News / Tradelanes: carriers play it smart on LatAm-Europe to keep the box ships full

© Yong hian Lim

Logistics bottlenecks between South America and Europe are disrupting supply chain flows, but forwarders appear optimistic the tradelane will see something of a peak season.

According to Container Trade Statistics (CTS), despite a 0.5% drop in volumes, to 169,236 teu for April (its most recent data set), rates for the Europe-South America east coast routing were 0.5% above April 2024.

Brazil-headquartered forwarder AGL Cargo’s Jackson Campos told The Loadstar: “Even with volumes going down a bit, rates did not follow the same path.

“That is because carriers are being smart with capacity; they are cutting some sailings and adjusting schedules to keep the ships full. This way, they avoid lowering prices too much. So, in the end, we see stable or slightly higher rates, even with less cargo moving.”

The reverse leg’s picture was broadly the same, if more pronounced, with volumes dropping almost 2.9%, to 185,000 teu, according to CTS, with rates remaining flat.

Mr Campos said South America had maintained a strong flow of agricultural exports to Europe, but, while noting this flow had faced “some challenges”, including inclement weather and logistics bottlenecks, he did not seem fazed for the long-term.

“The small drop in volumes in both directions also has a lot to do with how the economy is going in countries like Brazil and Argentina.

“Things are a bit slower, and with weaker local currencies, it gets more expensive to import goods from Europe. So, companies are buying only what they really need. On the export side, South America is still sending a lot of agricultural products.”

As to current rates, one multinational forwarder was today quoting $1,214 per 40ft for a shipment from Rotterdam to Santos, on a 30-day sailing.

By contrast, Freightos Terminal data indicates rates on that lane generally hovering between $723.10 and $728.47 per 40ft, after having crashed from $859 on 19 May and $700 on 26 May. But Mr Campos said things were improving.

“We’re seeing a bit more movement and, depending on the cargo, rates slightly higher. Urgent shipments or sensitive goods, like auto or pharma, tend to cost more,” he said.

“When it comes to which products are standing out, the automotive sector is definitely strong right now. We’re seeing a lot of car parts and even full vehicles moving. Fruit exports are also going well, depending on the harvest. And pharma keeps steady because of its importance.”

Noting electronics and retail goods were a bit slower due to lower consumer demand, he said that, “in general” there was “space available and room to negotiate”.

Asked about the prospects of a LatAm-Europe peak, Mr Campos said expectation was for a small rise in volumes from Europe, “starting around July”, which would “mainly be to get ready for the end-of-year shopping season”.

He added: “From South America to Europe, the fruit season should bring a bit more movement later in the year.

“It won’t be a super busy peak, but should be enough to feel the difference.”