News Content

Brazil-Europe rates hold up on back of strong fruit export volumes

STRONG demand for fruit exports from the east coast of south America (ECSA) to Europe are expected to hold freight rates steady at between US$1,300 and $1,500 per TEU or even push them up in the coming weeks.

According to the Brazilian association of fruit producers and exporters Abrafrutas, exports of fresh fruit from Brazil increased in the first half of the year by 8.5 per cent to 44,600 TEU on the back of a 60 per cent surge in apples to 6,790 TEU and a 32 per cent year-on-year spike in mangoes to 6,500 TEU, reported IHS Media.

"We have seen freight rates remain fairly steady over the past year, which also helps our members," said a spokesperson for Abrafrutas, which represents 39 different fruit producers responsible for 85 per cent of all Brazilian fruit exports.

The outlook for the northbound leg from the ECSA to Europe is "much brighter" as the northbound trade has "started to turn the corner" and the southbound trade "continues to strengthen," according to industry analyst Drewry Maritime Research, which believes there is the potential for the legs in both directions to be balanced by the end of 2017.

"Fruit is a market that Brazil is keen on expanding, and the extra loaders will help that during the peak export season [August to the end of February]," said Drewry senior manager Simon Heaney.

Freight rates rose by $150 between August and October to $1,450 despite the extra loaders, according to Drewry. Maersk Line has added tonnage to its Pecem Express service while CMA CGM has commenced an extra north Brazil Express loop operated by vessels of 1,750 TEU equipped with 500 TEU of refrigerated plugs.

Freight forwarders in Rio de Janeiro and Sao Paulo have reported spot rates of $1,300 to $1,500 per FEU from Santos to Rotterdam for dry boxes.

Contract rates have remained steady at $1,000, according to data from Drewry and rate management platform Xeneta, which has recorded long-term contract rates of between $850 and $1,000 per FEU for the last 12 months.

Rates have been steady despite the extra capacity because of high levels of utilisation, which hit 80 per cent in August and were forecast to come in at 73 per cent in September, according to Drewry.

The strong performance on the export trade to Europe extends to imports from the region, with that trade recording 13 consecutive year-on-year monthly gains, with seven of those months coming in above 10 per cent, according to Brazilian data company Datamar.

Drewry forecasts that exports to Europe and the Mediterranean will grow by 20,000 TEU in the fourth quarter as imports expand by 30,000 TEU.

On a rolling 12-month basis to the end of September, overall export volume to Europe totalled 743,000 TEU and import volume stood at 787,500 TEU, according to Drewry.