The cargo ship bound for South America is sailing on the hottest route on Earth this year
Strong trade demand makes the route between China and South America unusually busy and expensive
In order to meet the increasing transportation demand of Brazil, Mexico and other countries, since April, many shipping companies such as CMA, Mediterranean Shipping, Pacific Shipping, Evergreen Shipping and Orient Overseas have announced plans to add or upgrade South American routes. two|| In the past two months, due to Brazil’s tariff increase on imported new energy vehicles and the impact of a large number of early shipments by automobile enterprises, the capacity of South American routes has continued to be tight. In addition, due to comprehensive factors such as the Red Sea crisis ships bypassing the Cape of Good Hope at the southern end of Africa, the freight rates of China’s export routes have risen across the board except Japan. three|| The trade dispute between China and the United States has prompted many China companies to move factories to Mexico to avoid the risks of trade protectionism imposed by the United States on China, such as tariffs.
Raccoon was the first member of the family to sail the South American route.
For nearly a hundred years, their family carried thousands of tons of cargo between different shipping lanes. Raccoon’s great-grandfather and grandfather ran inland river transportation. To raccoon’s father generation, with the growth of China’s foreign trade, their footprints began to spread all over the world: Southeast Asia, Europe, Africa, North America…
In the first half of this year, strong trade demand made the route between China and South America unusually busy and expensive.
Major shipping companies have added routes from China to South America. Since April, shipping companies such as COSCO Shipping, Evergreen Shipping, Orient Overseas, CME France and Mediterranean Shipping have added or upgraded South American routes.
According to the data of the General Administration of Customs, from January to April 2024, the total import and export volume between China and Latin America was RMB 1.14 trillion yuan, and the total export volume was RMB 576.2 billion yuan, up 11.7% and 11.4% respectively compared with the same period last year, making it the fastest growing continent for China’s import and export trade. Among them, new energy vehicles have become important trade products. Brazil’s passenger car imports rose 450 percent in the first quarter of this year compared with the same period in 2023, with China accounting for about 40 percent of imports, most of them electric and hybrid vehicles, according to data released by Brazil’s Ministry of Development, Industry, Trade and Services in April.
On that freighter bound for Mexico. Raccoons only deal with 24 crew members and tens of thousands of containers full of cargo each day. Among these containers, there are some dangerous goods boxes numbered 3166 (flammable liquid-driven vehicles), which store lithium batteries, new energy vehicles and other industrial products. Raccoon is responsible for checking the safety of these dangerous goods boxes. “The biggest thing about the South American route is that it’s long,” Raccoon said.”It’s long enough to go through all the seasons of the year, and you have to dial the time difference constantly when you pass through different time zones, so you don’t sleep well.”
busy route
Starting from Shanghai Port, the container ship where the raccoon is located will sail in the Pacific Ocean for more than 30 days, passing through South Korea, Japan and Bering Strait successively. During the voyage, you can see the snowy mountains of Alaska, USA, more than 6,000 meters above sea level. Then, the freighter docked south at Mexico’s ports of Ensenada and Manzanillo. After sailing through the equator, the ship came to the Galapagos Islands belonging to Ecuador, where the only lizards on Earth that can live in the ocean-marine iguanas-are based on “sea monsters” in the monster movie Godzilla. Then the ship continued south, stopping in Peru and Chile.
Raccoon joined a shipping company last October and officially became an ocean-going freighter crew member. A month later, raccoons made their first voyage to South America.
According to him, the ship was originally on the North American route and was temporarily transferred to the South American West route to transport cherries to China when they ripen at the end of December. Cherries have a short shelf life and rot easily, so this route requires a high speed. Raccoon said: “Other routes rarely give full power to the main engine. This route should run at full speed even if the ship can’t bear it. After all, it is called Cherry Express.”
After the cherries, the South American route became busy, and the ship stayed on that route.
Mr. Lv, a freight forwarder who deeply cultivates Latin American routes, told reporters that compared with the dismal shipping market in the same period last year, the market since March this year is particularly hot. “At present, a lot of low-value goods have been stopped, and such enterprises are facing such high sea freight, and there is basically no way to do it.” Now the main transportation is machinery and auto parts.” Mr. Lu said that due to the connection between June and August and the traditional shipping season in South America, it is expected that this wave of freight rate rise will continue until early August this year.
