Wednesday, September 15, 2010

Logistics Backlog

For those of you who can read Portuguese, here is the article on the backlog in Santos.

As mentioned several times already, infrastructure is a massive problem in Brazil. Especially with the economy hot as it is (growing at 7-8% in 2010), infrastructure is starting to crack at the edges.

The delay of 15 days or more for ships to get into Santos, the main Brazilian port, has been commonplace since the beginning of the year. Once ships do arrive, it takes another 10 days to get the container out of the port and to your warehouse (if this is in the São Paulo metro area). The view is pretty spectacular (not to say frightening for logistics managers) looking out from an airplane flying over Santos to São Paulo - you can see ships lined up for dozens of kilometers, waiting to be let in.

I see it at my company and several of my suppliers, as we import a fair amount of raw materials from Europe, NAFTA and China. We have already also tried alternative ports, but the major ones in the south, such as Paranaguá and Itajaí are not much better and similarly clogged.

The situation is very similar at airports. It has become fairly common for cargo to get lost at Guarulhos (São Paulo) airport. Recently returning from Argentina, our plane had to park at an outside position (Guarulhos passenger load is at 120% of capacity, another problem...) and we took the bus, driving by the cargo terminal - containers, boxes, crates and drums all over the place - I am surprised that we are getting anything by air at all... Leadtimes for airfreight have also gone up - it takes, on average, 10 days to get a slot for an airshipment to Brazil, and as most of the freight goes through São Paulo (some goes through Campinas-Viracopos), there are few alternatives.

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