Wake-up call for a sleeping giant

One cannot say that Latin America has risen like a phoenix from the ashes of late, but at least the region’s trade has recently returned to ruder health. The maritime consultancy Dynamar has analysed the latest trends for the continent.

 

Declining volumes of trade over a certain period of time seem to have caused even the larger maritime carriers and bigger logisticians to largely lose interest in Latin America. Between 2013 and 2017, South America’s goods trade shrank by 20%, or approximately USD 222 billion, in the end falling below USD 1 trillion (USD 897 billion). The nadir was attained in 2015, when the value of all goods traded fell by a rather dramatic 19%. Volumes declined by 5% annually on average over the entire period.

 

Full steam ahead

The winds started to change with additional reschedulings last year, however; CMA CGM, Evergreen, Maersk and MSC were all in on the act. The Dutch maritime shipping consultancy Dynamar, based in Alkmaar, has established some of the facts of this turnaround.

 

Container throughput for more than fifty South American ports came to 22 million teu in 2017, which represents healthy growth of 6.4% vis-à-vis the previous year. In the international segment, throughput came to more than 10 million teu in 2017, which means that a plus of 8% was even achieved vis-à-vis 2016. Three years of stagnation thus appeared to have come to an end.

 

In the meantime, Latin America has returned to some of its old strengths. Now it once again accounts for around 16% of global perishables exports, with a strong performance in terms of meat from the east coast, as well as especially of fruit from the west coast.

 

Carriers’ and terminals’ prospects

Exports have continued their resurgence, but remain largely characterised by agricultural products. Imports, in contrast, are made up largely of consumer goods. Consumption by private households is one of the key causes for resurgent regional economies. Other imports include equipment and machinery of various types, as well as oil.

 

Last year, the production of perishables for export from Latin America came to a total of more than 25 million t overall. Fruit topped the list, with a total of 14.6 million t exported; this was twice the quantity of meat for foreign markets. On top of this, 1 million t of seafood was also sold abroad.

 

According to Dynamar’s latest report, there are currently 23 carriers operating 47 scheduled container services with direct connections to and from South America. The fleet deployed to this end is made up of approximately 340 vessels; the units have an average capacity amounting to around 6,500 teu per ship. Most of the trade is with Asia, which is also where the majority of imports come from. The East is followed by Europe and then North America. Callao (Peru) is the west coast port with the largest annual throughput. It comes as no surprise that the Brazilian port of Santos remains the leading hub on the east coast.

 

International terminal operators, in turn, are more worried. APM Terminals, which has a stake in six facilities, as well as other operators in action regionally, including DP World, ICTSI and TIL (MSC), have all espied dark clouds looming on the horizon – especially as concerns the east coast.

 

Key issues include losing concessions in Brazil, the possible consolidation of concessions in the Buenos Aires region in 2020, as well as contradictory political announcements from several governments. At least three terminal operators are planning to reduce their presence; in some cases they may withdraw completely. These are definitely not positive omens for multinational activities in the region.

 

Prospects are good

The fact remains, however, that since 2013 the region has not yet fully exploited the potential of its recovery. On top of this, Bolivia’s imminent entry into the South American free-trade bloc Mercosur, which was established in 1991, is expected to provide further new impulses.

 

Dynamar’s concluding assessment sees containerised trade in South America reaching approximately 14 million teu by the year 2021.