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Cali, Colombia - host of the Pacific Alliance summit. Colombia is among the big beneficiaries of the growing Pacific Alliance trade, Maersk says.  (Photo: Colombia Government)
Wednesday, June 28, 2017
Trade Talk

Maersk: Colombia Benefits from Pacific Alliance


Latin America ad expenditure will likely grow 4.1% this year, Zenith predicts.

BY LATINVEX STAFF

Just as the Pacific Alliance is gathering for a summit in Colombia this week, a new report from Danish shipping giant Maersk shows that foreign trade among member countries has increased by 10 percent for the first time since the alliance came into effect in 2015.

The Pacific Alliance consists of Chile, Colombia, Mexico and Peru. Its presidents are meeting in Cali, Colombia on June 29 and 30 for its annual summit.

Colombia is among the big beneficiaries of the growing Pacific Alliance trade, Maersk says. Colombian exports to Chile have increased by 49 percent, while imports from that country rose by 12 percent. Meanwhile, exports to Peru have grown by 15 percent and imports have increased by 10 percent.

However, contrary to what was expected, total containerized commercial trade between Colombia and Mexico has fallen by 2 percent. Although imports remained stable, exports fell by 10 percent.

Meanwhile, exports to Europe have risen by 11 percent. Banana shipments have grown by 20.9 percent. This growth responds to the direct transport routes that connect Turbo, Antioquia to Europe.

And contrary to what usually happens at the start of the year, Colombia has registered -in the first quarter of the year- positive figures in its trade balance. For the first time in the last 24 months, containerized foreign trade grew by 7 percent. Exports increased by 12.9 percent and imports grew by3.7 percent.

“This atypical, but positive, growth makes us think that the upward trend in containerized foreign trade will continue during the second half of the year,” Juan Camilo Vásquez, Colombia Sales Manager for Maersk line, said in the report. “It seems that the market has been able to now fully adapt to take advantage of the devaluation of the peso that began in 2015. Moreover, Colombian exporters seem to be being rewarded for their efforts to diversify trade.”

The Colombian agricultural industry has boosted foreign trade by improving its competitiveness and opening up to new markets. Proof of this is the fact that container exports of fruit and other perishable products increased by 12.9 percent in the first three months of the year.

The rise in exports has stimulated import growth as well. The entrance of supplies from Europe used for agricultural production has increased by 13.4 percent.

There is a similar pattern in imports from the Americas, which have risen by 5.0 percent. Particularly noteworthy is the large increase in fertilizer imports of 98 percent. Similarly, purchases of animal feed increased by 41 percent while paper rose by 24 percent.

“These figures are much higher than those we normally see at the beginning of the year and can be explained by: (1) a significant increase in the demand for traditional Colombian products, such as sugar whose purchase, for example, from Asia has risen by 869 percent; and (2) the moderate but steady increase in the demand for new products from Colombia such as pineapple and avocado,” explains Vásquez.

Enrique Piqueras, Managing Director CCTO (APM Terminals Operations in Colombia) says there’s been an increase in the volumes of refrigerated containers due to the growth of Colombian fruit exports, which have opened new markets in destinations such as Russia and the Middle East.

“This is quite significant and explains, to a great deal, the growth figures we are seeing in ports like Turbo,” he says. “Refrigerated containers offer temperature control technologies that increase the time during which fresh loads can be maintained in perfect conditions, allowing perishable products to be exported by sea.”

LATAM AD GROWTH: 4.1%

Advertising expenditure will likely grow 4.1 percent in Latin America this year, predicts UK-based ad agency Zenith. During the next three years, it will likely grow at an average annual rate of 3 percent.

"Argentina, Brazil, Ecuador and Venezuela (which account for 59 percent of Latin American advertising expenditure) were in recession in 2016, compounded by rapid devaluation in

Argentina and full-blown crisis in Venezuela, which is running out of basic supplies and is heading for hyperinflation," Zenith says.

Argentina’s recession looks like it came to an end in late 2016, while Brazil emerged from its longest recession since the 1930s in 2017.

Meanwhile, Venezuela’s sustained collapse in adspend means that its continued decline weighs less on the regional total each year. 

Zenith predicts that Mexico will be among the top ten contributors to adspend growth in the 2016-2019 period as measured by actual expenditure in US dollars. But that won't be enough to enter the top ten ad markets during that period. Brazil will remain the only Latin American country among the top ten, ranking sixth both last year and in 2019, according to the forecasts from Zenith.

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