By land and sea, shippers trading back and forth between Brazil and Argentina are taking advantage of opportunities while also navigating the complexities of global trade in these countries.
With a coastline of about 8,500 navigable kilometers, Brazil’s ports handle about 700 million tons of good annually and are responsible for over 90% of the country’s total exports. Many of those goods are shipped to Argentina, which is Brazil’s third-largest trading partner.
Using large ports like Porto de Santos (in Brazil) and Buenos Aires (Argentina), shippers move everything from agricultural commodities to automobiles to alcohol between the two countries. Situated near Buenos Aires, the Port of Zárate is an affordable option that’s attracting more shippers.
“Port costs in Argentina can be high, so companies are moving to Zárate to save money,” says Thessa Tozzi, DB Schenker’s Head of Sales & Marketing—Brazil. Land transport is also a popular option for shippers, although the decision between using land versus sea generally depends on the modes’ current rate climate, delivery timelines, and shipping capacity.
“There are times when it’s much faster, but also slightly more expensive, to use land versus sea,” Tozzi explains. “Then, during other periods, shippers may shift over to using ocean freight in order to reduce costs and gain efficiencies. We help our customers determine and take advantage of the best possible mode.”
The Largest Ports
Located in the city of Santos-SP, Porto de Santos is the largest port in Brazil and one of the busiest in Latin America, currently serving 26 Brazilian states. The port is important to São Paulo state’s economy, where around 90% of the city’s industrial base is located in a radius of 200 kilometers from the port. The port is also responsible for 28% of Brazilian foreign trade. Among the port’s most marketed products are sugar, soy, containerized cargo, coffee, corn, wheat, salt, citrus pulp, orange juice, paper, automobiles, and alcohol.
The Port of Itaqui is located near Sao Luis and handles an annual cargo volume of 146 million tons, with import and export commodities including copper, aluminum ingot and bars, soybean, pig iron, dry and liquid cargos, and general cargo. Other large Brazilian ports include Tubarao and Santos.
In Argentina, the Port of Buenos Aires’ container facilities are considered to be the fourth best in South America and The Caribbean, both in size and annual handling of cargo. The nearby Port of Zárate includes a vehicle terminal that was especially designed and dedicated for vehicle handling. The port’s container and general cargo terminal provides an agile, efficient service for container handling.
Importers and exporters working in both countries must address numerous regulatory issues to ensure a smooth transportation process. With its long-standing reputation of working successfully in both countries and its numerous physical locations in Brazil and Argentina, DB Schenker is well positioned to help shippers streamline the transportation and logistics processes.
DB Schenker also maintains operation at the main airports (GRU, VCP and EZE) as well at the ports (SSZ, BUE). Also of interest to importers and exporters is the recently-opened Tecplata destination terminal in Buenos Aires.
Highways and Byways
Since Argentina is almost 4,000 kilometers long and more than 1,000 km wide, long distance transportation is of great importance to the country. Several toll expressways spread out from Buenos Aires, serving nearly half the nation’s population.
Argentina’s expressways have been recently doubled in length and now link most (though not all) important cities. The Pan-American National Route 9 Buenos Aires – Rosario – Córdoba freeway is of major importance, while the longest continuous highways are National Route 40, a 5000-km stretch along the Andes range and the 3000-km sea-side trunk road National Route 3, running from Buenos Aires to Ushuaia.
In Brazil, vehicles can travel 1,751,868 kilometers of roads, 96,353 km of which are paved and 1,655,515 km are unpaved (just 5.5% of the roads are paved). The country’s most important highway is BR-116, followed by the BR-101. In May of last year, a national truck driver strike involving self-employed truck drivers impacted road transportation and led to a shortage of food, medicines, and oil across Brazil.
Significant Market Opportunity
Brazil is Argentina’s largest export and import market, while Argentina accounts for Brazil’s fourth largest export and import market. Total trade between the two countries amounted to the sum of $22.5 billion (USD) in 2016. Argentine exports to Brazil amounted to $9.1 billion while Brazilian exports to Argentina totaled $13.4 billion. In recent years, trade between the two countries decreased as commodity prices fell and Brazil experienced slower economic growth.
Brazil’s top exports are soybeans, iron ore, crude petroleum, raw sugar, and cars—most of which are shipped to China, the U.S., Argentina, the Netherlands, and Germany. Its top imports are refined petroleum, vehicle parts, packaged medicaments, integrated circuits, and automobiles.
Argentina’s top exports include soybean meal, corn, soybean oil, delivery trucks, and soybeans, while its top imports are cars, vehicle parts, telephones, petroleum gas, and refined petroleum.
As a global logistics expert, DB Schenker enables a good portion of the freight that moves between Argentina and Brazil, with a particular emphasis on automobile components, parts, and the vehicles themselves.
“These are very important markets for our customers, mainly in terms of the automotive industry,” says Tozzi, “which is very strong between these countries.” At a very high level, for example, Argentina exports vehicles to Brazil while the latter supplies the former with spare vehicle parts.
The Complexities of Global Trade
Companies shipping goods between Brazil and Argentina face some interesting challenges, not the least of which are the currency fluctuations, trade regulations, taxation, and political climates in the respective countries.
“Right now, Argentina’s currency is fluctuating and this is impacting the local market and the imports coming from the country,” says Tozzi. “The situation is in flux, and particularly when it comes to the taxes on shipping between Argentina and Brazil.”
Earlier this year, for example, Brazil’s and Argentina’s leaders discussed the possibility of easing Mercosur’s trade rules and allowing members of the bloc to negotiate individual agreements with other countries. According to Mercosur’s rules, members, which include Argentina, Brazil, Uruguay, and Paraguay, are prohibited from negotiating free trade agreements individually.
In Brazil, a newly-elected president possesses a strong market orientation, while Argentina will hold its presidential election in October. Both countries are looking to upgrade the current Mercosur trade agreement in order to leverage this agreement to its fullest extent. “If the rules are relaxed, the trade between the countries will become easier,” says Tozzi.
There have also been some recent changes to Argentina’s import documentation rules—a shift that DB Schenker is helping customers navigate and comply with. “A lot of shippers come to us for help understanding what the requirements are, what the demands are, how long the process takes, who is responsible for what,” Tozzi explains, “and what documentation is necessary.”
The changes involve importers’ licenses, and will replace a set of stricter rules that are currently in place. “They’re trying to ease the rules somewhat, but there’s still some bureaucracy and paperwork to work through,” says Tozzi, “both for exporters from Argentina and for importers from Brazil (to Argentina).”