Protesting Brazil dock workers stop ship from unloading cargo
* Brazil says to auction 159 terminals to private sector
* Regulatory reform will put exports in "crossfire"
* Planned port strikes come during peak grain export period
By Reese Ewing and Gustavo Bonato
SAO PAULO, Feb 19 (Reuters) - Brazilian dock workers, protesting a government port modernization drive that they fear will cost them jobs, stood fast for a second day on Tuesday, refusing to let nonunion workers unload a Chinese ship at Santos Port.
About 60 stevedores boarded the Zhen Hua 10 early on Monday, stopping it from unloading cranes manufactured by the Shanghai Zhenhua Heavy Industry Company. The cranes are to be installed at Embraport, a new private container terminal in Santos that does not use established union procedures to hire workers.
The incident is just a glimpse of what is in store for Brazil's world-leading commodities export sector if the government pushes through a sweeping reform of the country's port regulations.
Protesters were angry that crew members of the Chinese ship were being used to unload the cargo.
"We continue to occupy the ship because the company is not respecting our rights," said Rodnei Oliveira da Silva, president of the stevedores union in Santos. "They are putting Chinese workers in our place."
Union officials say the fight over the right to work the terminals in Santos, Brazil's biggest port by value of goods moved, is likely to intensify as the government unveils reforms of the 1993 Ports Law in the coming weeks.
Twenty years ago, Brazil opened the door to private investment into its terminals, though much of the infrastructure at the country's ports remains in state hands. But private and public terminals at Brazilian ports are still required to source workers through a centralized agency called the OGMO that doles out available shifts to union members.
Embraport, owned by local chemical and infrastructure group Odebrecht, the trading company Coimex and the United Arab Emirates' DP World, is one of the first private terminals here not required to contract labor through the OGMO.
And if President Dilma Rousseff or Congress does not modify Decree 595 to reform port regulation, the government could auction off 159 terminals to private investors that would also be free to ignore the OGMO and hire their own labor.
"I'm afraid this will end up in the courts," said Paulo Fleury, a director at the Logistics and Supply Chain Institute (Ilos). "And it will be the exporters and shippers caught in the crossfire between the unions, government and current terminal concession holders."
Fleury said it would be disastrous for existing concession holders of terminals, which will still be obliged to go through the OGMO, "if the government allows competing terminals to setup next door with a completely different cost structure."
Shipments of grain, sugar and coffee from Brazil may be in for a rough ride during strikes and protests that unions are planning for the coming weeks. Interruptions in flows of these basic commodities could affect futures prices, especially for crops whose yields have been hit by drought in North and South America.
Brazil's grain belt is in the midst of a record harvest of 83 million tonnes of soybeans and 74 million tonnes of corn. Exporters have already dispatched scores of ships to load and carry the crops away from local ports in the coming months.
As the world's population expands, Brazil will be one of the 21st Century's most important exporters of food due to its abundant arable land, water and sun.
"Negotiations to free the Chinese ship are well advanced. We will reach an agreement soon in which Embraport will contract local labor to unload the cranes," President of the umbrella union Forca Sindical, Paulo Pereira da Silva, told Reuters.
"But matters are going to worsen at the ports," he went on. "Santos workers will strike for six hours on Friday, stevedores voted to hold a nationwide strike soon, and port unions across Brazil voted to strike around mid-March against Decree 595."
The government plans to attract $27 billion in private sector investment in the next few years to modernize Brazil's underdeveloped ports.
President Rousseff has pushed forward the reforms as part of an infrastructure package that she hopes will help bring down what is often referred to as the "Brazil Cost." She expects to lower the cost of moving goods through ports by 20 percent.
(Writing by Reese Ewing; Editing by David Gregorio)
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