Conflicts in the Middle East and North Africa are beginning to impact Brazilian agricultural exporters. Increases in the value of sea freight, the imposition of risk fees, delays in deliveries and the possibility of a container shortage are some of the factors that companies are now taking into account.
The exporters consider the situation to be “manageable” for the time being, but the yellow light is on. In the short term, the biggest concern is the availability of containers. This could limit shipping of products such as meat, coffee and sugar.
To minimize risks, shipping companies are looking for longer and more expensive routes for deliveries. However, orders arrive 15 or 20 days late. Delivery delays extend throughout the entire chain and can lead to bottlenecks in Brazilian ports.
Because delivery delays also delay the return of containers to Brazil for new shipments. With production ongoing, it cannot be ruled out that manufacturers will be stuck in ports waiting for equipment to become available for new deliveries.
According to the industry, the situation is more critical for perishable products, which have a shorter shelf life, but this is already affecting the plans of exporters of beef, poultry and pork.. Industries have not yet reported calls for price negotiations, but fear that their competitiveness will be affected.
The poultry sector accounts for half of Brazil's exports, apart from China, Asia and the Middle East. For beef and pork, China is the main destination, accounting for more than 40% of shipments. However, containers sent from China to Europe pass precisely through the critical shipping route.
Costs such as freight, risk fees and insurance, among others, are traditionally borne by importers. Given the current situation, some are already looking for supply alternatives at more attractive prices.
When loads are dry, shocks are minimized. For coffee, 70% of exports are destined for the United States and Europe, routes that do not pass through the Red Sea and Suez Canal.
The Brazilian Coffee Exporters Council (Cecafé) reported that it is closely monitoring the situation and assessing the possible impact as sea freight costs increase for exports that need to be transported through the region.
“We have important markets in Asia and Oceania that could be affected by the increase in freight prices, mainly to China, Japan, South Korea, Australia and Arab countries,” the company said.
Containers stacked on a cargo ship traveling through the Suez Canal, Red Sea, Egypt (Camille Delbos/Getty Images)
In the Red Sea, Yemen's Houthi rebels have carried out attacks on merchant ships passing through the Suez Canal. The passage connects the Mediterranean with the Indian Ocean and is crucial for supplying southern Europe, North Africa and much of the Middle East.
The route through the Persian Gulf also became a problem. About two weeks ago, Iran and Pakistan launched mutual attacks, an escalation considered unprecedented between the neighbors.
The region's ports serve Iran, Iraq, the United Arab Emirates and some Asian countries. The most worrying situation is in the port of Bandar Abbas in southern Iran.
There are also tensions between neighbors Algeria and Morocco in North Africa. Instability in the region is longstanding. According to a meat importer operating in the region, it is not unusual for the Algerian government to refuse to accept cargo in the ports of Algiers and D'oran that was transshipped in the Moroccan port of Tangier.
At these times transshipment must take place in Algeciras, Spain, across the Strait of Gibraltar. “It's as if the taximeter is running and making freight more expensive. The cost variable these days is the world,” says the importer.
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