Mercosur–EU agreement could transform the Port of Santos and double cargo throughput within ten years

The Port Authority believes current throughput of 180 million tonnes per year could grow to nearly 400 million tonnes (Alexsander Ferraz/AT)

The Santos Port Authority (APS) estimates that the trade agreement between Mercosur and the European Union (EU) could double the annual cargo flow at the Port of Santos within up to ten years. This expansion in throughput would be driven by market opening, tariff reductions and increased competitiveness of Brazilian exports.

The treaty was signed last Saturday in Paraguay after more than 25 years of negotiations. The agreement provides for the gradual reduction or elimination of tariffs on more than 90% of trade between Mercosur and the EU, particularly benefiting agribusiness and higher value-added industrial sectors.

According to APS president Anderson Pomini, there will be a direct impact on the Port of Santos’ quayside operations. “It is one of the largest trade agreements on the planet. It involves 27 countries, a population of 718 million people and a GDP of around US\$ 22 trillion. It has the potential to double cargo throughput at the Port of Santos within five to ten years,” he said.

Pomini notes that the port currently handles 180 million tonnes per year. With the expansion of these markets and the creation of new maritime routes, the volume could reach nearly 400 million tonnes. He highlighted that integration between Europe and South America tends to reorganize global logistics chains, opening space for more vessels and business operations in Santos.

For APS, the agreement benefits strategic sectors of the Brazilian economy with strong participation in the export agenda, such as agribusiness, the automotive industry, the aeronautics sector, and the machinery and technology segment. “We celebrate it, but we also take on the responsibility of preparing for the next 20 years by deepening the navigation channel, improving access and increasing capacity,” Pomini emphasized.

“Today, the Port of Santos is already facing difficulties, especially in land access. If we have challenges operating at the current level of cargo handling, what would it be like with an increase, for example, of 30%, 40% or 50%?” says Ivam Jardim, port consultant at Agência Porto (Divulgação)

Diversification

Economist Roberto Paveck believes that one of the most relevant effects of the agreement is the reduction of import tariffs on capital goods, machinery and equipment. He says this movement tends, over time, to be reflected in lower investment costs and may have a positive impact on port modernization by expanding access to technologies currently concentrated among Asian suppliers.

“By diversifying sources and expanding technological alternatives, the agreement creates a more favorable environment for investment decisions in the sector. This is not an immediate change in operations, but a factor that can gradually support an increase in technological standards and efficiency across the port system,” he says.

The treaty now moves on to internal ratification processes. In the European Union, the text will be reviewed by the European Parliament and may also pass through national parliaments. In Mercosur, it will need approval from the congresses of Brazil, Argentina, Paraguay and Uruguay.

Expert rules out immediate surge

For port consultant Ivam Jardim, of Agência Porto Consultoria, from a technical standpoint, talking about doubling throughput in the short or medium term is a very optimistic assessment, “for which I do not currently see concrete justification.”

Jardim explains that the agreement is relevant, but it does not create new markets from scratch. “It improves access conditions, reduces tariffs, expands quotas and provides predictability. This tends to accelerate existing flows, not multiply them.”

He recalls that Europe is a mature market, where the population already has access to goods, food and industrial products. In other words, there is no suppressed demand that would require a significant increase in commodities.

“The European population is not growing. In many countries, it is shrinking. Therefore, there is no demographic driver to support a doubling of consumption. What may grow is added value, quality and trade regularity.”

Ivam Jardim states that the issue brings to the forefront a necessary discussion about the physical and operational limits of the Port of Santos. “Today, the port already faces difficulties, especially in land access. If we have challenges operating at the current level of throughput, what would it be like with an increase, for example, of 30%, 40% or 50%?”

The consultant points to the need for expansion of the port area, effective improvements in road and rail access, and increased capacity of the navigation channel. “It is not enough to deepen the channel to 17 meters. It is essential to increase operational capacity — that is, the number of vessels that can enter and leave per hour — to avoid queues, missed windows and inefficiency.”