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Maersk’s quest to be allowed to bid for the Tecon10 terminal project in the Brazilian port of Santos was quashed by the country’s Federal Audit Court (TCU) yesterday.
It voted to uphold legislation that bars operators of existing terminals in a port from bidding for new projects.
Under Antaq [Brazil’s National Waterway Transportation Agency] regulations, a terminal operator is not allowed to bid for a new concession in a port if it already operates one, a piece of legislation designed to encourage intra-port competition and prevent the build-up of monopolies.
Maersk – whose port arm, APM Terminals, operates the Brasil Terminal Portuario (BTP) facility in a 50:50 joint-venture with MSC’s TiL – had launched a legal challenge to overturn the regulations.
And now, with MSC and Maersk effectively out of the running for Tecon 10, by extension, the world’s third-largest shipping line, France’s CMA CGM, would also be barred from bidding for the project, since it recently acquired a majority stake in local operator Santos Brasil for around $1.1bn. And it would also eliminate DP World, given its 100% ownership of Santos’s Emabraport facility.
However, under Antaq regluations, the incumbents would be allowed to enter a second round of bidding, if no valid bids are received in the first round.
Meanwhile, the list of possible bidders for the project – which would see four new berths built in the Saboo area of Santos at a projected cost of $1.1bn, providing the port with an annual handling capacity of 3m teu and raising its overall capacity by some 50% – appears to be growing.
According to local reports, Brazilian commodities and energy conglomerate CSN, which controls the Sepetiba Tecon container terminal in Rio de Janeiro as well as large tranches of Brazil’s rail freight network, is considering a bid for Tecon 10.
Although most of its exports are channelled through Sepetiba, CSN remains one of the largest customers of the Norte-Sul Railway that connects Sepetiba to Santos’s terminals.
“With the complete connection of the Norte-Sul reaching São Paulo, securing control of the largest terminal in the São Paulo port will make a difference for [CSN founder Benjamin] Steinbruch’s group, [as it] would gain two options for shipping cargo,” Brazilian analyst Datamar reported.
According to Xeneta’s eeSea liner database, Sepetiba is currently served by just two liner strings: an intra-region service by Brazil’s cabotage operators; and the Sirius/Neo Bossa Nova Europe-east coast South America service jointly run by CMA CGM and Maersk.
In contrast, Santos currently receives calls on 66 services.
However, it is also approaching its capacity limitations – according to eeSea, last year it handled just under 5.5m teu, representing at 85% utilisation level, with nominal capacity at 6.4m teu. A port industry rule of thumb is that a utilisation of more than 80% normally results in congestion.
In terms of domestic potential investors, CSN is likely to be joined by the world’s largest food shipper, JBS, which made its debut in the port industry earlier this year when it took over operations at the port of Itajai and launched a dedicated JBS Terminais subsidiary.
On the international side, South Korean carrier HMM has publicly stated interest in Tecon 10, and it is likely to be joined by other Asian carriers such as Cosco, while smaller global terminal operators, including AD Ports, ICTSI, Yilport, and Hapag-Lloyd’s Hanseatic Global Terminals, all qualify to bid.
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