Brazil dock workers end strike, expose fragile ports

SANTOS, Brazil Fri Feb 22, 2013 2:54pm EST

Dock workers wait to get approval to unload a ship after a strike at the port of Santos February 22, 2013. REUTERS/Paulo Whitaker

Dock workers wait to get approval to unload a ship after a strike at the port of Santos February 22, 2013.

Credit: Reuters/Paulo Whitaker

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SANTOS, Brazil (Reuters) - Dock workers returned to work at ports across Brazil on Friday after they disrupted the movement of global commodities with a six-hour strike in protest of the government's plan to overhaul regulations and privatize hundreds of terminals.

The short-lived stoppage provided a glimpse of what could be a tense harvest for Brazil, one of the world's biggest commodities exporters, if unions do not reach a deal with the government and call off an open-ended strike set for mid-March.

Until then, ports should operate normally as both parties agreed to a negotiation period that runs through March 15. Workers decided to call off a second six-hour stoppage planned for Tuesday.

"We are tense, the companies are strong and the workers are weak in these negotiations," said Geraldo Ventura, a dock-side worker since 1974, as he waited to sign up for an afternoon shift at Brazil's Santos port.

Shipping lineups soared to more than 50 in Santos, which accounts for 25 percent of international trade in Brazil, and 90 in Paranagua, according to cereal exporters' association Anec.

"The paralyzation caused irreparable damage to the national logistics chain," Jose dos Santos Martins, executive director of the country's national association of terminal operators, known as Sosesp.

With a record soybean harvest and strong corn and sugar crops putting pressure on Brazil's antiquated roads and ports during a brewing labor dispute, doubts are mounting about the country's ability to meet delivery contracts.

Even before some 30,000 stevedores walked off the job at 36 ports early on Friday, expectations of delays caused top buyer China to cancel at least two soybean cargoes ordered from Brazil and buy from the United States instead.

"With the additional amount that we need to export this year, we just can't have any problems," said Anec's General Director Sérgio Mendes, referring to a soybean crop that is likely to be 25 percent bigger than last season.

Friday's strike halted 16 of the 26 ships berthed to load and unload at Santos Port and slowed the flow of soy, corn, sugar, coffee and containers at other big ports, including Paranagua, port authorities said.

Bulk grain loading, which is done via conveyer built and requires little labor, is normally uninterrupted at Santos, but the strike shut down most bulk cargo loading of grains.

Loading at the Copersucar and Cosan terminals, two of the world's largest exporters of sugar, was also temporarily stopped, Reuters reporters at Santos said.

Chicago grains markets rose early on Friday on news of the disruption at Brazilian ports, though they fell back later in the day after Ports Minister José Leonidas Cristino reached an agreement with union leaders in Brasilia to negotiate.

The government agreed to wave potential fines on unions that participated in the strike, which was not deemed legal.

"The strike was fundamental for us to obtain this agreement," said Sergio Nobre from the CUT umbrella union which oversees representation of several economic sectors, speaking to reporters at the Presidential Palace in Brasilia.

Minister Cristino, however, said the government would not allow changes in the "essence of the project," referring to proposed regulations that are being debated in Congress.

AFRAID OF PRIVATIZATION

The dock workers fear a government drive to privatize some 158 terminals starting later this year will lead to a loss of jobs and benefits because private operators would not have to hire through the centralized agency, known as "OGMO."

The Brazilian government says the planned changes for ports are needed to boost competitiveness as it seeks to attract billions of dollars in private investment to expand capacity to cope with burgeoning commodity exports.

But the government's decision to launch a major push for port reform that was likely to rile some of the country's biggest unions could not have come at a more delicate moment for Brazil or global commodities markets.

Brazil's grain belt is struggling to ship record corn and soybean crops that are likely to soon make it the world's No. 1 exporter of those grains, surpassing the United States.

At the same time, global grain stores are at record lows due to severe droughts that hit North and South American output in the previous season, raising concerns over food inflation.

The local farm sector has managed over the years to dominate much of the world's agricultural commodities markets by leveraging tropical sun, savanna and rains, and was a bright spot for Brazil's slowing economy last year.

But insufficient investments in local roads, railways and ports to keep up with the rapid expansion in the country's farming potential has raised the costs and risks of doing business with Brazil.

The decision to reform the Ports Law at the start of Brazil's main commodities export season may raise doubts among potential infrastructure investors, who Finance Minister Guido Mantega and other local officials will be courting during a road show in New York next week.

Despite the strong demand for Brazil's crops and the pressure to export them swiftly, workers in a steamy waiting room in Santos said they feared for their job security if the ports left the government's hands.

"Today there's a lot of work, but if there weren't ships in this public port here, there might not be," said Marco Aurelio Nascimento, who was returning to his job after the walkout.

(Additional reporting by Peter Murphy in Brasilia and Fabiola Gomes in Sao Paulo; Writing by Caroline Stauffer and Reese Ewing; Editing by Lisa Von Ahn, Nick Zieminski, Gunna Dickson and Jim Marshall)

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