How does the waiting time at the ports affect the navigation costs?

  • 04/12/2020
  • 11 分钟

Waiting times at ports can change the direction of a company and its goods! This is a major challenge in Brazil. In periods of high demand, especially when the Real is devalued in the international market, the search for Brazilian products grows, and it is necessary to be well prepared. That’s because, if the time is too long, all the logistics can become very expensive. This is what we will understand in more detail below.

Investments in infrastructure and professional training are necessary for the scenario to undergo changes. However, they will not happen overnight, as it takes time to put them into practice. The assessment is by Terezinha de Paula and Roberto Brandão, managing partners of TAP Consultoria e Treinamento em Logística, who granted an interview for this article.

What is waiting time at ports?

The waiting time at ports refers to the period in which a ship is on the bar waiting to dock, and which, added to the time required for unloading or embarkment, becomes the total stay in the port. This is what we call the turnaround time. This time is variable in each Brazilian port and can differ considerably from the waiting required for loading and unloading cargo.

The waiting for berthing depends on several factors. In some ports, long waits are “normal” throughout the year, but in others the bottlenecks become evident when there is a change in the number of ships, or in season with periods of rain, the harvest period of a given commodity, and so on.

In 2020, for example, with the increase in exports of soy and sugar, the port of Paranaguá, one of the largest bulk ports in Brazil, is one of those that suffers from waiting days at the bar to dock. To give you an idea, the wait in the bar for ships scheduled for the Export Corridor to load soy is around 30-40 days at the moment (end of October). And that is because it has improved, as it has recently reached almost 45 days in some cases. 

The biggest problem in Brazil is the lack of port infrastructure, which includes not only the port, but all other transport segments, roads, access roads, etc., which ends up increasing waiting times at ports, especially in times of peak demand for certain products.

More investment in infrastructure and professional training for those working in the segment, especially in the management areas, is essential to avoid a long waiting time at ports, especially in times of peak demand for certain products. Following the example of Asian countries such as China, South Korea and Malaysia could be the way for Brazil to become more efficient on loading and reduce operating costs, experts defend.

How does this wait affect the shipping industry’s costs?

The cost of waiting time at ports is something that everyone should be aware of. Often, companies begin to operate in the field of maritime chartering without knowing all the details that involve the practice and incur in this type of error.

“Smaller companies are often unaware of port structures and do not know the risks they are taking. And when the bill arrives, the shipowner (carrier) cannot be charged. The mooring of the ship itself ends up being expensive when it takes a long time in the port”, warns Brandão.

The fine charged for the delay of the vessel (called “demurrage”) has a very significant value, which is generally between US$ 10,000 and US$ 15,000 per day. “The demurrage is based on the price of the ship. There are companies that end up going bankrupt due to the high values of this delay to embark”, stresses Terezinha.

There are other problems involved, which can affect not only the port market, but the economy as a whole. Many international shipowners do not pass through Brazil, especially in periods of greater delay, due to the high costs involved.

In addition, when they accept to dock in Brazil as part of their routes, the cost of freight charged by these professionals increases considerably, precisely because of the anticipation of a longer delay than that found in other countries; something that can change, but it requires some initiatives that we will see later!

Role of climate in waiting time

There are certain products that can suffer due to the waiting time at the ports. Not all of them: non-ferrous metals do not have much of a problem with climate. Fertilizers, soy, sugar and others cannot be shipped during periods of rain, for example, as Roberto Brandão explains. “Seasonally, we know what the rainy months are. So, companies already get prepared”, he ponders.

The impact of the foreign exchange on exports

When the Real is very depreciated against the dollar, this also has a significant impact on ports. After all, Brazilian products become cheaper on the international market, which increases demand and, consequently, the pace of work in the segment.

“With the dollar up and the Real lagging against the US currency, our product is cheap abroad. And then, we managed to beat the USA, but we increased exports, which creates a cargo boom”, details the TAP partner.

Security risks

In addition to financial costs, waiting times at ports can pose security risks. “Some goods are explosive and most ports do not have a structure for these cargos”, comments Brandão. The world saw an unfortunate recent example about something similar, which took place in Beirut, this August 2020. For Brandão, the ideal is that the cargo does not wait in any port. “It must come and go straight.”

For ports that are very close to urban centers, as is the case in the capital of Lebanon, there are risks of disasters that must be avoided by everyone working in this segment. An observation that, probably, will be taken in great consideration in the debates about it for the next years.

How to reduce this waiting time?

The question has solutions! The reduction in waiting time at ports depends on investments in infrastructure that allow more agility in the process as a whole. This, however, would take a long time to occur, even if the resources were available immediately.

In the Port of Santos, proposals have already emerged, such as the implementation of waterways, which would improve the scenario by removing most of the cargo from road transport, especially larger ones, such as containers. Greater synchronization between trains and ships is another idea.

For Brandão, it is necessary that the ports have more berths, storage places and adequate port equipment. “They are building a new entrance to the Port of Santos, but there needs to be an access road”, believes the professional.

The union between shippers and professionals responsible for cargo is essential for the claim for improvements to occur in practice, believes Terezinha. “If they get together, they can propose improvements and be heard”, defends the partner of TAP.

This union — which should include associations representing business owners to work with the government in suggesting changes to the rules — is considered key by professionals in the field so that the situation improves. “The CAPs (Port Authority Councils) give a voice to companies linked to the port”, concludes Brandão.

In this article, we seek to provide an overview of one of the great challenges of logistics in Brazil: waiting time at ports. With the union of professionals, companies and public authorities, it is possible to improve the scenario. However, it is necessary to act now for the fruits to be harvested in the future, since structural changes require time and long-term investments.

Stay with us! Also check out our article on the challenges of the shipping agent.