* 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 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
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
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
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
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
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)