Maersk Group
Trade Report
Q4 2016
BRAZIL
Optimism Over Brazil Growth
in 2017 Timid
•
•
•
•
Capacity to remain unchanged during the whole year
Exports to struggle amid lack of space and equipment
Carriers’ costs increasing, empty equipment resupply is a must, bunker fuel keeps rising
Q4 2016 imports improved but well below 2012, 2013 and 2014 levels
Brazilian trade is starting to show signs of what is expected to be a
slow recovery. Imports grew during Q4 2016 but exports struggled
to expand amidst an appreciating Real, a high base of comparison
and ultimately a lack of equipment and space on ships servicing
trade between the region’s largest economy and the rest of the
world.
Indeed, for 2017, Maersk Line, the world’s largest container shipping company, expects imports will grow less than 1% whilst
exports are seen finishing the year flat - provided the Real stays
around the BRL3 to the dollar mark. This comes after exports in the
fourth quarter dipped year on year and imports managed to grow
nearly across all categories.
“The latest numbers confirm our concerns and predictions around
Brazilian trade performance. Imports showed a sign of improvement linked to the need to resupply inventories but far away from
the glory years where imports were the engine of the economy. This
means exporters are going to continue to find it hard to expand
because there is no empty equipment on the coast and also space
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Maersk Group Trade Report / Q4 2016 / BRAZIL
is limited on ships, and carriers will continue to be impacted by
the increasing costs of bunker and extremely high cost of moving empty equipment into the country,” says Antonio Dominguez,
Managing Director for Maersk Line’s East Coast South America
cluster. “Imports need to increase significantly before shipping
lines can start to think about justifying the cost of bringing new
ships to Brazil and we do not see that happening in 2017. We
remain concerned with the stronger local currency as exports will
become less competitive if the Real crosses the BRL3 to the dollar
barrier, exposing once again the country’s lack of competitiveness,
infrastructure and supply chain inefficiencies that require a green
light for auctions and further investments. Carriers cannot be
expected to continue to carry the high cost of all these inefficiencies, considering the current financial situation the whole shipping
industry is battling,” he adds.
In the last decade, Maersk as a group has invested more than
US$8.5 billion (R$25.9 billion) in Brazil from ships to terminals,
oil and gas and training versus more than US$2.5bn in the rest of
Latin America. At the moment, Maersk is moving forward with the
announced acquisition of Hamburg Sud pending due diligence
and regulatory approvals. This acquisition will provide customers
unique advantages as the networks of both carriers are highly
complementary.
“We can see optimism among clients but statistically, Brazil is
bouncing off two extremes, the all-time high experienced in exports
last year and the all-time low in imports, any losses or gains are
going to look much bigger than they really are, so for now, while we
are encouraged by what looks to be the start of an economic recovery, we are taking a very sober view on Brazil,” says Nestor Amador,
Commercial Director for Maersk Line East Coast South America.
“The import market is showing very timid signals of recovery and
while we compare YOY 4Q 2016 versus 2015, volume expansion so
far is yet to signal that we are on a solid path for growth. When we
compare December 2016 versus.2014 and even 2013, the drop in
volumes is 23% and 34% respectively. Imports did perform better
as a result of stock levels reaching rock bottom figures and replenishing inventory levels in Manaus and production lines. On the
exports side, the strength seen during the first half of 2016, faced a
challenging ending as the Real appreciated against the dollar. Also
limited space to Asia and a lack of equipment in the country has
led to new orders being moved back to break bulk vessels, which in
turn will result in increasing logistic costs for customers,” he adds.
Market Growth per Trade - Import Total
Market Growth per Trade - Export / Import Total
Fourth Quarter
In the fourth quarter, exports declined 4.1% but imports increased
13.8%, putting total maritime trade growth at 2.9%, according to
statistics provided by Datamar to Maersk. The numbers look good
but imports are coming from a very low base of comparison by historic standards, considering that Brazil was officially a net importer
until the first quarter of 2016 when imports tanked and the nation
became a net exporter by the second quarter. In contrast, the
decline of exports is partly told by the high base of comparison.
