News / Tradelanes: Latin America-North America riding a rollercoaster

North-south trade in the western hemisphere has been on a rollercoaster thanks to tariff gyrations, the US end of de minimis, which has affected freighter capacity into Latin America, and the region’s largest cargo carrier suffered a week-long pilot strike.

Still, the market has taken these upheavals in stride and remained fairly unruffled, but Latin America’s largest airfreight gateway is sending out warning signals.

At the end of July, Washington hit Brazil with a 40% tariff on a large number of products, but excluded aircraft parts, energy shipments and orange juice. The tariff, imposed in response to the sentencing of Brazil’s ex-president Bolsonaro, effectively brought the duty on northbound shipments to 50%, with predictable repercussions for traffic.

Brazil’s seafood exports to the US slumped 28% in terms of value in the third quarter. Overall exports to the US dropped 20.3% year on year in September, with boneless beef shipments down 66% and unground coffee sinking 29%.

The measure proved too successful in terms of the impact on US consumer prices, as did tariffs slapped on US imports from other parts of the world. As US food prices climbed more than 3% in September, elections showed widespread US voter dissatisfaction with Washington’s tariff policy and triggered the president’s decision on 14 November to roll back tariffs on more than 200 food products, including staples like coffee, bananas, beef, and orange juice.

Six days later the White House lifted the 40% tariff on a range of Brazilian goods, including coffee, fruit, and beef, effectively eliminating duties on these products. (The 40% levy remained in place on industrial and fishery products as well as steel, aluminium and copper from Brazil.) Retail prices of coffee had climbed as much as 40% in the US, which sources about 30% of its supply from Brazil.

The tariff rollercoaster has mainly played out in ocean transport, reported Rene Genofre, airfreight director of logistics firm Allog, Brazil’s third-largest forwarder, in terms of ocean cargo, and the leading player in the reefer segment.

“The lifting of the tariffs had a minor-to-no impact on the airfreight, but for ocean freight there is some optimism and some exporters are resuming volumes, cautiously,” he remarked.

While the tariffs hurt US-bound seafreight traffic from South America’s largest economy, the nation’s overall exports were up in September as shippers expanded business with other regions. Fruit exports to non-US destinations grew $3.1bn that month.

Data from World ACD show airfreight volumes out of Central and South America grew 7% year on year in the first three weeks of November, while chargeable weight flown to North America was up 1%. Volume to the Middle East and South Asia surged 42%, and traffic to Asia Pacific was up 39%. Outbound pricing overall slipped 2%, but fell 5% to North America.

On the ocean transport side, CTS data for September show a 6.8% year-on-year drop in trade volume from Latin America to North America. Following a 6.9% drop in August, this marked the second month of decline after gains in previous months. Volume in the opposite direction sank 3%, the first decline since May. Northbound pricing was unchanged from August, below levels seen in June and July.

Freightos FBX spot rates for 40ft containers from Santos to Newark show a persistent decline in pricing for the past year, except for a spike in June. Rates sank from $8,073 in mid-November 2024 to $2,681 on 17 November this year.

Ocean carrier schedule reliability from Central and South America to North America improved to 79.7% in September/October, according to data from Sea-Intelligence, a 42.7% improvement. Average delay of late vessels fell to 3.56 days, down from 8.86 days.

On the airfreight side, Latin American markets have seen a fresh capacity injection from Asia courtesy of DSV, which extended its weekly Shanghai-Rockford freighter to select destinations in Latin America including Bogota, Santiago, Buenos Aires, and Sao Paulo. This has brought some relief, after the end of US de minimis exemption for parcels triggered a drop in freighter capacity from Asia transiting the US en route to South America, Mr Genofre reported.

Northbound lift out of Brazil has been affected by the start of the cherry season out of Chile, which caused some freighter shifts to Santiago, he added.

“Here we might see some strong action, in case the US lifts more tariffs that may trigger airfreight to support pent-up demand, as then, this cargo will compete against Chile for the US northbound capacity, which is pretty much sold out to the cherries,” he reflected.

LATAM, the region’s largest carrier, kicked of the cherry season last month with a flight to China via Auckland. About 90% of Chile’s cherry crop is sold to China.

The airline had to contend with a week-long pilot strike last month, which caused the cancellation of at least 173 flights. In Brazil ,the strike had no impact, though, said Mr Genofre.

His eyes are on developments at Sao Paulo’s Guarulhos Airport (GRU), which has suffered some episodes of serious disruption in recent years.

“It looks like another meltdown is on the way. Local customs even amended a local regulation recently, granting additional 24 hours for GRU authority to process inbound cargo, without suffering penalties. So, seems they already see it coming,” he reported.