Navigating Brazil's Tecon 10 Port Auction: Regulatory Shifts and Strategic Infrastructure Opportunities

The Tecon 10 port auction in Brazil's Port of Santos has become a pivotal test case for global investors seeking to capitalize on Latin America's infrastructure boom. At stake is the construction of a $1.0 billion container terminal capable of handling 3.5 million TEUs annually—a project critical to alleviating congestion at Latin America's largest port, which is projected to reach capacity by 2028. Yet, the auction's regulatory framework, designed to curb market concentration, has sparked fierce legal battles involving shipping giants Maersk and MSC. These disputes underscore a broader trend: global players are increasingly contesting local rules to access high-potential logistics assets, while regulators push ex-ante antitrust measures to diversify competition. For investors, the Tecon 10 saga presents both risks and opportunities—especially for those willing to navigate regulatory uncertainty.

The Regulatory Crossroads

Brazil's National Waterway Transport Agency (ANTAQ) has barred current terminal operators—Maersk, MSC, CMA CGM, and DP World—from participating in the first round of bidding for Tecon 10. The rationale? To prevent further consolidation in a market already dominated by these firms. Only “new entrants,” such as JBS Terminais or Asian infrastructure funds, can bid in the initial phase. Existing operators may join only if no viable proposals emerge—a scenario ANTAQ deems unlikely.

Maersk and MSC have responded with lawsuits, arguing that excluding global expertise risks undermining the terminal's value. Maersk's June 17 lawsuit demands procedural changes to ensure a “fair process,” while MSC threatens litigation if Brazil's Federal Audit Court (TCU) upholds the restrictions. These challenges reflect a recurring theme: multinational firms are pushing back against regulatory efforts to limit their influence in key markets.

Broader Trends in Infrastructure Regulation

The Tecon 10 rules mirror a global shift toward preemptive antitrust measures in infrastructure auctions. In Brazil, this approach has extended beyond ports to sectors like sanitation (e.g., Aegea's sewage PPP challenges) and telecommunications (e.g., ANATEL's 4G spectrum auctions). The goal is to foster competition by restricting dominant players' participation upfront—a strategy that can deter monopolistic practices but also alienate experienced investors.

For Latin America, this regulatory tightening creates a paradox. While it aims to attract new capital and expertise, exclusionary rules risk deterring global operators whose scale and resources are critical to ambitious projects. The Tecon 10 auction is no exception: delays and legal uncertainty have already pushed the timeline into 2026, raising concerns about investor confidence.

Investment Opportunities and Risks

1. Betting on New Entrants: JBS Terminais and Asian Funds

The exclusion of legacy operators opens doors for under-the-radar players like JBS Terminais, the logistics arm of Brazilian meatpacker JBS. JBS has positioned itself as a credible bidder by hiring Aristides Russi Junior, a former CEO of Maersk's port unit, and leveraging its experience in port acquisitions (e.g., in Itajaí). Its bid could capitalize on ANTAQ's preference for “new entrants,” offering investors exposure to a potential winner in the Tecon 10 race.

Meanwhile, Asian port infrastructure funds—already active in Latin America—are eyeing the terminal as a gateway to Brazil's $164 billion agribusiness export market. Investors with stakes in these funds could benefit if the rules hold, though execution risks remain.

2. Infrastructure Funds: A Play on Regulatory Volatility

For risk-averse investors, Brazilian infrastructure funds (e.g., BNDESPar or private equity vehicles focused on logistics) offer diversified exposure to projects like Tecon 10. These funds often have expertise in navigating regulatory hurdles and could benefit if exclusionary rules spread to other sectors, as seen in railways and energy.

3. Caution with Legacy Operators

Maersk (Copenhagen: MAERSK-B) and MSC's parent company (Switzerland's MSC Group) face dual risks: legal setbacks and reputational damage if their bids are blocked. Their stocks have already shown volatility amid the Tecon 10 dispute.

Investors in these firms should tread carefully until TCU rules definitively—delayed decisions could prolong uncertainty, weighing on valuations.

Conclusion: A Strategic Balancing Act

The Tecon 10 auction epitomizes the tension between regulatory ambition and investor pragmatism. While ANTAQ's rules aim to democratize access to Brazil's logistics goldmine, they risk stifling participation from global operators with the capital and know-how to execute complex projects. For investors:

• Go Long on New Entrants: JBS Terminais and Asian funds stand to gain if exclusionary rules endure. Monitor their progress through the bidding rounds.
• Diversify via Infrastructure Funds: These vehicles offer exposure to multiple projects and regulatory landscapes, reducing single-asset risk.
• Avoid Overcommitting to Legacy Operators: Maersk and MSC's legal battles could drag on, making their stocks volatile until clarity emerges.

The Tecon 10 terminal is not just a port—it's a microcosm of Brazil's infrastructure ambitions. Investors who bet on the right players and sectors while hedging against regulatory risk could reap rewards as Latin America's logistics networks modernize.

Final note: Stay attuned to TCU's rulings and legal developments. Regulatory clarity could trigger a market revaluation within months.