News / Tradelanes: Latin American exports on a seesaw, due to taxes and tariffs

Latin America’s southern cone is experiencing some violent gyrations in export activity.

Agriculture exports from Argentina soared to a record volume of $4.2bn in a single day on 24 September, 24 hours after a government decree had eliminated export duties on key agricultural products until 31 October, or until a cap of $7bn is reached.

The temporary removal of export taxes also triggered orders for at least 10 shipments of 65,000 tonnes each of soybean exports to China, a move that likely increased the dismay among US soybean exporters who see their largest market pivoting to other sources.

Next door, in Brazil, exports of major commodities to the US have plummeted as a result of the 50% tariff slapped on by the White House, over the trial of former president Jair Bolsonaro. US orders for coffee from Brazil slumped 67% in August, from a year earlier, sugar by 77% and orange juice fell 29%.

For exporters in the Latin region using maritime transport, at least vessel and port operations have shown stability. Sea-Intelligence’s September Global Liner Performance Report shows outbound liner schedule reliability climbed 5.4 percentage points in June/July from the previous month, marking an improvement of 36.4% on a year ago, to a reading of 86.7%. The average delay for late vessels shrank by 0.27 days, to 3.16 days, versus 6.97 days a year earlier.

According to CTS data, volumes shipped from the region by ocean carrier to North America was up 1.1% year on year in July, slowing from the 4.4% growth in June. Meanwhile, northbound prices rose for four consecutive months, climbing 5.4% in July.

Airborne exports from the region climbed through the first three weeks of September. Statistics from WorldACD show outbound volume in the two-week period to 7 September was up 3% over the preceding fortnight, an increase of 5% year on year.

Chargeable outbound weight in the two weeks to 14 September was up 2%, followed by a 3% increase in the following two-week period. Tonnage to North America in the two weeks to 21 September was flat year on year, following gains of 1% and 2% in the prior fortnight.

Airborne exports from Argentina showed little impact from trade policy measures. More than 60% of this traffic is cargo originating in Chile, predominantly salmon, most of which goes to the US, noted Federico Calvo, director of Intermodal Logistics.

Exports of Argentine cherries are on the rise, but blueberry exports have not recovered from the advance of the rival industry in Peru, he noted.

“It’s salmon that moves the needle,” he commented. But he expects salmon exports to increase out of Buenos Aires, as the Chilean government is issuing concessions for new salmon production only in the far southern sectors of the country, which cannot be reached by road from Chile, but are accessible to trucks from Argentina.

Airfreight pricing from Central and South America has been under pressure, according to WorldACD. Overall outbound pricing from the region fell 3% year on year between 1 and 21 September, to an average of $1.56 per kg, dragged down by rate declines of 21% to Asia Pacific and 6% to North America. The three consecutive two-week periods up to 21 September saw rates down between 2% and 4%, year on year.

To a large extent, the overall rate decline is a reflection of the rise in capacity in South America, which was up 4% year on year in the two weeks to 21 September.

One factor here is the continuing growth in e-commerce volumes into the region. Argentina was a relative latecomer to this party, but it appears to be making up lost ground with a vengeance, after regional e-commerce behemoth Mercado Libre tuned into international imports, which drew in the likes of Shein. Mr Calvo reported that e-commerce soared 250% from last year.

And more freighter capacity is coming in. LATAM is set to double its B767F flights between Brussels and Buenos Aires this month, from two to four weekly frequencies, targeting pharmaceuticals, automotive and consolidated general cargo.

At the same time, passenger airlines are gearing up for the winter schedule, which ushers in a surge in bellyhold capacity between North and South America. Delta Air Lines, for one, will be adding a second daily non-stop flight between its Atlanta hub and the Argentine capital. In addition, it will boost capacity by replacing the A330-300 used on the route with an A330-900neo.

Mr Calvo added that salmon exporters like passenger flights out of Buenos Aires thanks to their better schedule integrity compared with freighters.

They should also like the outlook on pricing. With freighter and bellyhold capacity on the rise, rates will go lower, he predicted.