Dynamar: South America (worldwide) container trades 2018

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For the first time, this publication builds on previous individual studies on both the East Coast of South America and the Andean Coast of the same continent, combining the two into one comprehensive report. We draw your attention to, and discuss in this review facts and findings contained in the this new publication.

Publication highlights:

– Boom and Bust economies, in particular: Brazil and Argentina
– Economic contractions in 2014 – 2016, recovery in 2017
– A welcome return to growth after three years of decline
– Dynamar expects South America containerised trade to reach 14 million TEU in 2021
– Port Callao, Peru has the highest container throughput on the west coast
– Santos, Brazil is the leading port of call on the east coast
– Familiar names lost: CSAV to Hapag-Lloyd and CCNI to Hamburg Süd
– Maersk absorbs trade specialist Hamburg Süd

South America
The South America Container Trades is a voyage, from south to north to south, between the seaboard countries of Chile, Peru, Ecuador, Colombia, Brazil, Uruguay and Argentina, and including two landlocked countries: Bolivia and Paraguay. The west coastline stretches 12,500 km and over half of this uniquely belongs to Chile, which country at its widest measures less than 250 km.

The region is home to over 390 million people, has a trade value of USD 897 billion and a GDP estimated at USD 3,739 billion. Brazil is the largest company by far with a population of over 209 million, generating some 42% of trade, 55% of GDP and 43% of South America’s 22 million TEU throughput. On the west coast, Colombia (with also a northern coast line) has the largest economy, with 49 million residents generating 8.4% of total GDP. However, it is Chile that has the greater container throughput at 20%.

A volatile, yet loyal trade
The report identifies 47 container liner services that offer direct connections with South America with a fleet of some 341 vessels at an average of 6,500 TEU per ship. In terms of average capacity deployed, the Far East trade lane leads the way, followed by Europe and North America, respectively.

These liner services call at 38 South American ports. Twenty-one are located along the east coast and seventeen along the west coast. Four west coast ports actually receive the highest amounts of annual trade capacity with Callao in Peru the largest of them all, most of this traffic comes from the Far East. It will not come as a surprise that Santos in Brazil is the leading port of call on the east coast.

Full container carryings between South America and (most of) the rest of the world reached just over 10 million TEU in 2017. This was 8% up on 2016 and was a welcome return to growth after three years of decline. The trade sees more imports than exports with the exception on the Far East lane.

Familiar carriers
The South America trades have experienced the loss of some familiar names: CSAV to Hapag-Lloyd in 2014 and CCNI to Hamburg Süd in 2015. Hamburg Süd and affiliate Aliança survive, but are part of Mearsk group.

The two largest carriers in the South America deepsea trades are Maersk Line and MSC, respectively. These control 49% of Annual Trade Capacity (ATC). Over 10 carriers, including the likes of NileDutch, Seatrade and ZIM supply less than 1% of capacity. Total Annual Trade Capacity reached almost 9 million TEU in 2017.

The 23 vessel liner carriers active on the trades serving South America deploy 341 ships with a total carrying capacity of 2.2 million TEU. They connect South America with 77 ports in the Far East, Europe, North and Central America, and Africa. Among the ships are 51 ULCS, yes in South America too, ranging from 10,000 to 13,000 TEU.

Ports
Port container handlings of more than fifty South America ports studied reached 22 million TEU in 2017, reflecting a healthy growth of 6.4% on the year before. The growth figure brings to an end a three-year period of stagnation.

Terminal highlights
A number of private terminal operators are active throughout South America, six are local to South America. Global operator APM Terminals and Chile-based SAAM both have interests in six facilities each. Other operators with interests in the region include DP World, ICTSI, TIL (MSC) and regional company Ultramar.

Incoherent port and terminal development has raised fresh concerns on the East Coast. Issues under the spotlight are the removal of concessions in Brazil, conflicting policy announcements and the likely consolidation of separate Buenos Aires concessions into one in 2020.

Hence, at least three terminal operators have been or are looking at reducing their presence, perhaps to the point of complete withdrawal in a couple of cases.

South America and fresh produce
South America’s exports are largely agricultural based: meat and chicken from the east coast and fruit from the west coast. Imports include consumer goods, equipment and machinery of various types, and petroleum, in whatever form.

Last year, generated 25 million tons in perishable exports. Of these, fruit was the largest with 14.6 million tons exported, twice as much as meat. Only fishery products, of the other three, managed to exceed 1.0 million tons. South America accounts for 16% of worldwide perishable exports.

Between 2013 and 2017, South America’s merchandise trade, by value, shrank some USD 222 billion, or 20%, to USD 897 billion. The main damage was done in 2015 when the value of trade dropped by 19% in one go. Compound Annual Growth Rate over the whole period reviewed was -5%.

A common theme throughout this study has been one of reduction or contraction from 2014 to 2016 with something of a bounce-back in 2017, albeit not necessarily showing full recovery compared with the situation of 2013.

Trade Treaty
All four east coast countries are members of the regional Mercosur/ Mercosul common market. This is a free-trading zone established by the 1991 Treaty of Asunción among Brazil, Argentina, Uruguay and Paraguay.

Bolivia will become the next full member. Elsewhere Chile, Colombia, Ecuador, Peru, Guyana and Suriname are associate members. Venezuela is currently suspended from the organisation.