Industrials

Impacts On Shipping Costs In Latin America

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<p style="text-align: justify;">The current Covid-19, Political Situations, the Suez Canal incident and other crises did of course not spare Latin America.</p><p style="text-align: justify;">The Region, same as others, was and still is affected by increasing freight charges for containers being shipped, which for example increased for imports from China to the West Coast South America by an astonishing 430% from USD 1.450 per 40&rsquo; Standard / High Cube Container in July 2020 to USD 7.700 in April 2021 (*see below chart). Keep in mind, that roughly 40% of the total container volume to countries at the West Coast South America (Columbia / Ecuador / Peru/ Chile) originates in China.</p><p style="text-align: justify;">Reasons for this are manyfold:</p><ul style="text-align: justify;"><li>Covid-19 measures and restrictions</li><li>Shortage of Equipment (Container)</li><li>Blank Sailings</li><li>Port Congestions</li><li>Shortage of trucks for delivery / pick-up of containers from inland locations</li></ul><p style="text-align: justify;">As well as there are other impacts at a local level.</p><p style="text-align: justify;">The above not only resulted in higher freight costs, but also interrupted the supply chains, resulting of shortages of products available in supermarkets, retail stores, etc., as well as higher product costs for the end consumer.</p><p style="text-align: justify;">Similar effects on the export side, where many of the products exported from Latin America are perishables (fresh fruit, frozen fish and others), being shipped in Reefer Container, having an additional impact on maintaining the quality of the products in case of Reefer Container shortages or cancelled sailings.</p><p style="text-align: justify;">In this current environment it is extremely difficult to pre-view in which direction the markets will develop, and it will be therefore of the upmost importance for the interested parties to keep up to date with the developments in the individual markets in order to minimize any possible negative impacts and to take advantage of the positive ones.</p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Karl-Heinz Ruzsitska