Maersk and CMA CGM: Suspend direct flights to the port

Two major container shipping lines, CMA CGM and Maersk, have advised customers to suspend direct services to the port of Manaus until further notice.

The port is a major transportation hub in the upper Amazon basin and is located on the Rio Negro River, near where it joins the Solimus River to form the Amazon. Data on the port's website on Monday showed it was the lowest since records began in 1902, and the water level was falling further. The water was too shallow for navigation, and some communities up the river were virtually cut off from traffic.

A barge carrying trucks and empty oil tanks has been stuck on a sandbar since last month. The federal government has set up a task force to mitigate the effects of severe drought in the region and provide emergency supplies of water, food and medicine to affected communities. It also allocated 41 million reais ($8.2 million) for dredging to restore navigation to the river.

However, the Amazonas state government is preparing for the worst drought the region has ever experienced. The phenomenon is exacerbated by El Nino and by air currents from warming waters in the tropical Atlantic Ocean that impede the formation of rain clouds. According to a report, as many as 90 percent of conventional vessels on the Amazon are currently operating under restrictions, and state governments have called for a halving of freight capacity.

This is affecting the region's supplies and its imports and exports, from grain to mobile phones and other consumer electronics produced in Manaus' large free trade zone. Officials warned that food exports could be disrupted. On Friday, CMA CGM warned customers that the situation had "reached an alarming level", restricting container ships from entering the port. "Cma CGM has no choice but to divert its vessels [serving in Manaus] to other ports," it added. The ships will be unloaded at the ports of Pesim and Fortaleza (originally bound for Manaus and Vila do Conde).

Earlier, the container shipping line announced a low water surcharge of US $750 per TEU in Manaus from September 25, rising to US $1,100 per TEU from October 25.

Maersk has also informed its customers of its contingency plans to deal with the Amazon's deteriorating environment. "Alianca, our feeder supplier, has announced that due to force majeure, cargo on ships bound for Manaus will be unloaded at other ports," the company said. Container shipping lines are also unable to predict when cargo traffic will return to Manaus. Cma CGM said: "The weather conditions that caused these restrictions were unstable, which made it impossible to accurately provide improved forecasts. The cargo from these ships will be transported to Manaus as soon as the water levels allow."

As the water level is still falling, there seems little chance of improvement in the short term.

Observers expect the drought to last longer than usual because of bad weather and smoke from wildfires in the Amazon region. Some forecasts show the lack of rainfall in the region continuing through the second half of December and possibly into next year.

That raises the possibility of further restrictions in the region, which would further push up freight rates. Currently, Maersk offers a limited alternative transport option, namely the provision of truck and barge services between Vila do Conde and Manaus. However, this scheme does not apply to dangerous goods and refrigerated goods.