Brazilian Operation "Red Tide" Resulting in Customs Delays

On March 23, 2012 Brazilian customs authorities announced that, in an effort to combat import fraud and under-payment of duties, they were commencing operation "Red Tide", "Maré Vermelha" in Portuguese, in which the number of inbound containers placed on hold pending physical inspection of goods and documents would be significantly increased. According to the original announcement, additional parameters would be placed on import transactions of goods and sectors considered of interest to the national economy, particularly non-durable consumer goods such as clothing, footwear, toys, electronics, bags, plastic products, and toiletries, among others. With fewer imports receiving an automatic release, companies in targeted industries have reported that in some cases more than half of all entries are being placed on hold under 'red channel.' While all ports have been impacted to some degree, critical ports such as Santos (SSZ), which handles more than 40% of all Brazilian imports, are experiencing significant backlogs and delayed cargo releases. The Brazilian government has yet to announce an end-date for operation Red Tide but it is expected to continue through at least June/July, and possibly further.