War raises freight rates by nearly 300% and worries Brazilian fruit producers

The war between Russia and Ukraine has aggravated the international logistics crisis, causing concern among Brazilian fruit exporters. Even though Russia is not among the main customers of the Brazilian fruit industry, the escalation of the conflict worsened a situation that had been in place since last week. Moreover, there is a notorious lack of vessels and containers, increasing freight rates further.

“In 2020, we paid US$4,000 to send a container of fruits to the US. Last year, the value increased twofold and, now, in 2022, we foresee that the same operation will cost US$ 11 thousand,” says Guilherme Coelho, president of the Brazilian Association of Fruit Producers (Abrafrutas).

Maritime logistics operators have stated that no vessel should be available this month, with no normalization perspective until at least April. One way to overcome this situation and ship fruits to Europe is to use a cabotage route from Salvador (BA) to Santos (SP).

Regarding this topic, the Minister of Infrastructure, Tarcísio Gomes de Freitas, limited himself to comment that the “Legal Framework for Cabotage [approved in January this year and transformed into Law 14,301] creates new opportunities to increase the supply of vessels.”

See below the five most exported fruits from Brazil in the period between 2019 and 2022. The data are from DataLiner.

Five most exported fruits from Brazil | Jan 2019 – Jan 2022 | WTMT

Source: DataLiner (click here to request a demo)

On Tuesday, March 15th, Freitas was present at the 26th Intermodal, the largest logistics exhibition in South America. He also stated that the privatization of ports could further alleviate the need for vessels. The second stage is to develop port infrastructure through leasing and privatization. So, when port investment and vessel access are combined, supply increases. We will resolve this process in the long run,” said the minister while acknowledging that the solution would not be immediate.

Privatizations

During Intermodal, the Minister of Infrastructure once again argued in favor of privatizations, such as the Port of Santos, whose auction is scheduled for March 30th. The Ministry foresees BRL 30 billion of investments allocated to the port, with BRL 11 billion coming from new port leases.

“In addition, we expect R$ 19 billion to come with the privatization of the port, which will fund improvements in road, rail, and maritime access and the draft deepening works from 15 to 17 meters, making the port an even-larger container hub,” explained Freitas.

Source: Globo Rural

To read the full original article, please see:

https://revistagloborural.globo.com/Noticias/Infraestrutura-e-Logistica/noticia/2022/03/guerra-faz-frete-subir-quase-300-e-preocupa-produtores-de-frutas-do brasil.html#:~:text=Setor%20j%C3%A1%20vinha%20de%20forte,cont%C3%AAiner%20a%20US%24%2011%20mil&text=A%20guerra%20entre%20R%C3%BAssia%20e,exportadores%20de%20frutas%20do%20Brasil.

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