High Brazil-Asia freight costs keeps industry apprehensive

Jul, 20, 2022 Posted by Gabriel Malheiros

Week 202229

Brazil-Asia maritime freight costs, critical for industrial input supplies, increased again in July.

The average monthly price was US$10,550 per 40-foot container (about 12 by 2.5 meters), up 30.2% from the June average.

Costs have risen since May, returning to the levels of the second half of 2021, the height of the global logistics crisis that began in the second half of 2020.

This month’s average price is 5.1 to 6.6 times higher than the first two months of 2020, before the pandemic.

According to the National Confederation of Industry (CNI), the recent price increase suggests that global logistical bottlenecks could take longer to dissolve.

According to Matheus de Castro, an infrastructure specialist at CNI, the value of $10,000 per container might be the “new normal” for the cost of international trade logistics – CNI is starting an online panel to disclose the pricing monthly on Wednesday, 20th.

Logistical bottlenecks keep prices high and promote the scarcity of industrial components, such as semiconductors, hampering production and making all products more expensive, from refrigerators and stoves to motor vehicles.

Faced with the highest inflation in 40 years, US President Joe Biden has been criticizing the market concentration between major maritime operators – European and Chinese multinationals, none of them American.

According to the CNI expert, in terms of lockdowns, the worst is over, but that is insufficient to alleviate global logistical bottlenecks, partly because of the congestion levels at US ports.

The clogging of West Coast terminals caused operators to relocate some services to the East Coast, which spread congestion rather than solving it.

According to Fábio Pavani, manager of the São Paulo branch of Asia Shipping, which specializes in foreign trade logistics, the freight cost is pressured by the rising demand for imports, increasing fuel prices, and global bottlenecks.

“Domestic consumption remains uninterrupted,” he said. And, even if it loses some steam, interruptions to global industrial chains combined with the lockdowns in China brought down input stocks in Brazil. Thus, “demand for transport, whether by sea or by air, has increased,” said Pavani.

Source: Money Times

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