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Container giants locked in negotiations with Brazil Foods

Container giants locked in negotiations with Brazil Foods

Rio de Janeiro: Asian container lines are worried that the formation of the world's biggest ever chicken producer and exporter could force weak freight rates down still further on the Brazil to Far East and Middle East trade routes.

Brasil Foods has been formed by the purchase of Sadia - last year Brazil's number one chicken exporter with 23% of the market based on last year's figures - by Perdigao - the second biggest with 24% - and is now a formidable force for container line freight rate negotiators to deal with. During 2008 Brazil exported some 3.6M tonnes of chicken worth a total of USD$6.9BN.

NYK Line, K Line, MOL Line, Evergreen and Hanjin are all locked in negotiations with Brasil Foods right now as the new freight rates for 2010 will be set before Christmas, according to SAO sources at both the chicken producer and at K Line.

The new Brasil Foods now has more than 50% of the Brazilian chicken export market (based on 2009 figures) and up to 70% in certain domestic sectors, and monopolies commission CADE is studying a plan to make brasil Foods sell off some of its domestic brands but is giving it free rein (or range!!) to operate as a strong exporter.

A logistics manager at Brasil Foods said: "Although it has reservations about our dominance on the domestic front, we have approval already from CADE to start combining our logistics operations for the export sector, and we are negotiating right now with all the major carriers operating in Brazil today. We are looking for reductions in all services, including to Asia, as usually with greater volumes you get greater reductions in price per box."
But K Line and the other Asian carriers are already suffering from rate reductions of between 40 and 50% over the past year. A K Line manager said: "We have suffered so many freight rate falls during the past 12 months - especially in the reefer sector - and we can't take any more. I hope our shippers understand that."  [27/11/09]