Drought in the rivers of Manaus raises concerns for companies due to impact on the Port of Santos

Companies involved in the service between the ports are concerned about the situation, which could have a cascading effect, impacting the final customer (Tadeu Rocha/ Norcoast/ Disclosure)

Cabotage shipping and intermodal logistics companies are worried about the effects of the drought in the Amazon rivers on the Port of Santos, due to the fixed maritime transport routes between the port complex in Santos and Manaus.

Based on information recorded by the Agency of National Waters (ANA) and advanced regional data analyses, there are strong indications that there will again be restrictions on navigability during the dry season, between September 2024 and early 2025.

The situation mirrors that of the second half of last year. "Although the logistical problem in Manaus and the surrounding region was evident during the drought, it actually extended throughout Brazil. Santos was highly impacted, as it stopped receiving products from the Manaus Free Trade Zone that supply retail consumption, especially large department stores," recalls Luis Fernando Resano, Executive Director of the Brazilian Association of Cabotage Shipowners (Abac).

Resano adds that, at that time, some cargoes were not shipped due to concerns about their arrival in Manaus and the surrounding region. "Thus, with Santos being the leading container port in cabotage, it was heavily impacted in both loading and unloading operations", he states.

Companies

Marcus Voloch, Vice President of Navigation at Log-In Logística Integrada, reports that the company offers two regular weekly services connecting Manaus to the Port of Santos. He recalls that in 2023, the drought was not only longer but also more severe than in previous years, leading to the halting of navigation by larger vessels, something that had never happened before.

"Depending on the level and duration of the drought, the reduction in navigable river levels compromises navigability in the region, and navigation services need to reduce the volume transported to navigate safely to Manaus. This leads to greater restrictions on product distribution in the Southeast Region, as well as the supply of cargo from other Brazilian ports, such as Santos, to the North Region. In a more critical scenario, like in 2023, there could be a halt to the entry and exit of larger vessels at the Manaus port, and cargoes would be diverted through alternative means", he argues.

Gustavo Paschoa, CEO of Norcoast, a cabotage navigation company, comments that climate models show that the drought is related to global warming, not El Niño — which causes even more concern.

"This change makes us believe that more severe droughts in the North Region will be a constant, not only this year but in subsequent years as well. Consequently, there will be a cascading effect causing delays and cargo buildup at other ports. In Santos, as last year, we might experience congestion due to route redirection", he states.

In a statement, Maersk and Aliança, which are part of the same corporate group, informed their customers about the situation, requesting them to advance the transport of their cargoes related to the region as much as possible.

"Furthermore, unlike previous years, where the emergency and temporary Low Water Surcharge (LWS) was charged separately, in 2024, as a result of our efforts to meet customer needs even under adverse conditions, we offer a logistical and integrated service solution already included in the charged amount, always ensuring the feasibility of the provisional and floating pier solution", the statement explains.

According to Maersk and Aliança, the application of this charge will cease as soon as navigability conditions return to normal.

Ministry of Ports minimizes the situation

The Ministry of Ports and Airports (MPor) assures, in a statement, that no impacts on cabotage navigation between Santos and Manaus are anticipated. This is due to the measures taken, especially for the Manaus-Itacoatiara stretch. The National Department of Transport Infrastructure (DNIT), also in a statement, reports that it has not yet been notified by associations, companies, or municipalities about transportation issues on the mentioned stretch.

The Ministry highlights that in June of this year, DNIT, together with the Ministry of Transport and the Ministry of Ports and Airports, announced the launch of bidding notices for dredging services to ensure navigability of the Amazon and Solimões rivers during the dry season.

"To mitigate the social and economic impacts caused by low navigability, DNIT is advancing with the Annual Dredging Plan (PADMA) and the Nautical Signaling Plan", the Ministry details.

The planned investment is estimated at around R\$ 500 million over a five-year period. According to MPor, this amount will be used to hire companies that will carry out dredging and supervision services on the four stretches.

"The bidding process is expected to be completed in the coming days, with the expectation that services will start in the second half of 2024. In addition to ensuring the economic vitality of the Amazon region, these measures aim to minimize the impacts of adverse weather conditions, reinforcing the river transport infrastructure as a fundamental element for the sustainable development of the region and the country", the Ministry concludes in the statement.

The optimal time for dredging is early August, according to Luis Fernando Resano, Executive Director of Abac. However, the deadlines are a concern for the association, which has received information beyond the official reports.

"We have heard that there is already a winner and that it is in the homologation phase. DNIT informed that the contract will be signed by August 4 for the start of dredging. This is very close to the tolerable limit. We hope there are no delays and that the best equipment possible is used. The Navy, through its organizations in Manaus, has conducted preliminary soundings. We hope they are quickly updated after the dredging to facilitate navigation", Resano reveals.

Abac states that since the end of the 2023 drought, it has been working to ensure that the Ministry of Ports, the Brazilian Navy, through the Western Amazon River Captaincy, and DNIT form a working group to plan and address a potential drought similar to that one.

"The private port sector is also developing alternatives to mitigate a potential drought, such as the installation of a floating dock in Itacoatiara and increasing operational capacity in Vila do Conde, where the final leg of the cargo would be handled by barges, which, although leading to increased transit time and costs", Resano adds.

Problem may affect other regions of the country

The issues may extend nationwide, according to Luis Fernando Resano, Executive Director of Abac. "The impact is foreseeable, as Manaus is the second-largest port in cabotage container handling, and if we are unable to reach this port or have reduced operational capacity, the Free Trade Zone will face more difficulty in moving its production, and the region will experience shortages", he asserts.

The Manaus Free Trade Zone is responsible for manufacturing a wide range of products, including household appliances, vehicles, motorcycles, TVs, cell phones, bicycles, air conditioners, and computers, which supply the Southeast market.

A large portion of these goods is transported via cabotage, departing from Manaus to the Port of Santos for distribution in the Southeast Region. Similarly, in the reverse direction, inputs destined for industries and the population in the North Region are sent via the Santos port complex.