The year 2024 has proven to be exceptionally challenging for U.S. exporters shipping to South America (SAM). Companies faced numerous obstacles, including constantly shifting vessel schedules, last-minute port omissions, significant delays at transshipment (t/s) ports, and stark disparities in freight rates among ocean carriers—leading to widespread customer dissatisfaction.
What were the driving factors behind these challenges for U.S. exporters?
Latin America’s trade activity showed remarkable strength in 2024. According to Alphaliner, carrier capacity in South American trade lanes increased by 17.4% from June 2023 to June 2024, reaching 4.1 million TEUs. Meanwhile, data from Datamyne reveals that U.S. exports to the top 11 South American markets grew by 9% in the first 10 months of 2024 compared to the same period in 2023, with Brazil leading the way as the primary growth driver.
Despite this surge in demand and capacity, many ports in the region struggled to accommodate the growing volumes and larger vessels. The lack of infrastructure exacerbated bottlenecks, particularly at transshipment hubs in the Caribbean, from Panama to Freeport.
Compounding these operational challenges, climate-related disruptions persisted in 2024. Low water levels in the Panama Canal and Amazon River, as well as strong hurricanes affecting the Caribbean and the Gulf of Mexico, added to congestion and extended transit times.
Additionally, a condensed and early U.S. import peak season created ripple effects. Concerns over potential labor strikes (though the strike ultimately lasted only a few days) and longer transit times due to geopolitical tensions in the Red Sea led many importers to bring forward their holiday inventory. This shift placed additional strain on global capacity, affecting space availability for U.S. exports.
Freight rates also played a significant role in these challenges. Cargo originating from Asia, Europe, or the Mediterranean commanded significantly higher rates than U.S. exports, leading carriers to prioritize these higher-yield shipments. Furthermore, ocean carriers’ inconsistent pricing strategies for U.S. export cargo added complexity. Over the past several months, some carriers implemented substantial rate increases, while others maintained steady pricing. This disparity created significant cost-forecasting difficulties for customers, with some seeing rate differences between carriers more than double for comparable services.
Looking Ahead to 2025: What can exporters expect in 2025?
According to BIMCO, South America’s import volumes are projected to grow by an impressive 10% in 2025. Globally, the container fleet is expected to expand by 9.3% in 2024 and an additional 4.8% in 2025, reaching 32 million TEUs by the end of that year. Meanwhile, global container demand is forecasted to grow by 5–6% in 2024 and another 3–4% in 2025. This projected capacity growth suggests that carriers will be better equipped to meet increasing demand in South American trades.
In response to chronic congestion at certain ports, carriers such as Maersk and MSC have already started omitting specific Brazilian ports from their rotations and remove few other ports on the way. These adjustments aim to streamline services and enhance schedule reliability.
However, risks remain. Infrastructure limitations, weather-related disruptions, the potential for labor strikes (notably on January 15th for U.S. East Coast/U.S. Gulf Coast ports), and ongoing geopolitical tensions are all variables that could affect performance. How carriers manage capacity increases, alongside evolving trade dynamics, will be critical.
The Importance of Planning and Communication
At MTS Logistics, we expect to ship close to 20,000 TEUs from the U.S. to South America in 2024. Based on our experience, accurate forecasting will remain the cornerstone of success in 2025. Securing adequate capacity at competitive—though not necessarily the lowest—rates will be vital.
Without proper forecasting and with a sole focus on minimizing costs, companies risk undermining their supply chain stability and overall cost-effectiveness. While many challenges—such as weather, infrastructure, and carrier policies—are beyond the control of shippers and service providers, focusing on what can be controlled will make a difference.
Transparent communication and proactive planning across all stakeholders in the supply chain will be essential to navigating these complexities and achieving long-term success.
