Southbound shipments to the east coast of South America declined in April year-over-year for the sixth consecutive month, with industrial resins and auto parts leading losses. Increasingly sluggish output growth in this region will impose strict limits on the southbound container trade through the remainder of 2014. Moreover, the boost in trade to Brazil, derived from World Cup-related inputs, will end in the second quarter, leaving no choice but to revise lower the projection for the region. I am now predicting a 7.4 percent decline in traffic to the east coast of South America during 2014, 5.0 percentage points below the March 2014 forecast. I expect a modest recovery in 2015, but economic conditions in the region will remain relatively unfavorable for U.S. exporters. Year-to-date through April, exports were down 9.5 percent and totaled 160,738 TEUs.
Exports to the west coast of South America rose in April year-over-year after declining for two consecutive months. The rising strength of the U.S. dollar has clearly curbed this trade over the past two quarters. In addition, the economies of the region are experiencing a slowdown as investment is falling and lower world commodity prices cut into export earnings. Chile’s economic growth dropped to 2.6 percent in the first quarter compared with the same period past year, and was down a tenth of a point from the fourth quarter of 2013. Colombia’s economy expanded by just 0.8 percent in the first quarter of 2014, Ecuador posted a 1.2 percent gain, and Peru experienced about 1.8 percent growth. In every country, the terms of trade deteriorated as import prices were generally stable while export prices for key commodities declined. Going forward, I anticipate more sluggishness through the remainder of 2014 and much of 2015, primarily owing to the downward trajectory of world commodity prices. I am therefore revising the forecast for U.S. containerized exports to this region in 2014 to minus-5.1 percent from minus-2.3 percent. For 2015, the growth forecast stays at around plus 3.0 percent. Year-to-date through April, exports were down 1.9 percent and totaled 154,472 TEUs.
Source: JOC Container Shipping Outlook, June 2014 report.