Cold Chain Market Report

Special Report

Mercosur trade deal offers EU-Latin America backhaul boost

By Laura Robb

South American forwarders and shippers expect a boost in the backhauls of the slow-growing Europe-to-Latin America trade lanes , pending the finalization of a trade agreement that would begin slashing tariffs on EU imports by more than 90 % as early as late 2025 .

The EU-Mercosur agreement , signed Dec . 6 , would reduce the cost of importing wine , spirits , cars , machinery , communications equipment , textiles , and chocolate from EU countries to Mercosur countries , which include Argentina , Bolivia , Brazil , Paraguay and Uruguay .

“ Ocean rates are low , but origin costs are high .”

The trade ’ s backhaul has expanded just 1.4 % to 1.57 million TEUs in the past five years , ending in 2024 , according to data from GTAS , a sister product of the Journal of Commerce within S & P Global . Latin American sources said any increase in volumes would be impactful where there ’ s one import on the inbound for every four heading to Europe .

As the high costs of European goods currently drive shippers to import from other countries , sources said meaningful tariff reductions would bring a significant shift to the traditionally low-volume lane .

“ The European market right now is on a low trend ,” said a forwarding source in Brazil . “ Europe , overall , is quite hurt economically . Origin costs are very high . Agents are trying to recover lost business by adding [ to ] origin charges . Ocean rates are low , but origin costs are high .”

A ‘ protected ’ market

While the terms have been settled to create “ the world ’ s biggest free trade zone ,” according to European Commission Vice President Kaja Kallas , the pact still needs approval from the European Parliament and the European Council . If ratified , it would effectively position EU exports to Mercosur more favorably than US products as early as 2026 .

Historically , “ the Mercosur market is large , but highly protected ,” said the European Commission , which serves as the EU ’ s executive branch .

“ It ’ s expected that the trade will increase a lot ,” said Marcelo Machado , sales consultant at CSS Logistics in Brazil . “ They ’ re saying it will be a billion-dollar business between both continents .”

Sources in South America agreed that European exports to Latin America have been soft , with very limited excess capacity on the lane . Overall , vessel utilization on the lane is adjusted to the current volumes and any volume influx could create a capacity imbalance .

Some temperature-sensitive EU food exports require specialized refrigerated ( reefer ) container equipment . Increased demand for EU perishables on the lane , especially in the wine , spirits and dairy industries , may bring more reefer equipment , which is often scarce on connecting trade lanes , to Latin America .

EU members Poland , France and Austria have publicly opposed the pact , delaying the European Parliament from voting to ratify and possibly derailing a long-simmering deal with talks stretching back to 1999 .

email : laura . robb @ spglobal . com

The backhaul EU – Latin America trade has expanded just 1.4 % in the past five years . Juliano Cruz Fotografia / Shutterstock . com

42 Journal of Commerce | March 3 , 2025 www . joc . com