Ocean Freight Rates More Than Quadruple on China-Brazil Route

RIO DE JANEIRO, BRAZIL – Ocean freight on the China-Brazil route has soared and reached an unprecedented US$10,000 per TEU container, according to importers and shipping companies operating in the port of Santos.

”It is a record high; I had never seen freight reach that amount,” said Luigi Ferrini, Senior Vice President of Hapag-Lloyd in Brazil. A year ago, the cost of this same route was in the range of US$2,000 per TEU.

According to Rafael Dantas, director of the importer Asia Shipping, the rise in freight costs has increased since October, with the global recovery of the economy and the greater demand for Chinese products.

The surge also occurs on other routes from China. The trips from Asia to Europe and the United States reached above-average values, with more than US$4,000 per TEU.

The price increase is mainly the result of logistical problems and the large gap between supply and demand over the past year – a “perfect storm for global container flows”, according to Centronave, which represents the long-haul global shipping groups in Brazil.

“When the pandemic broke out, many companies stopped placing orders and there were dozens of travel cancellations [by cargo ships]. But demand for products did not fall as expected. Money that would have been spent on travel was now being spent on items for the home and home office. Local consumption increased worldwide, and there was a lack of products,” summarizes Ferrini.

At the height of the Brazilian pandemic, between March and July, 23 ship trips from China were canceled. The number is equivalent to at least five weeks without container imports from the country.

In the middle of the year, it became clear to companies that it would be necessary to resume orders. The increase, however, coincided with the resumption in Europe and the United States, leading to a fierce dispute over containers and vessels. Today, virtually all ships available in the world are in use, says Centronave.

The situation is aggravated because the pandemic has also reduced efficiency in releasing cargo at ports, terminals, and warehouses, which also suffered from social isolation measures and the reinforcement of health surveillance protocols.

To try to ease the bottleneck, between October and December, shipping companies added 14 extra-loaders (additional ships), which increased capacity by about 14% on the Shanghai-Santos route. The increase, however, has not been sufficient to meet demand. In the week of Christmas, freight registered US$7,184 per TEU. Seven days later, it had already reached US$8,173. Now, ship-owners and importers say prices have reached the US$10,000 mark.

The increase could affect several sectors that depend on Chinese imports. This is the case in the electrical and electronic products industry (mainly portable and brown products). The largest companies in the sector, which work with annual contracts in maritime transport, reported readjustments of 90%, according to the Brazilian National Association of Manufacturers of Electronic Products (Electros). The smaller ones, which make sporadic imports, reported a 200% increase in cost.

For Dantas, from Asia Shipping, another aggravating factor is the concentration on maritime transport, composed of large global groups. “After years of crisis, companies started to share operations, exchange information about the market. This consolidation undoubtedly contributes to higher prices,” he says.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error