The largest port complex in Latin America is at the limit of its cargo handling capacity. Responsible for 30% of the transport of the Brazilian trade balance, the port of Santos has a capacity of 162 million tons a year, and by the end of 2021 the movement should reach 150 million tons. But today this is not seen as a problem. The solution is in the ongoing investment package of around R$ 10 billion, until 2025, in private resources, to expand terminals. “Lease auctions are very well addressed. Production needs to be disposed of. These investments will benefit the economy,” said Fernando Biral, president of the Santos Port Authority (SPA), a public company responsible for managing the port of Santos.
Of the 11 auctions scheduled for the concession of terminals, four have already taken place and two of them are planned for November. The other five will be until 2022. The package also includes R$1.8 billion in the road-rail system and another R$2.5 billion from current lease contracts. “With this, our plan is to reach the capacity of 240 million tons by 2040.”
The need for expansion in no way affects the good performance of the port, which was not even impacted by the economic crisis caused by the Covid-19 pandemic. On the contrary. Last year, SPA closed with net revenue of R$ 1.1 billion (11.5% above that registered in 2019). Invoicing continued on the rise in the first half of this year, when the company obtained revenue of R$ 549 million. And 2021 is heading to be the most profitable year in history. In the first half of this year, SPA earned R$ 170 million, close to the R$ 202 million registered throughout the year 2020. “For us, there is no crisis at the port. Last year, handling grew 10% and containers, which parked in 2020, have already registered a 20% increase this year”, said the executive. The average annual growth of the port’s tonnage, between 2009 and 2021, reaches 5%, well above the GDP (Gross Domestic Product), which registered an average high of 1.2% per year.
To achieve this result, the company also made a strict cost reduction plan. In three years, administrative expenses fell 36.4%, from BRL 88 million in the first half of 2018 to BRL 56 million in the first six months of this year. “This includes personnel expenses and represented a great cost reduction. We also re-licited contracts and made cheaper contracts”, said the president of SPA.
The company’s good scenario today, which involves cash revenue registered in the first half of this year of R$ 1 billion (almost eight times more than that observed in the first six months of 2018, when it closed with a cash position of R$ 138 million). Until 2018, the company had a loss. “I had accounts such as social security deficit and this was not recognized in the balance sheet. An infrastructure company needs to make a profit and generate cash to make investments. And there was inefficiency in the management of the port”, said the director of the port authority.
“Today we have a technical and collegiate administration. Political appointments are a thing of the past” Fernando Biral, president of the Santos Port Authority.
According to Biral, in the last 20 years, and until 2018, the National Treasury contributed something around R$ 1 billion, in nominal values. This means receiving public resources that could be directed to other sectors. “The port disputed part of the Union’s budget with education and health, for example.”
Today the port sails on a calm sea. SPA arrives with solid cash for the privatization process of port management in Santos, which should be concluded in the second half of next year. In November, the grant amount will be announced. As a mandatory investment, the construction of a tunnel between Santos and Guarujá, in the amount of R$ 3.5 billion, will also be listed in the package.
Although the conclusion of this process takes place in the middle of a fierce electoral race, Biral does not believe that privatization can be affected by the political heat of 2022. “Today we have a technical and collegiate administration. Political appointments are part of the past,” says Biral. The president guarantees that the port is financially ready for privatization. “We went through steps and everything was mapped. There is nothing under the rug and we are at another level of transparency and governance.” Above all, the private sector will bring more agility in hiring and executing important projects, such as dredging and the logistics system.
But not everything is perfect. The port consultant and managing partner of the Porto Fabrizio Pierdomenico Agency, says that there are many answers that need to be answered by the government before the concession. “Much of port management in countries like the United States and others in Europe is still in the hands of the public sector. I’m not against the concession, because there are public and private models in the country, but a balance is needed”, he said. “The public authority negotiates and guarantees harmony between public and private interests within the port. You need to know if a private player will be able to do this.” Anyway, the navigation plan for the largest port in the Southern Hemisphere is ready. And points forward. All that remains is to pull the anchor.