Brazil: weak import performance hinders export growth
A light recovery is expected for the Brazilian global commerce in the second quarter. “The market i…A light recovery is expected for the Brazilian global commerce in the second quarter. “The market is asking whether the Brazilian economy has finally reached rock bottom given that we are seeing in the first quarter an improvement over the weak import results seen in the last quarters. Even so, there is still much to improve and this is the moment to adopt new accords that favour Brazilian trade with infrastructure investments finally moving forward but if not, we will be far from a reasonable position for a good while to come, explains Antonio Dominquez, managing director for the East Coast South America, in the Maersk Group Trade Report Q1 2016 Brazil.
According to the report, the import has dropped by 31% and export grew by 16% in the first quarter, compared to Q1 of last year. The export volumes illustrate the big interest in exporting more and more, making it possible for Brazilian products being present in strong developing markets such as Asia and Middle East. However, the growth of the export is hindered by the weak import performance of the country. Even though export freight prices have improved, it’s still not enough to cover the costs of bringing more ships to Brazil.
It’s written that there are still challenges accessing the market. Nestor Amador, commercial director for Maersk Line in Brazil, Argentina, Uruguay and Paraguay explains that the weak currency and unstable internal market have increased the interest of doing business overseas. In his opinion, signing new bilateral accords is one of the solutions to increase competitiveness in Brazil together with the improvement of infrastructure.
Exports
The growth of 16% was mainly the result of reefer exports. Mainly the increase of sales to Asia made this possible, since Asia bought 23% more Brazilian products than they did last year in the same period. However, even though there is more demand for Brazilian export it’s hindered by the declining imports. There is not enough space available on the ships and prices of air freight towards Asian markets have increased.
A positive development for the export is the new RCM technology, which is used in the reefer export. It’s a remote control management for the containers, which makes it possible to collect data on, for example, temperature, humidity and for example ventilation during transportation. However, it also makes it possible to adjust it while being transported, with the result of increasing the durability of the cargo. In this way cargo can reach further and new markets.
The fruit, vegetable and plant industry has contributed to the total export growth with a 6% increase in the first quarter.