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March 18 2019

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March 18 2019 | The Journal of Commerce 21 www.joc.com South America Trade and Logistics Cover Story Special Report increasing imports of fertilizer. When imports and exports are strong, there can be 1,000 inbound containers available weekly to match up to the roughly 5,000 outbound refrigerated containers, according to Maersk. A bumper cotton crop, driving exports up 9 percent in the third quarter, to 16,020 TEU, only added to the pressure. That trend contin- ued apace into the fourth quarter with 25,552 TEU exported, up 26 percent year over year. Coffee too increased during the fourth quarter of 2018, up a mighty 36 percent, to 19.586 TEU, and wood and wood products did well, up 10 per- cent to 54,971 TEU during the fourth quarter. "Imports need to make a comeback oth- erwise space on ships will tighten further as cotton crop volumes increase," said Denis Fre- itas, head of east coast South America (ECSA), Safmarine, a Maersk subsidiary. Chinese tariffs on US agriculture exports have ramped up demand for Brazilian cotton and soybeans. "Import volumes need to increase to fill up underutilized ships returning to Brazil. Once this happens and a balance is reached between imports and exports again, Maersk will start to look at adding capacity," the third-quarter report concluded. Early indications are that cotton exports were also strong in the fourth quarter; another bumper crop is expected this year in Brazil so the pressure of finding enough boxes to export the commodity will doubtless re-emerge. Brazilian imports of machinery, appli- ances, and electronics were down 6 percent to 32,498 TEU during the fourth quarter compared to the same month of 2017; those exports were flat, at 59,100 TEU, for the third quarter, according to Datamar, a shipping data provider. Imports of pulp and paper fell 16 per- cent during the fourth quarter, to 7.001 TEU, and registered a 17 percent drop to 9,400 TEU for the more voluminous third quarter. Plastics imports decline Plastics and rubber imports dropped mar- ginally year over year, to 43,214 TEU, during the fourth quarter after declining 3 percent to 51,500 TEU, for the third quarter. Chemical imports rose 10 percent during the fourth quarter, to 42,563 TEU, following a 14 percent year over year jump to 65,568 TEU during the third quarter. Metals, mining, and construction imports were down 1 percent during the fourth quarter, to 29.835 TEU, after expanding 15 percent to 49,994 TEU during the third quarter. "We had been struggling with recession — in both Manaus and Brazil — for the past three years, and although there was a brief surge at the start of 2018, electronics nose-dived after the World Cup finished in July," said Ramesh Tha- dani, the business ventures manager for Grupo Simoes, a Manaus-based logistics company for Growth in Brazilian container trades anticipated aer slow start to year By Rob Ward THE OUTLOOK FOR the Brazilian container trades looked bleak toward the end of 2018, but there are signs of a 2019 export rally that could offset import weakness. Import growth in the third quarter of 2018 was the slowest in two years, and inbound spot rates were falling amid muted holiday re- tail expectations, uncertainty over the incom- ing president, and mounting export concern about container availability. However, exports have been stable, and indications are that this year they could help fuel a broader economic recovery under President Jair Bolsonaro, who took office in January and is pushing ahead with wide-ranging economic reforms and a privatization push. Maersk Line forecasts that a 3 percent expansion of the Brazilian economy in 2019 will support a 5 percent increase in contain- er volume, to 5.14 million TEU, although a sluggish start is expected because of the late occurrence of the Rio de Janeiro Carnival this year. Brazilian container volumes for 2018 ended up 3.5 percent higher than in 2017. Brazilian imports in the third quarter of 2018 rose just 3 percent year over year to 474,000 TEU, the weakest showing since the third quarter of 2016 when imports fell 8.3 percent, according to a Maersk report. Exports in the 2018 third quarter rose 2 percent to 450,000 TEU. Unbalanced trade problems The slowing of import growth is worry- ing exporters who have already seen some refrigerated capacity decommissioned to handle Another bumper cotton crop is expected this year in Brazil so the pressure of finding enough containers to export the commodity will doubtless re-emerge. Shutterstock.com Chinese tariffs on US agriculture exports have ramped up demand for Brazilian cotton and soybeans.

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