(With information from Reuters)

Shipping goods from Brazil to Chile could be about 5% cheaper within three years, due the expiration of a pact signed in 1975 that limited trade to ships registered in either country, according to Brazilian industrial lobby National Confederation of Industry (CNI).

Brazil’s foreign trade chamber (CAMEX) decided not to renew the pact, which granted exclusivity to two German shipping companies, the Chilean subsidiary of Hapag Lloyd AG and the Brazilian subsidiary of Hamburg Süd.

Without the pact, cargo would be transported on ships under any flag, creating a greater competition environment.

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

A study found that the end of the deal would add 5% to the final price of products, including Brazilian foods, electrical goods, industrial equipment, and Chilean copper and wines.

CAMEX also extended to one year (from a month) the validity of waivers for roll-on roll-off and break bulk ships, since both countries have a necessity to ship cars and paper products.

Diego Bonomo emphasized that more legal certainty would be needed, as changes will start in 2020.

Sources:

https://money.usnews.com/investing/news/articles/2017-07-31/brazil-chile-shipping-costs-to-drop-with-end-of-pact?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BZpTwipsbQP2xa2p8v%2BA36A%3D%3D

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