Automotive shipments in and out of Brazil could be hit by widespread and ‘indefinite’ strike action involving customs officials across the country, which is threatening to frustrate recent attempts to solve congestion at the country’s ports. Industrial action has already been reported at a number of ports including Santos, Paranagua, Salvador and Manaus, as customs officials attempt to negotiate wage increases and better working conditions with the government.
The strikes are also affecting airports and bonded warehouses.
According to Inchcape Shipping Services, the global maritime services provider, the strikes by Brazilian customs officers are disrupting major ports and the clearance of imported goods has slowed significantly. Inchcape reports that unless this week's negotiations with the government are successful, interruption to vessel movements is likely to intensify.
The officials have said that they will be stopping work for two days week for an indefinite period while for the remaining days they will work at a minimum level, almost guaranteeing delays at the ports until the situation is resolved.
Importers, including industries that rely on raw materials and parts, such as the automotive sector, are expected to be badly affected.
Brazilian ports have been suffering from congestion for some time. Last year GM reported problems at Rio Grande and Nissan was facing difficulties at the port of Paranaguá.
There were also problems when Brazil failed to automatically grant licences for finished vehicles and parts from Argentina following similar restrictions placed on imported Brazilian products by Argentina.
More recently, congestion problems at Argentine ports, such as Zarate, have also been affecting Brazil’s car terminals thanks to an overflow of export units bound for Argentina.
Recent reports that improvements have been made to increase capacity and throughput, such as 77% increase in imports through Paranagua in the first quarter thanks in part to the use of dedicated new areas for vehicle storage, have suggested a move forward.
However, while these efforts reflect well on the terminal operators and forwarders involved, it may be disguising a more deep-seated problem that some commentators have said ultimately lies with the government under president Vana Rousseff.
Responding to the 27% improvement in throughput recorded for 2011 at Paranagua port, Miguel Malaguerra, operations director at Grimaldi Group, said that the solutions found had been administered in an ‘ad hoc’ fashion and in “precarious conditions”.
Commenting via the dedicated Finished Vehicle Logistics forum on LinkedIn, he said: “The fact is that all Brazilian ports operating ro-ro cargoes are congested and operating beyond their designed capacity, which causes huge quality and logistics problems,” he said. “Nonetheless, these ongoing record breaking volumes can be celebrated and, largely so, due to the competence and creativity of all the parties involved, with notable exception of the government authorities. [This] then raises the question that we may be promoting a false sense of well being and erroneous perception by these authorities that all is well in the ports sector – a bit of a Catch-22 situation.”
In other breaking news from South America this week, Argentina is reported to have suspended its automotive trade pact with Mexico until it negotiates under the same conditions that determined Mexico’s trade accord for automotive with Brazil.
According to Reuters, the move came after Argentina said in March it planned to seek more favourable terms in the pact, known as ACE 55, aiming to follow in the footsteps of Brazil, which won concessions limiting the number of Mexican vehicle exports to the country.
Argentina has come under renewed pressure in April this year from the WTO for its import-licensing measures, which member states said are restricting trade across a range of goods including vehicles and automotive parts (read more here).
A report on finished vehicle port volume and activity in South America will be published shortly in the July-September issue of Finished Vehicle Logistics.
