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Brazil Shipping Report Q4 2011
Business Monitor International, Sep 2011, Pages: 100
Brazil Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Brazil's shipping industry.
In Q411 BMI believes that growth in the Brazilian port sector will continue on the back of exports to Asia, particularly China, and rising domestic consumer spending, which should see increased demand for containerised goods. The pace of growth at Brazilian ports has been rapid and BMI notes that Brazil's ports have not yet developed the infrastructure needed to handle increasing throughput levels. Its ports are poor by international standards, ranking 126th out of the 133 nations surveyed in the World Economic Forum's 2010 Global Competitiveness Report. As such, we expect to see more investment in infrastructure, both public and private, as ports seek to deal with growing traffic and to capitalise on increasing trade opportunities.
Headline Industry Data
- 2011 port of Santos tonnage throughput +12% in 2011 following growth of 15% in 2010.
- 2011 port of Itajai tonnage throughput +18% in 2011 following growth of 63% in 2010.
- 2011 port of Santos TEU throughput +12% in 2011 following projected growth of 15% in 2010.
- 2011 port of Itajai TEU throughput +8% in 2011 following growth of 61% in 2010.
Key Industry Trends
Badly Needed Brazilian Port Investments Mired In Red Tape - BMI maintains its long-held view that Brazilian ports will see more delays and congestion in 2011 because of a lack of port capacity and inadequate landside infrastructure. We stress the urgent need for increased capacity in the country's ports to enable them to handle Brazil's rapidly increasing trade volumes. Although there is significant private investment forthcoming, lengthy legal and bureaucratic processes are delaying action on this pressing issue.
Nothing Sweet About Delays At Santos As Disappointing Sugar Harvest Leaves Vessels Waiting - BMI expects more delays at Brazil's main sugar exporting ports during this year's harvest. While last year's crippling delays were exacerbated by a record crop, this year vessels have been left waiting as a result of a slow start to the harvest and poor crop yields, meaning there is simply not enough sugar to load. BMI believes that although the harvest may well pick up, resulting in quicker loading times, vessels are still likely to experience delays due to Brazilian ports' antiquated infrastructure.
OSX To Spend US1.7bn To Create Biggest Shipyard In The Americas - BMI believes OSX's plan to build a new shipyard in Brazil is good news for the country's shipbuilding sector, which has been experiencing something of a revival recently. The yard will no doubt seek to take advantage of growing Brazilian exports to Asia, while also boosting the domestic profile of the EBX group of companies by creating jobs and attracting foreign investment.
Risks To Outlook
Potential downside risks to our outlook include a possibility of reduced Chinese demand in 2011 due to monetary tightening, which would have a knock-on effect on its demand for raw materials. As China replaced the US in 2009 as the biggest importer of Brazilian products, any slowdown in Chinese spending will have a negative effect on Brazil's port sector.
A second downside risk is the possibility that Brazil will not be able to improve its port infrastructure in order to keep up with global demand for its main exports. Brazil supplies 54% of the world's sugar and it is currently vying with Australia to become China's main supplier of iron ore. Infrastructure deficits limit expansion and we believe that if the country does not improve efficiency and capacity there is a possibility that importers will look elsewhere for their supplies. We acknowledge, however, that importers are traditionally repeat customers and supply contracts take some time to develop, therefore this is a mid-term rather than short-term risk.
A final downside risk comes from the possibility that recently introduced credit-cooling measures will serve to prevent private consumption from repeating the 7.0% y-o-y real growth rate posted in 2010.
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