Recently published research from Business Monitor International, "Brazil Shipping Report Q2 2012", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 05/31/2012 -- BMI believes 2012 will be another year of strong growth for Brazilian ports. Although we expect a good level of growth to continue during our forecast period, we caution that there are a number of risks to our outlook for the country's booming shipping sector, including the infrastructure deficit and signs of overheating in the Brazilian economy.
BMI notes that Brazil's transport network has not yet developed the infrastructure needed to handle increasing throughput levels, causing severe delays and increased costs for shippers. 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.
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Brazil's rapid economic growth has been aided considerably by the country's strong commodities mix. However, we caution that much of the demand for Brazilian exports of raw materials has come from China. With a slowdown in Chinese economic growth looking increasingly likely, we are concerned that demand for the country's raw materials could weaken.
On the domestic consumer demand side, we are 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 demand for imports of containerised goods.
Key Industry Data
- Total tonnage throughput at the Port of Santos to grow 12.2% in 2012 to reach 109mn tonnes. To 2016, we predict average annual growth of 10.5%.
- Container throughput at Santos to grow 16% to reach 3.5mn twenty-foot equivalent units (TEUs) in 2012, with average annual growth of 10% during our forecast period.
Key Industry Trends
Santos To Double Throughput, Road And Rail Improvements Needed
BMI believes the Port of Santos' plan to double its capacity by 2013 is good news for Brazil's underdeveloped and over-stretched port sector. We have long maintained the view that Santos must increase its capacity in order to handle increasing trade volumes. We caution, however, that any capacity increase must be matched by investment in the port's inadequate road and rail links to prevent bottlenecks at times of high demand.
NYK Increases Brazil Exposure In Effort To Get Back In The Red
With the container shipping sector plagued by low rates on traditional routes due to crippling overcapacity, lines are turning to emerging markets to boost volumes. Having announced a US$150.3mn loss for the first six months of its April-March fiscal year, Japanese line NYK is expanding its operations in the high growth market of Brazil as part of its efforts to get back into the black.
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