Imports were primarily driven by restocking among automakers as
Manaus started to come back to life right at the end of the fourth
quarter. Meanwhile, potato imports, for example, also helped prop
up numbers with strong demand for produce from Portugal and
Argentina. On the flipside, retail continued to hurt with finished
manufacturing down 1.5% year on year. In terms of the four core
global regions, imports saw double-digit increases in volumes from
Europe (17.6%), Far East (11.9%), Africa (10%) and the Middle East
(48%).
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Maersk Group Trade Report / Q4 2016 / BRAZIL
Containerized Import Growth - Main Segments
Industry Segment
Apparel & Recreational
Automobile & Transportation
Beef
Chemicals
Cotton
Finished Manufacturing - Primarily Consumer Goods
Fish
Food & Beverage
Fruits, Vegetables & Plants
Machinery, Appliances & Electronics
Metals, Mining & Construction
Other Meat
Plastic & Rubber
Pulp & Paper
Residues From Food Industries
Textile & Leather
Wood
Q4
2016/2015
-9.7%
22.2%
13.8%
18.9%
216.4%
-1.5%
17.2%
15.4%
53.9%
9.6%
2.3%
19.8%
18.8%
0.0%
-2.7%
39.4%
3.0%
For exports, lower numbers were principally driven by weaker commodities, in particular, soy and cotton, which had a strong and
evenly distributed performance during 2016 but not a concentrated result like the fourth quarter of 2015.
However, it was reefer exports that suffered the largest drop,
declining 11% in the fourth quarter versus 1.7% for dry. Reefer
exports were all down with Europe (-7.6%), Far East (-6.5%), Africa,
(-11.7%) and the Middle East (-12%). Beef sunk 24%, fish fell 5.9%,
fruits and vegetables declined 3.8%, poultry was 11.6% weaker
and other meat was also 8.8% lower in the fourth quarter year on
year.
Containerized Export Growth - Main Segments
Industry Segment (DRY)
Apparel & Recreational
Automobile & Transportation
Chemicals
Coffee
Corn
Cotton
Finished Manufacturing - Primarily Consumer Goods
Food & Beverage
Machinery, Appliances & Electronics
Metals, Mining & Construction
Plastic & Rubber
Pulp & Paper
Residues From Food Industries
Soy
Sugar
Textile & Leather
Tobacco
Wood
Industry Segment (REEFER)
Beef
Chemicals
Fish
Food & Beverage
Fruits, Vegetables & Plants
Other Meat
Pork
Poultry
Q4
2016/2015
15.5%
18.2%
0.2%
-2.0%
-93.5%
-31.5%
8.5%
-14.9%
6.2%
4.1%
9.5%
3.4%
-58.0%
-74.1%
10.8%
-12.7%
-8.7%
27.4%
Q4
2016/2015
-23.7%
10.6%
-5.9%
-23.5%
-3.8%
-8.8%
3.0%
-11.6%
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Maersk Group Trade Report / Q4 2016 / BRAZIL
January
Brazil is in better shape in January than it was the same time a year
ago but economic signals continue to be mixed for now from disinflation to high employment. Indeed, inflation in January reached its
lowest ever recorded level for the month.
“With the Real just above the BRL3.00 mark, you can spur demand
for imports without hurting exports but should it dip below
BRL3.00 to the dollar, exporters are going to have a tougher time
to compete,” says Joao Momesso, head of Trade and Marketing for
Maersk Line across its East Coast South America cluster. “Provided
the Real remains stable, we expect a lack of equipment and ship
capacity to be the factors where customers will focus to maximize
their exports potential in 2017,” he adds.
In terms of products, imports were again better but retail remains
under pressure whilst cotton exports are down year on year as the
season pattern is different.
Regional Breakdown
From a regional standpoint, the northeast put in the best performance on the imports side in the fourth quarter, showing the best
recovery. The southeast was more steady. Both regions have an
opposite story to tell, says Momesso.
