Brazilian Ports Face Challenges

An 8% drop in full container volumes in Brazil is expected in 2009, says UBS Pactual. Weakening demand coupled with overcapacity has caused shipping rates to drop, says the shop, which thinks the situation could last a while. “We now assume a container volume decline of 5% for Brazil in 2009 (measured in TEUs), from 9% growth previously. However, we assume full container volumes decline further, by roughly 8%, reflecting deteriorating full-to-empty ratios,” says the shop. The scenario has deteriorated rather quickly, especially considering that in September, Brazilian ports were trying to keep up with increasing exports. In response to expectations for 2009, UBS has cut the 12-month price targets for Log-In (to BRL9 per share from BRL17), Wilson Sons (to BRL15 per BDR from BRL25) and Santos Brasil (to BRL9 from BRL31).