South America Calling

Brazil's Senate Thursday evening approved legislation aimed at modernizing ports.

The government-sponsored bill, designed to increase port efficiency and attract investment, garnered a 53-7 majority in the upper house and, following the formality of presidential approval, will pass into law.

One hurdle must still be overcome, however, as opposition senators have asked the Supreme Court to suspend the vote on the basis that it was rushed and proper procedure was not followed.

President Dilma Rousseff hopes the new rules will trigger $25 billion in investments, which are badly needed to ease bottlenecks currently impeding the flow of grain exports.

The principal objective of the bill is to reduce restrictions on private terminals, including allowing operators to load third-party cargoes and the end of union closed shops on private docks.

Stevedore unions went on strike this week at Santos and Paranagua, the top grain ports, to pressure for their right to chose labor at port to be maintained in the bill. It remains to be seen whether they will strike in protest now the changes will likely pass into law.

Grain exporters can ill afford further strike delays as Brazil has an enormous backlog of soy and corn to export. On Monday, there were 237 ships waiting to load grains at Brazilian ports, up from 101 at the same time last year, according to shipping agent SA Commodities/Unimar.

As I explained in my previous blog, the passing of the bill is also important because it provides the legal certainty necessary for investment to be made in new grain terminals at northern ports.

With the current export routes clogged, the development of grain corridors from the Cerrado to ports in the north is seen as vital to the future growth of grain farming in the highlands of Brazil's interior.

(AG/CZ)

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