Argentine shipping costs soar as grain heists rise

Saturday, August 30, 2014

The $24 that truck driver Hector Jofre usually carries to bribe gang members or shanty dwellers for access to Argentina's biggest grain port did no good one night in April.

Six youths in a pickup climbed on the back of the rig when Jofre slowed near a railroad track. They opened hatches that spilled 10 tons of corn onto the road and swept up as much as they could. Jofre said it took three more deliveries without pay to compensate his employer for the loss.

"It used to happen once a month," said Jofre, 31. "Now it's every day. Truckers are getting spooked."

Truck drivers in Argentina, the world's third-largest exporter of corn and soybeans, say theft and extortion are on the rise at the main port, Rosario. Although police have pledged to step up security, escalating crime has led to higher shipping fees and compounded delays at terminals, threatening the country's biggest source of dollar income at a time when Argentina's debt crisis has sent central bank reserves near an eight-year low.

The Argentine government has placed limits on currency exchanges to prevent Argentines from hoarding U.S. dollars, considered a secure currency in the economically challenged nation.

As grain supplies arrive from a harvest that is almost complete, thieves are targeting cargo, fuel and personal belongings on trucks headed into Rosario, where increasing drug trafficking led to a doubling of the murder rate in three years. The river city handles 80 percent of agricultural exports and is known as Argentina's Chicago -- the deadliest municipality in the U.S. -- for its link with commodities and crime.

Although data on agricultural crime isn't available, police and port authorities say incidents are on the rise, affecting deliveries to grain handlers including Cargill Inc. and Archer-Daniels Midland Co. Railway owner Belgrano Cargas & Logistica SA added security after convoys were looted in Santa Fe province, which includes Rosario.

"The federal and provincial governments need to get a grip on the situation," said Ernesto Ambrosetti, chief economist at the Rural Society, the largest farming group. "It isn't just jeopardizing public safety, but also the ability of the nation's agricultural industry to operate profitably."

Government and police officials pledged to step up security near Rosario's 28 export terminals after meeting with drivers Aug. 6, the Federation of Argentine Truck Drivers, which represents about 6,000 drivers, said in a statement. After receiving the assurances, the union said it canceled a planned strike to protest the crime wave.

Fernando Sostre, a spokesman for the Argentine Federal Police, declined to comment when contacted by telephone in Buenos Aires. Damian Umansky, a spokesman for Santa Fe Governor Antonio Bonfatti, didn't respond to two voicemail messages seeking comment, and the provincial police office in Rosario didn't respond to six telephone calls seeking comment.

Theft losses and demands from truckers for more pay to deliver in danger zones have sent grain-shipping costs surging, Ambrosetti said.

Massimo Macchiavello, a spokesman for Minneapolis-based Cargill in Buenos Aires, declined to comment on the violence and its costs. Mark Klein, a Cargill spokesman in Minneapolis, deferred questions to Macchiavello. Victor Camargo, a spokesman for Decatur, Ill.-based Archer-Daniels Midland, declined to comment on whether the company is paying higher prices. He said the company's security is handled by a third-party firm that's monitoring the situation. Jackie Anderson, a spokesman for Archer-Daniels Midland, didn't provide a comment.

"Theft has risen to such a level that it's now normal to see grains and oilseeds strewn over the roads to terminals," said Alfredo Sese, the technical secretary for the transport and infrastructure commission at the Rosario Exchange, the nation's largest grain market. "That wasn't the case a couple of years ago."

Trains are being targeted, according to Belgrano Cargas, the Buenos Aires-based rail operator that doubled security after thieves attempted to steal crop cargoes. A Rosario-bound freight train carrying 2,730 tons of soybeans valued at about $550,000 was looted May 19 after it was derailed by an object left on the tracks, Belgrano spokesman Gonzalo Sanchez Sorondo said. The attack took place in a poor area of the provincial capital, Santa Fe, about 50 miles north of Rosario.

The thefts are compounding delays and costs for shipments already being held up by the government's effort to curb drug trafficking with more terminal inspections, said Guillermo Wade, manager of the Port and Maritime Chamber in Rosario. Keeping a loaded ship docked for four days until inspectors conduct searches can cost an extra $100,000, he said.

For President Cristina Fernandez, Rosario is more than a public security concern. Crop exports generated $23.2 billion last year, the nation's biggest source of dollars, Association of Grain Exporters data show. The industry estimates grain accounted for 37 percent of all the country's shipments.

Last month, Argentina defaulted for the second time in 13 years after failing to reach an agreement with holders of government debt. A U.S. court ordered the nation to pay investors in full when it makes payments on restructured bonds.

Business on 08/30/2014