Supply chain shipping woes threaten LatAm commodities boom

Ocean shipping and its emissions are becoming a thorn in the side of Latin America’s commodities boom.

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A bulk freighter is anchored off Salvador da Bahia, Brazil. Photo: Alan/flickr.

(Michael Molinski is a senior economist at Trendline Economics. He’s worked for Fidelity, Charles Schwab and Wells Fargo, and previously as a foreign correspondent and editor for Bloomberg News and MarketWatch.) 

SÃO PAULO, Brazil (Callaway Climate Insights) — Latin America’s commodities boom over the past couple years is being threatened by the very industry that transports those commodities to the rest of the world — ocean shipping.

Big transportation companies have jacked up their container rates to and from Latin America to more than two to three times their rates in 2019, before the Covid pandemic.

“Our ships are still chockablock full — that’s a good sign,” said Rolf Habben Jansen, CEO of German ocean carrier Hapag-Lloyd, during a recent quarterly call. The South America trade “seems to be a bit more robust than some of the others.”

Hapag-Lloyd is the fifth largest ocean shipping company doing business with Latin America, behind Maersk of Denmark, MSC of Switzerland, CMA CGM of France and China Ocean Shipping Company (COSCO).

The ocean shipping industry is also a concern to Latin America because of its carbon emissions, especially in Brazil. Brazil is battling international concerns because it has been unable to bring down its emissions while the deforestation of the Amazon continues.