Draft reduction at Brazil’s Maceio port could hit sugar export competitiveness

Sugar traders loading from Northeast Brazil‘s key sugar export terminal at Maceio port could see freight costs rise, after the local maritime agency was Friday forced to revise down the draft by 1 meter to 9.5 m after a build-up of silt and mud went unchecked for decades.

Andre Luiz Macena de Lima, president of the Syndicate of Maritime Navigation Agencies for the state ofAlagoas (Sindaneal), said in an interview that Maceio port had not been dredged since the 1990s and that the today’s decision to officially reduce the draft could see sugar exports lose competitiveness on freight.

“Producers will need more vessels to load the sugar in Maceio, as they can’t call for larger ships,” he said. “Producers should now put more pressure on the government for a solution.”

According to a document circulated by Sindaneal and seen by Platts, the official draft for the sugar terminal at pier six is now 9.50 meters and can accommodate vessels with an overall length (LOA) of 250 meters. Restrictions for the port overall are for a maximum LOA of 220 m and maximum deadweight of 60,000 mt.

Macena de Lima said that shipping masters have been asking for a long time for the official depth, and they were forced to take action. “We were counting on the rising tide to berth the vessels, which is a non-viable practice,” he added.

Industry sources say vessels could load up to 10.50 meters on high tide, but run the risk of touching soft mud on the low tide.

Maceio is the prime export location for raw sugar in Brazil’s Northeast region. Some 1.3 million mt of sugar was exported over the 2013-14 season (September-August), and 1 million mt has been exported so far in the current 2014-15 season.

We have had several audiences with the Secretariat of the Ports (SEP) since 2009, mainly listing the dredging problems, but no measures have happened,” said Macena de Lima. “The minister of SEP announced the dredging about one year and half ago, but the measure never got off the ground.”

Other shipping sources said there were no plans for new dredging to take place for at least a year, as they wait for a decision from the federal government.