Labor unrest rocks ICTSI Brazil

Labor unrest has rocked the only remaining foreign port of International Container Terminal Services Inc. (ICTSI), the Suape Container Terminal in Pernambuco, Brazil.

But ICTSI chairman and president Enrique Razon Jr. remained optimistic they would be able to amicably settle the dispute with the five labor unions involved, although he noted that the labor pay situation in Brazil is "very different from other labor pay situations from other labor wages worldwide."

"This is a typical Brazilian labor situation, and we do not foresee any negative impact on either TSSA or ICTSI," Razon said. TSSA or Tecon Suape S.A. is the wholly-owned subsidiary of ICTSI responsible for the operations and development of the port terminal.

ICTSI bagged the 30-year concession in May last year for the Port of Suape, a 13,500-hectare industrial development zone located in northeastern Brazil. ICTSI will be investing about $8 million into the project as its equity contribution, on top of the estimated $60-million capital expenditures for equipment and facilities over the entire 30-year contract.

Suape is the first new foreign container terminal operated by ICTSI after the sale in June 2001 of its international subsidiaries with operations in six countries: Argentina, Mexico, Saudi Arabia, Pakistan, Tanzania and Thailand.

Razon said the company is currently in the thick of negotiations in a complicated environment wherein they are dealing with five different labor unions, whose wage rate is pegged, as in other Brazilian ports, on a per container move basis. The present wage rate stands at $60 per container.

In comparison, other laborers in ports around the world are paid wages and salaries regardless of how many containers are moved.

"When TSSA took over port operations in the Suape container terminal, one of its initiatives to improve productivity was to seek a lower rate on the container moves. This is the main issue that the five labor unions are up against," Razon said.

Apart from the unique charging of containers by labor, TSSA is also working out among the five labor unions their respective jurisdictions over the various tasks in the terminal, he added.

Razon said that despite the labor unions’ opposition to the lower rate proposal, TSSA will not hire port labor outside of the unions, which is why the Brazilian government and potential clients like Hamburg Sud have been supportive of the company’s efforts to negotiate with the port workers.