In order to meet the increasing transportation demand of Brazil, Mexico and other countries, since April, many shipping companies such as CMA, Mediterranean Shipping, Pacific Shipping, Evergreen Shipping and Orient Overseas have announced plans to add or upgrade South American routes. Among them, Dafei announced the opening of M2X-Mexico fast ship route, which has been linked to Tianjin, Qingdao, Busan, Ensenada, Manzanillo, Lasaro and other ports successively; Mediterranean Shipping launched MEXI-CAS loop on May 15, making its maiden voyage from Qingdao to connect major ports in Asia and Mexico; Pacific Shipping launched two upgraded weekly direct services to South America East Route 1 (ES1) and South America East Route 2 (ES2), of which ES1 departs from Shanghai and is jointly deployed by Pacific Shipping, Evergreen Shipping, COSCO Shipping and Dafei Steamship to provide services, ES2 departs from Qingdao, and the above four shipping companies jointly deploy 12 ships to provide services.
According to COSCO Holdings, COSCO currently has 12 container liner routes anchored in Mexico, with an input capacity of more than 220,000 TEU (standard containers). In the first four months of 2024, total seaport throughput across Mexico increased by 18.2% year-on-year, and trade between Asia and Mexico shows great potential for cooperation. In this context, COSCO Shipping recently opened Mexico Express (WSA5) line, each class provides more than 3000 – 5000 standard containers, will connect Ensenada, Manzanillo and Lazaro and other Mexican Pacific side ports.
William Ho, general manager of ocean shipping trade, Pacific Shipping Line Operations Management, said: “With continued optimism in the growth prospects for Latin America, we are seeing strong trade flows between Asia and Latin America. Following the enhancement of our South America West service, we hope to enhance our South America East service to further enhance connectivity and better meet customer needs.”
Freight forwarder manager Lv felt that in the past two years, the shipping capacity invested by various shipping companies on South American routes has been increasing continuously.”The most obvious example is that Wanhai Shipping, which used to mainly operate near-ocean routes, has also opened up South American routes one after another.” In July 2023, Wanhai Shipping “Jichun” berthed at Tianjin Port Container Terminal, marking the official opening of the new route of the company to South America, passing through several ports in Mexico, Panama, Colombia, Ecuador and other countries.
3166 Dangerous Goods Box
On freighters, raccoon’s main job is to steer ships and manage container cargo. One of the tasks is the management of dangerous goods box 3166.
Starting from raccoon running ships, there are many new energy vehicles on board each voyage, accounting for about 0.5%-2% of more than 10,000 containers. “My colleagues who joined at the same time also said that there are 3166 dangerous goods boxes everywhere.” Raccoon said he had chatted with fellow freight forwarders in charge of the Chilean port of San Antonio. The other party said: “The goods are overstocked and cannot be found, and they are all occupied by new energy vehicles.” In addition to new energy vehicles, the ship’s export goods also include all kinds of large-scale machinery, fireworks, Yiwu small commodities and other daily consumer goods.
A number of freight forwarders to the Economic Observer reporter said, In the past two months, By Brazil to import new energy vehicles imposed tariffs, A large number of car enterprises ahead of time impact, South American route capacity continued to be tight, In addition to the Red Sea crisis ships around the southern tip of Africa Cape of Good Hope and other comprehensive factors, China export routes freight rates in addition to Japan routes rose across the board. On May 31, Shanghai Shipping Exchange released Shanghai Export Container Composite Freight Index (SCFI) for 3044.77 points, an increase of 12.6% over the previous period. Among them, the South American route increased by more than 150% compared with the end of March, and the freight rate (sea freight and sea freight surcharge) from Shanghai Port to South American Basic Port reached USD 7408/TEU.
Brazil and Mexico are China’s top two trading partners in Latin America. From January to April, China exported 153.2 billion yuan to Brazil, an increase of 24.6%, which can be attributed in part to the large export of new energy vehicles. Brazil’s passenger car imports rose 450 percent in the first quarter of this year compared with the same period in 2023, with China accounting for about 40 percent of imports, most of them electric and hybrid vehicles, according to data released by Brazil’s Ministry of Development, Industry, Trade and Services in April. Recently, BYD’s “EXPLORE NO.1” ro-ro ship loaded with 5459 new energy vehicles arrived in Brazil. In addition to exports, BYD and Great Wall Motor have also announced production plans in Brazil.
