BMI forecasts that the Port of Itajaí is set to record very healthy growth in 2014 in both tonnage and box throughput terms. This impressive level of growth should continue over the medium term, although risks are posed by Brazil's lagging freight transport infrastructure and industrial action by Brazilian workers.
We forecast that the Port of Itajaí will handle 1.20mn twenty-foot equivalent units (TEUs) in 2014, which translates into impressive year-on-year (y-o-y) growth of 9.00%, up slightly on 2013's estimated annual gains. In 2014, we forecast that total tonnage throughput at the port will grow by 13.00%, following 2013's expansion of 12.35%. If this scenario is realised, this would see 14.25mn tonnes handled at Itajaí in 2014, up from 2013's 12.61mn tonnes.
On the downside, however, we caution that the port's volumes could be affected by industrial action, which are becoming increasingly common in Brazilian ports. In 2012, there was a wave of strikes across Brazil from May onwards, with public sector workers agitating for pay rises; these strikes continued into 2013, with workers threatening to shut down facilities.
Further downside risks to our forecasts for the port are presented by the possibility of a repeat of the flood damage sustained at the facility in 2011. Dangerously high river levels and strong currents caused serious flooding at the port, suspending operations for almost a week and causing substantial losses at Brazil's second busiest container terminal. Although the port's throughput levels have made a strong recovery after being hit hard by floods in 2008, we caution that the possibility of further damage presents downside risks to our forecasts.
BMI believes this damage is cause for concern, given that this is the second time in the past few years that the port has been damaged by flooding. In 2008, the port's quay and patio areas sustained major damage as a result of heavy rains. In 2013, however, the damage was reduced as a result of state-funded dredging works, as well as the installation of an early-warning system, allowing the port to reopen in less than a week. Robert Grantham, commercial director for the Itajaí Port Authority (IPA), said that although the port had been closed for nearly a week, the damage could have been worse: 'If not for the recent dredging here we could have seen a repeat of the 2008 catastrophic flooding, which caused such devastating damage to the port infrastructure. We have all learned lessons from the floods three years ago.'
|Growth Shoots Up|
|Port Of Itajai Container Throughput, TEUs, 2000-2018|
Despite advances in damage-limitation systems, BMI believes the latest flooding will be a cause for considerable concern for IPA and container terminal operator APM Terminals, given the extent of the damage sustained in 2008 and the cost of the reconstruction works. Before the 2008 flooding of the Itajaí Acu River, the Port of Itajaí was Brazil's second largest container port after Santos, with throughput of 681,852TEUs and 693,580TEUs in 2007 and 2008 respectively. Flood damage, which washed away two berths and caused port operations to be temporarily halted, saw the port's container volume plunge to fourth place among Brazilian ports, with throughput of 593,359TEUs in 2009, down 14% y-o-y.