Problems such as the lack of containers have eased in recent weeks in Brazil

08/11/2022

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Problems such as lack of containers and delays in ship calls have eased in recent weeks on the Brazilian coast, even at peak times — Foto: Divulgação/Claudio Neves/Portos do Paraná

The logistical chaos triggered by the pandemic is not over, but the situation is starting to improve, analysts and companies say. Although freight rates remain high, problems such as the lack of containers and delays in ship schedules have eased in recent weeks in Brazil despite the peak season for global trade.

In the Brazil-Asia route, the nominal capacity of the two-way trade is expected to reach in August its highest level since the beginning of 2021, according to data from consultancy Solve Shipping.

“Logistics are beginning to return to normal. Blank sailings [call cancellations] have dropped a lot, we have seen a number of extra loaders [additional vessels], and routes are returning to regular scheduling. The strange thing is that this is happening in the peak season,” said Leandro Barreto, a partner at the consultancy.

At the height of the global logistics crisis, in addition to the skyrocketing price of freight rates, Brazilian importers and exporters struggled amid the lack of space in ships and containers, which often delayed operations or made them impossible.

A factor that has reduced such pressure is the economic slowdown in Europe and the United States, which ends up expanding the supply of capacity of ships and containers on the Brazilian coast, said Luigi Ferrini, the regional sales and customer service senior vice president at the shipping company Hapag-Lloyd. “In 2020 and 2021, much of the capacity was being allocated to other global routes,” he said.

Maersk projects that global container demand will be flat in 2022, but already sees a greater risk of a downturn caused by global inflation and a potential recession, according to a recent quarterly report.

This reduction in domestic demand, however, is not yet perceived in Brazil, said Rafael Dantas, sales director at the importer Asia Shipping. “The market has shrunk between March and May before rising again in June and July. Today, imports are heated,” he said.

Despite the strong demand, the lack of capacity has not been a problem, Mr. Dantas said. However, container freight rates remain high – a scenario that, in his view, will not change any time soon. “This new price reality is here to stay.”

Last month, the average import freight rate from Asia was $10,550 per 40-foot container, while the rate for refrigerated containers was $8,000. In January 2020, the rates were $2,050 and $3,100, respectively, according to data by Solve Shipping, published by the Nacional Confederation of Industry (CNI).

In exports, the highest freight rates are those of the routes to the United States. In July, the average price to the East Coast reached $10,600 per 40-foot container. In addition, the reefer container market remains under pressure. On the route to Asia, the rate is $6600, while the price to the Mediterranean and the Middle East is at $6800.

Maersk expects some normalization in the second half of the year, although the forecast remains a question mark. The company said in a note, however, that “normalization does not mean returning to pre-covid freight levels.” The company highlighted the substantial rise in fuel prices and time charter rates in the last two years.

Analysts believe it is too early to say that the crisis is over. The prevailing perception is that any increase in demand or logistical hurdle can bring problems back. One example is the fruit crop in the Northeast region, whose harvest will start soon and increase substantially the demand for reefer containers, said Mr. Ferrini, with Hapag-Lloyd.

In addition, with the war in Ukraine and the growing demand for inputs and food around the world, Brazilian exports are expected to rise, the executive said. Therefore, if during the peak of the pandemic the Asia-Brazil route was in great demand, now the pressure is likely to reverse course.

In addition, he notes that congestion in ports in Europe and the United States still persists, in some cases caused by strikes of workers in the sector.

Mr. Barreto also considers the tension between China and Taiwan as a point of attention to watch. “It is increasingly clear that any extraordinary event generates an impact. The entire logistics infrastructure is operating at the limit, so the tolerance to any event is zero,” he said.

*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/