Maersk Line expects flat growth in Brazilian container exports next year, Maersk Line East Coast South America (ECSA) head has told CM.
The carrier predicts Brazilian trade to grow by a negligible 1% in 2017, when imports are likely to go positive thanks to slowly increasing business and consumer confidence.
Total Brazilian imports and exports went down by 2.5% in the third quarter of 2016, with a lower decline of imports (-8.6%) and a slower growth in exports (+2.9%) due to a stronger Real.
Exporters can however now benefit from a weaker Real following the US presidential elections in November, which saw the Republican candidate Donald Trump being elected as the country’s new President.
“In terms of trade in the fourth quarter, we can see that a depreciation of the Real is providing opportunities for exporters and this is positive,” ECSA’s managing director Antonio Dominguez told CM.
According to Dominguez, Brazil is currently recording very high volumes of reefer cargo to China and maintaining such a pace in 2017 would be considered a success.
As Dominguez added, while Brazil is starting to deliver on its fruit harvest in the northeast of the country, Maersk Line is conducting studies into how the extension of the Panama Canal could help reducing transit times between Brazil’s Pecém and the Chinese market.
Ricardo Arten, managing director of APMT in Brazil, told CM: “For now, these are just studies but we could be opening new market opportunities as fruits from the northeast usually head to Europe as the main destination, in particular the UK and Netherlands.
“There is clearly room for trade growth and we have seen this through the increase in container volumes in Pecém since September.”
As he added, at the Port of Pecém, the 18 m water depth of which is significantly higher than the average 12 m depth for Brazilian ports, APMT recently invested in two new ship-to-shore (STS) cranes.
APMT Itajai saw a double-digit rise in reefer exports in both September and October, with Arten telling CM that another good result is likely in November “thanks to an assertive commercial approach to attend the growing poultry and pork trade”.
Critical for Brazilian exports, Dominguez told CM, is the establishment of more trade agreements and infrastructure in the country, as well as lifting restrictions to open up its borders and create more trade opportunities.
Additionally, as Arten added, APMT is “keen to see a more competitive and attractive legal framework for public-sector concessions in Brazil”.
However, according to Dominguez, although the industry would welcome more trade agreements in the short-term, the government is currently focused on reinvigorating the Brazil’s economy, moving forward on certain key reforms and advancing possible infrastructure opportunities.
“There are a number of possibilities out there, the US recently announced a fresh meats accord with Brazil and Italy is calling for a bilateral trade accord between Brazil and the European Union as a trade accord now between the EU and the Mercosur trading bloc is now years in the making,” he said.
“Trade agreements are a long process and Brazil only has five accords at the moment so there is much room for opportunity, though, the country lags other Latin American peers such as Mexico, which has nearly 50 trade accords in place.”
Speaking about the recent US election, Dominguez commented that the company had a good cooperation with consecutive US governments over time and is keen to see move forward a potential trade accord the US and Brazil have been working on for a number of years.
“Earlier this year, the US and Brazil announced a new trade accord over fresh meat and this was a positive step but it will take time before this market matures,” he added.