Brazilian Cotton Exports

This is not due to an inadequate port infrastructure that is unable to handle the volume, but this is mainly as a result of the following reasons.

• Shipping lines have reduced the tonnage offered to the market.
• Imports to Santos are scarce, which means that there is an occasional lack of empty containers available, thus aggravating the situation.
• There is a reduced number of bonded warehouses in the city area for loading and clearance, as many were closed by authorities for irregularities.

The cotton supply chain has another unfortunate factor to consider: the season for this supply chain is from August to December, which coincides with the market peak season, meaning big volumes of cargo need to be shipped in four or five months.

Solution

After considering all of the factors above, we started to investigate possible alternative routes that could actually generate solid benefits for the market.
We found one single route with export space underutilized by shipping lines - through Manaus.

This is an import area with the following already installed: a free trade zone, most of the necessary electronics, and domestic appliances - and the two-wheeler and plastic segments have large assembly and/or processing plants in Manaus. After being processed, these goods are distributed domestically in Brazil.
This means these plants import all the spare parts, CKDs, and raw materials from overseas, in 40' feet equipment mostly from Asia, and these are shipped back with almost no exports; they are shipped back to Asia completely empty.

The solution FMS has designed basically consists of making good use of these available empty containers and creating space for exports through an inland location called Porto Velho, Rondônia.

The following can be seen in the image:

• The state with the largest cotton production in Brazil is Mato Grosso (Sapezal area).
• The trucking distance to Santos is 2,100 km.
• The trucking distance to Porto Velho, Rondônia, is 950 km.
• Containers go by barge from Porto Velho to Manaus.
• In Manaus, containers are transshipped to their mother vessel and exported through Panama.

Through our partners in Porto Velho, we have developed a bonded warehouse that is able to operate with cotton bales; hired operators from Santos who are experienced in using forklifts with cotton stay in Porto Velho and train the local staff. We also presented the project to the Ministry of Agriculture, Livestock and Food Supply and to customs inspectors before we started operating, and we prepared the area for operations.

Result

Since December 2018, FMS has been operating at a steady level throughout the low season.

With one point of contact and one unified invoice, FMS performs stuffing, inspection, and customs clearances, as well as handling phytosanitary certification in Porto Velho and sea freight to final destinations.
Containers are loaded onto the barge in Porto Velho, already sealed and cleared with our lading bill from Porto Velho until the final destination.

This solution has already proven successful with not only cotton, but also lumber and iron ore from the region. We are also researching possibilities for sugar, coffee, and soybeans.

If you would like to find out further details, or if you are interested in this new route, please do not hesitate to contact our FMS Brazil team: Brazil @ FMS