigues Alves, a senior representative of the union of stevedores at Santos port, South America’s largest.
A press official at the other major grains port, Paranagua, confirmed the labor stoppage occurred there as well.
The Brazilian government says the planned changes for ports are needed to boost competitiveness as it seeks to attract billions of dollars in private investment to expand capacity to cope