Folha de São Paulo, in a report yesterday, made an interesting provocation when comparing the value of sea freight for a 40-foot container on the Hong Kong-Santos route, which would currently cost US$75, disregarding taxes and port costs, with the value of freight for the same route in the opposite direction ( US$1.250), with other shorter distance routes (eg: Miami-Santos for US$840 and Santos-Miami for US$1.340) and even with express deliveries made by motoboys between the cities of São Paulo and Campinas (US$106) .
Taking a ride on the obvious distortion present in the fact that moving a volume of around 20 tons over a huge distance costs less than the delivery of a simple box between two neighboring cities, the report has the merit of highlighting the factors that have led to this situation and the possible future consequences for Brazilian foreign trade.
The main factor for this picture is the imbalance between supply and demand. On the supply side, shipping companies greatly expanded their capacity to supply the Brazilian market with products manufactured in Asia, especially in the last decade, a period in which the real appreciated. On the demand side, the recent depreciation of the real, and its consequent reduction in purchasing power, caused a sharp drop in imports. In the very short term, existing capacity causes this sharp decrease in freight prices.
In the export flow, the opposite movement is taking place and, therefore, with the increase in export volumes, the competition for capacity is greater and freight prices suffer a sharp rise. The same must occur, in this case, with the costs of port handling and other activities in the exporters' production chain, as I had already mentioned in the post about cutting investments in PAC.
It is not, however, in the very short term and in this tariff adjustment that the greatest danger lies, but rather in possible disinvestments by shipping companies in the routes that pass through our coast. Maintaining the scenario of economic recession and depreciation of the Brazilian currency, sustaining for a prolonged period the drop in demand and a decrease in the pace of imports, companies will certainly demobilize assets from these routes, which may delay the process of resuming growth, when it starts .
I had already heard the expression that, when it comes to international trade, Brazil was in the wrong hemisphere, in the wrong ocean and, apparently, we will still suffer from the adoption of wrong policies.
Good luck for all of us!
References:
Leonardo Julianelli
https://ilos.com.brExecutive Partner of ILOS. Graduated in Production Engineering from EE/UFRJ, Master in Business Administration from COPPEAD/UFRJ with extension at EM Lyon, France, and PhD in Production Engineering from COPPE/UFRJ. He has several articles published in periodicals and specialized magazines, being one of the authors of the book: “Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods”. His research areas are: Demand Planning, Customer Service in the Logistics Process and Operations Planning. He worked for 8 years at CEL-COPPEAD / UFRJ, helping to organize the Logistics Teaching area. In consultancy, he carried out several projects in the logistics area, such as Diagnosis and Master Plan, Sales Forecast, Inventory Management, Demand Planning and Training Plan in companies such as Abbott, Braskem, Nitriflex, Petrobras, Promon IP, Vale, Natura, Jequití, among others. As a professor, he taught classes at companies such as Coca-Cola, Souza Cruz, ThyssenKrupp, Votorantim, Carrefour, Petrobras, Vale, Via Varejo, Furukawa, Monsanto, Natura, Ambev, BR Distribuidora, ABM, International Paper, Pepsico, Boehringer, Metrô Rio , Novelis, Sony, GVT, SBF, Silimed, Bettanin, Caramuru, CSN, Libra, Schlumberger, Schneider, FCA, Boticário, Usiminas, Bayer, ESG, Kimberly Clark and Transpetro, among others.