From January to April 2024, China exported RMB 198.3 billion yuan to Mexico, up 15.1% year-on-year. Lin Bo, assistant researcher of Latin American Institute of China Academy of Social Sciences, told Economic Observer that automobile trade and cross-border e-commerce going to sea are two highlights of Sino-Mexican trade. The automobile trade between China and Mexico grows rapidly, and Mexico is China’s second largest automobile export market overseas;SHEIN, Shopee, Temu, AliExpress and other e-commerce platforms have gone out to sea one after another. Due to the high proportion of young people in Mexico and the strong demand for online shopping, China’s export of daily consumer goods to Mexico has been greatly driven.
In addition to cross-border e-commerce, Mexico has several offline China small commodity cities, which also drive the wholesale and retail of China goods, Lin said. In terms of investment, China and Latin America have achieved good cooperation in infrastructure construction of “One Belt and One Road”, and private enterprises in China such as automobile and automobile-related supporting enterprises are also actively exploring Latin American market.
Go to South America
After graduating from college, Raccoon, who majored in nautical technology, did not immediately start his career as a sailor, but followed his interest and became a photographer. He sent a series of portraits he had taken and told reporters that his family thought he was “not doing his job properly.”
After becoming a crew member, raccoon did not completely give up photography, but the various characters in his lens became huge ships and cranes at the dock, seabirds resting on containers, dolphins riding waves on the bow.
In Mexico’s largest port, Manzanillo Port, ships from all countries dock here, and many China gather near the port. Raccoon disembark rest, in the port area on a more prosperous street found four or five Chinese restaurants and a China supermarket chain “RT-Mart.” One of the Chinese restaurants, in addition to the owner, only scattered one or two tables of China guests. Raccoon found that local prices are not cheap,”a bowl of rice cover cost me 80 yuan.”
It’s hard for a China crew in port not to be curious about their own supermarket in a foreign country. Raccoon walked into the three-story RT-Mart and struck up a conversation with the owner. The boss is a couple with a son. Raccoon learned in the exchange that the couple came from Guangdong, belonging to the first batch of China people to enter the Mexican market at the end of the 20th century. At first, they exported some small commodities to Mexico. As they grew in scale, they gradually developed into supermarkets. But the raccoon just turned around and left.”The price of a pack of shrimp slices is 18 yuan, a bottle of soy sauce costs 50 yuan, and the price of two bottles of Lao Gan Ma can buy a box in China.”
Recently, the heat of business going to Mexico has been rising. Lin Bo, for example, said that due to more people going to sea for investigation, visas for China enterprises to travel to Mexico are now more difficult. His friends in Mexico, who work in leasing factories, have also noticed that more and more people are asking him about leasing.
According to data from the Mexican Ministry of Economy, as of the end of 2023, Mexico had absorbed foreign direct investment (FDI) of US$36.058 billion, a year-on-year increase of 27%. According to the source of investment, the United States is Mexico’s largest source of investment, accounting for 38%; in the first quarter of 2024, Mexico absorbed FDI of US $20.3 billion, an increase of 9% over the same period in 2023, a record high. According to the analysis of EqualOcean’s “Research Report on China Enterprises Going to Sea in Mexico,” Mexico has undertaken a large number of “offshore outsourcing” businesses in the United States, which has attracted a number of China enterprises that want to enter the North American market to invest and build factories. In addition, Sino-US trade disputes have prompted many China companies to move factories to Mexico to avoid the risks of trade protectionism imposed by the United States on China, such as tariffs.
At the same time, EqualOcean manager Li Jiaqi observed that some parts manufacturers in Mexico have insufficient production capacity, local high-tech talents shortage, these talents are generally sent to Mexico from China; In addition, Mexico, Brazil and other places of mechanical equipment is not as perfect as China, so now many enterprises will still choose to produce in China, and then shipped to Latin American countries.
South from Mexico, the raccoon’s boat would pass through the Peruvian capital and eventually arrive in Chile, where cherries are abundant. In Port San Antonio, Chile’s largest port, China can be seen on the streets, and the Chilean Communist Party distributes leaflets with sickles and hammers. Raccoon said Chile has cheap and abundant cherries and red wine, local cherries cost only 2 yuan a catty, red wine is the most expensive just over 100 yuan.
When the raccoon returns to this Chilean port in early February, it is no longer cherries that are being transported home, but fresh grapes, peaches, bananas and other seasonal fruits waiting for him.