“The Northeast was the first region to be hit by the crisis in the third
quarter of 2015 and also the most impacted so it is consequently
the first that we now see recovering the fastest, whilst the southeast, which was the last to be impacted by the crisis is the region
putting in the most modest improvement,” he adds.
APM TERMINALS REGIONAL
BREAKDOWN:
North and Northeast
Owing to the fast ramp up of productivity levels at APM Terminals
Pecém, container trade is migrating from northeast cargo
outflow ports such as Natal (Rio Grande do Norte) and Suape
(Pernambuco) to Pecem (Ceara) where APM Terminals operates
one of its three terminals in Brazil. The expectation is that volumes will grow 20% in 2017 thanks to fruit and refrigerated cargo
exports as well as increasing imports from North America, Europe
and the Middle East
South
The challenging Brazilian economic backdrop, drop in consumption
and reduction in import volumes, impacted the increase in demand
for shared containers, principally in mature markets, like Itajai in
Santa Catarina. That said, LCL (less-than-container-load) services
offered by APM Terminals at Itajai, for example, increased 40% in
January 2017 in relation to the same period in 2016 after doubling
its levels last year versus 2015. The company now leads the Santa
Catarina market with 62% of its operations of this modal concentrated at the Itajai terminal.
Brazilian Trade Growth by Region
Q1
2016/2015
Q2
2016/2015
Q3
2016/2015
Q4
2016/2015
Southeast
12.8%
8.3%
2.8%
-3.1%
South
20.8%
7.6%
3.4%
-5.9%
Northeast
19.1%
22.0%
2.4%
-1.5%
North
-6.5%
4.3%
8.6%
-0.3%
Q1
2016/2015
Q2
2016/2015
Q3
2016/2015
Q4
2016/2015
Southeast
-27.5%
-15.2%
-11.9%
5.6%
South
-33.2%
-18.3%
-3.2%
22.7%
Export
Import
Northeast
-28.0%
-7.1%
2.9%
30.2%
North
-51.2%
-45.7%
-17.7%
28.8%
Q1
2016/2015
Q2
2016/2015
Q3
2016/2015
Q4
2016/2015
0.8%
Total
Southeast
-10.0%
-3.7%
-4.7%
South
-4.9%
-2.2%
0.9%
2.9%
Northeast
-7.2%
5.7%
2.6%
10.2%
-40.8%
-33.0%
-11.3%
18.3%
North
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Maersk Group Trade Report / Q4 2016 / BRAZIL
About Maersk Group
About Maersk Line
■ Maersk Group, which has annual revenue of around US$40 bil■ Maersk Line, the world’s largest container shipping com-
pany, runs 16 SAMMAX (South American Maximum)
ships worth US$2.2 billion that were especially designed
for Brazil’s shallow water ports.
■ Maersk Line has a 15% market share of the Latin
America container shipment market.
About APM Terminals
■ APM Terminals is a global leader in port productivity and
terminal operations with a presence in 69 countries and
72 terminals.
■ APM Terminals operates in the port of Pecem, is a lessee at the container terminal Itajai and also has a 50%
stake in Brasil Terminal Portuario, or BTP, in Santos with
a minority stake in TCP at Paranagua, Parana state.
■ APM Terminals also operates inland terminals for empty
containers and repairs in the south.
lion and operates in more than 130 countries, finished a US$4bn
investment cycle in Brazil in 2014.
■ The group has more than 6,500 staff in Latin America and 88,000
in the world with more than 2,000 in Brazil.
■ The company is also engaged in oil and gas production, towage
and emergency services at sea, oil drilling, and tankers, focusing
heavily on the safety and training of its highly-skilled staff as well
as sustainability.
For further details and interview requests,
please contact PR Consulting Brasil
André Mascarenhas
Tel: 11 3078 4461 / 99256 7749
Anthony Dovkants
Tel: 11 3078 0855 / 99686 8060
More Trade Reports from other markets at http://www.maersk.com/en/the-maersk-group/about-us/publications/trade-reports
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