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Brazil Freight Transport Report Q1 2012
Business Monitor International, Dec 2011, Pages: 65
Business Monitor International's Brazil Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Brazil's freight transportation industry.
BMI believes 2012 will be another year of strong growth for Brazilian freight transport. Although BMI expect a good level of growth to continue during their forecast period, BMI caution that there are a number of risks to their outlook for the country's booming shipping and freight transport sector, including the infrastructure deficit and signs of overheating in the Brazilian economy.
BMI notes that Brazil's freight transport network has not yet developed the infrastructure needed to handle increasing throughput levels, causing sever delays and increased costs for shippers. As such, BMI 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.
BMI are also concerned about the fact that Brazil has some of the lowest saving rates in the region, and growth in real average incomes has been slowing for some time. These factors, combined with a recent uptick in non-performing loans, point to the possibility of a slowdown in consumer spending in the coming months. This could result in a repricing of Brazil's previously unstoppable consumer growth story, hitting container imports.
Key Industry Data
- Air freight tonnes to grow 9.4% in 2012. Over the medium term, to 2016, BMI predict that growth will average 7% a year.
- Air freight tonnes/km are set to grow 7.6% in 2012.
- Total tonnage throughput at the port of Santos to grow 12.2% in 2012. To 2016, BMI predict average annual growth of 10.5%.
- Rail freight tonnes to grow by 10.3% in 2012. To 2016, BMI predict average annual growth of 8.3%.
Key Industry Trends
Dredging To Allow Santos Handle Larger Vessels As It Struggles To Cope With Demand Work has begun to improve access to the Brazilian port of Santos, South America's biggest sea port. A dredging project is to give the some terminals at the facility a deeper draught and a much wider turning circle, enabling them to handle larger vessels. This will improve efficiency at the port, which suffers from severe congestion at times of high demand.
Flood Damage Presents Downside Risks To Itajaí Forecasts
Heavy rain has again disrupted operations at the Brazilian port of Itajaí in the state of Santa Catarina. Dangerously high river levels and strong currents have caused serious flooding at the port, suspending operations for almost a week and causing substantial losses at Brazil's second busiest container terminal. Although the port's throughput levels have made a strong recovery after being hit hard by floods in 2008, BMI caution that the possibility of further damage presents downside risks to their forecasts.
Risks To Outlook
Potential downside risks to their outlook include a possibility of reduced Chinese demand for Brazilian commodities exports such as iron ore in 2012 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. The poor state of the Brazil's port infrastructure has been a cause of concern for BMI for some time. Investment in infrastructure has not kept up with the rapid progress made in other areas of the economy. The chronic infrastructure deficit was clearly demonstrated in mid-2010, when ships queued for as long as a month to load sugar from local ports, as a record crop, high demand and wet weather combined to slow loading. These kinds of delays raise questions as to whether the country will be able to meet rising demand in the run-up to the 2014 World Cup and the 2016 Olympics.
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