To Our Valued Customers:
Market Conditions – Even with the impact of the current global pandemic, the main ports on the East Coast South America showed an increased on the total handling of containers over the first half of the year, the port of Buenos Aires in Argentina registered a 1.5% increase on their total amount of containers in which half of them originated in China and the other half in USEC and Brazil with exports having the same outcome. The ports in Brazil also showed an increment of 3.98% on the total amount of containers that were handled within the first 6 months of the year in comparison with the same timeframe in 2019 being the port of Santos the one that showed the biggest increase at 10.45% of containers handled.
Inspections on Reefer Cargo to China – Ecuador, the second largest exporter of shrimp worldwide after India, have seen their product fully stopped at China due to fear of traces of Coronavirus within the walls of the containers and the outer packages, the government advised the hope to restart exports again within the next 2 weeks to China. The same is occurring with frozen meat from Brazil and the United States, reason why USDA is monitoring these types of commodities even though there is no scientific proof that COVID-19 can be transmitted from food. We are closely monitoring this issue and will provide an update in our next market letter.
Market Rate Update – Even with the governmental guidance of “shelter in place” that most of the Latin American countries have taken since the beginning of the global pandemic and the spread of the COVID19 in South America, all ports and terminals are working with a minimum impact in their markets and have not shutdown yet since logistic services have been recognized and defined as essential businesses. No significant increases have been advised on the LATAM market and rates remain fairly the same for the remaining of the third quarter with no expectation of changes besides the already announced GRIs and EIS.
General Rate Increase – Ocean carriers are implementing general rate increases for August on the trade lane of East Coast South America between $200 to $300 per container. Carriers are focusing on the ECSA and Mexico trade lane due to the increase in volume in the first half of the year. West Coast South America trade lanes have been steady so far and no new surcharges have been announced for the month of August. Central America and the Caribbean are following WCSA lead without any significant surcharges announced within the next month.
Inventory Replenishment Upgrade, Import Forecast – With the increasing demand on the exports from Brazil and the blank sailings that started in June, a slight lack of equipment and constrain space in vessels has been a clear issue in July with the expectation of normality in August. Ports in the WCSA, Ecuador, Colombia, Peru, and Chile have not shown any shortages of equipment or issues with space during the beginning of the third quarter with no expectation of change through the remainder of the year.
Blank Sailings – Some carriers implemented Equipment Imbalance Surcharge (EIS) to address repositioning of empty containers in deficit areas that were created due to some of the blank sailings the carriers were obligated to do following the same trend as Asia. Blank sailings were clearly visible at the end of June and July, no new blank sailings are announced for August so far but carriers are keeping an eye on this issue due to fear of the second wave of COVID-19 in Latin America that can cause new disruptions on the service.