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Brazil Freight Transport Report Q2 2010Published by: Business Monitor International Published: Jan. 26, 2010 - 79 Pages Table of Contents
AbstractA number of international shipping lines were reported, in November 2009, to have reached an impasse with Brazil's largest food exporter, Brazil Foods over setting freight rates for 2010. The company, formed by the merger of two of the country's largest food producers in May 2009, has unrivalled dominance in Brazil's export market and accounts for about 50% of total chicken shipments. According to Seatrade Asia, container lines Nippon Yusen Kaisha (NYK), K-Line, Mitsui O.S.K. Lines (MOL), Evergreen and Hanjin Shipping, were all in negotiation with Brazil Foods, having up to that point, failed to reach an agreement on freight rate levels for 2010. The companies were reportedly concerned that Brazil Foods' dominance of the Brazil's food export market, would force the cost of shipping to Asia and the Middle East downwards. Indeed, a logistics manager at the company, quoted by Seatrade Asia, said: 'We are looking for reductions in all services, including to Asia, as usually with greater volumes you get greater reductions in price per box.' Brazil Foods was formed in May 2009, by Perdigão's acquisitions of debt-laden Sadia. Brazil's meat industry has become a lucrative market for the container shipping sector in recent years. Blessed with extensive land for breeding, Brazil has become a major exporter of frozen meats - shipped in refrigerated containers -supplying China, Japan and the Middle East, as well as European markets.Since our last report, we have again edged up our Brazilian growth forecast. We continue to estimate GDP contraction of 0.6% in 2009, but now expect a stronger recovery in 2010, with growth of 5.0% (was 3.6%). We have kept the rate for 2011 at 3.9%. We now expect annual GDP growth to average 4.2% in 2010-2014, up from 3.5% in the preceding five years. We now link our maritime freight forecasts to changes in overall trade volumes (rather than GDP), and therefore take account of slower export performance and the downturn in shipping rates in 2009. We maintain an earlier reduction of our airfreight intensity estimates for 2009, but note that a recovery is now underway. The pipeline throughput forecast was earlier raised marginally towards the end of the forecast period, taking into account increased gas demand and the expected growth in ethanol exports. As a result of these changes, our freight carried forecast is for annual average growth of 7.6% in 2010-2014, measured in million tonnes per km. According to our latest estimates, transport and communications GDP will have fallen by 0.2% in 2009, less steeply than overall GDP, which we estimate will have contracted by 0.6%. For the 2010-2014 forecast period we expect the transport and communications sector to outpace the economy as a whole. It will achieve average annual growth of 4.5%, versus 4.2% for overall GDP for 2010-2014. The total value of transport and communications GDP, will rise to US$148.5bn in nominal terms by 2014, representing 5.4% of Brazil’s GDP. The transport and communications sector employed 4.99mn people, or 5.0% of the labour force, in 2009. We see these figures rising to 6.18mn and 5.5% by 2014. For the rail sector, we see freight carried, measured in million tonnes per km, growing by an annual average of 6.3% during the five-year forecast period, down from 6.5% in 2005-2009. Rail should enjoy a favourable combination of demand and expanding capacity, as new investment flows into the operations of the privatised operators. There continue to be no reliable statistics on Brazilian road freight haulage. However, based on BMI estimates we expect freight carried to be growing more slowly than rail, at an average of around 5.4% a year, because investment to improve and repair the highway network will take longer to have an effect. Despite the collapse of Varig, the catastrophic TAM accident of July 2007, and real concern over the ability of the air traffic control system to cope, underlying demand for airfreight has remained resilient. We now expect the growth figure in 2010-2014 to be an annual average of 7.2%. Total traffic carried by Brazilian shipping will rise by an average of 9.5% per annum in the forecast period, compared to 7.2% registered in the preceding five years. Get Full Details About This Report >> |
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