Floods hamper industry, slash Rio Grande do Sul exports by 19%

The floods in Rio Grande do Sul have had a profound impact on the state’s economy, affecting several sectors, including international trade. In May, exports from the state dropped by 19.3% compared to the same month last year, according to data from the Federal Revenue.

The industry’s observatory reported that out of 23 segments with certified shipments, 18 experienced declines. The primary causes were the paralysis of industrial plants, damage to land transport routes, and interruptions at Salgado Filho Airport.

“Beyond the shutdown of factories, the damaged infrastructure has escalated costs for both transportation and production in Rio Grande do Sul. Most of the affected plants are in municipalities hit by the climate disaster,” noted Gilberto Porcello Petry, president of the state’s Federation of Industries (Fiergs).

With flights suspended throughout May, exports of industrial products from Rio Grande do Sul plummeted by 72%.

Despite revenue reaching $1.2 billion, the Foreign Trade Secretariat of the Ministry of Development, Industry, Commerce, and Services (MDIC) reported a loss of $282.5 million to the state-wide economy due to the combined adverse factors.

The decline in exports was driven by an 18.9% decrease in the quantity of goods sent abroad. Fiergs’ analysis highlighted that the climate disaster exacerbated the already negative trend in industry shipments, which had been slowing since January of the previous year.

Imports

Last month, the state imported goods worth approximately R$4.1 billion ($772 million), a 41.2% decrease compared to May last year. The Fiergs report indicated that the reduced demand for intermediate and capital goods reflects lower industrial consumption. Most of the state’s imports were in the chemicals segment, with companies purchasing around $226.6 million worth of goods, down 31.6%.

Rio Grande Port and Salgado Filho Airport

Salgado Filho Airport plays a crucial role in imports rather than exports. According to the Federal Revenue Inspectorate, the total value of products exported by RS companies was about $1.2 million, compared to over $3 million in May 2023, a reduction of 72.1%.

Regarding imports, the state received around $3.5 million worth of goods, a stark contrast to the $37.5 million in arrivals during the same period last year, marking a 91.5% decline. The airport’s operations were halted on May 3, although some goods had already been shipped before the closure.

At the Port of Rio Grande, the primary hub for exports, operations continued despite the disaster. However, road routes from industrial plants to customs were severely affected, increasing travel costs and time.

The chart below used DataLiner data to compare container exports and imports at the Rio Grande Port Complex between January 2021 and April 2024.

Rio Grande Container Exports & Imports | Jan 2021 – Apr 2024 | TEUs

Source: DataLiner (click here to request a demo)

Breakdown of Exports

Foods

Drop of 36.5% compared to May 2023)

Reasons:

Lower quantity (-34.2%) of shipments

Prices (down 3.4%)

Other productive sectors: 

Crude vegetable oils
Total: US$119.1 million
Minus US$160 million

Bird slaughter

Total: US$101.2 million
Minus US$31.3 million
Main buyer: United Arab Emirates

Pork slaughter

Total: US$49.4 million
Minus $2.8 million
Main market: China

Tobacco

Total: US$206.5 million
Increase of US$58.3 million (39.4%)
Production up 14.3%
Price increased by 22%
Industrial tobacco processing (US$ 196.2 million or more than US$ 62.1 million) was the main highlight, with products shipped mainly to Belgium.

Chemicals

Total: US$99.6 million
Minus $3.5 million

Leather and Footwear

Total: US$70.9 million
Minus $1.1 million

Motor vehicles:

US$64.3 million
Reduction of US$46 million

Machinery and equipment:

US$56.3 million
Reduction of US$54 million

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