Brazil-Chile shipping costs set to drop

The cost of shipping goods between Brazil and Chile is expected to fall by about five per cent with the 2020 expiry of a pact that limited trade to ships registered in either country, the Brazilian industrial lobby CNI says.

Brazil’s foreign trade chamber CAMEX has decided not to renew the 1975 pact, and to allow cargo to be transported on ships under any flag, citing the need for greater competition.

The maritime agreement granted exclusivity to two companies owned by German shipping groups, the Chilean subsidiary of Hapag Lloyd AG and the Brazilian unit of Hamburg Sud, which was acquired this year by the world’s biggest container shipping company Maersk Line, a unit of A.P. Moller-Maersk.

CAMEX also extended to one year, from a month, the validity of waivers for roll-on roll-off and break bulk ships, which are not subject to the restriction due to the lack of such vessels in both countries and are needed to ship cars and paper products.

“If and when this goes into effect, it will increase the number of shipping companies operating between Brazil and Chile,” CNI foreign trade manager Diego Bonomo said.

A study by the economic think tank IPEA found that the maritime pact added five per cent to the final price of products, including Brazilian foods, electrical goods and industrial equipment, and Chilean copper and wines.

However, Bonomo cautioned that CAMEX had only decided Brazil’s foreign ministry should send a diplomatic note to inform Chile that the agreement would not be renewed in 2020, by which time another Brazilian government will be in office and could reverse the decision.

“We need more legal certainty that this will happen,” he said.