Shipping to Brazil: What Every Business Owner Needs to Know [2.0 Update]

Submitted by skypostal on Mon, 08/20/2018 - 00:00
Shipping to Brazil

Shipping to Brazil means tapping into the fifth most populous country in the world with one of the top ten gross domestic products. In spite of the occasional economic turbulence, Brazil can be a profitable place to invest. Since 1960, Brazil’s economy has expanded from $15 billion to over $2 trillion in 2011.

Some of the things that make Brazil such a special country to live in and visit—like its sprawling and diverse geography—can make shipping to Brazil a challenge. Navigating the economic and logistical challenges of Brazil requires companies to have a good understanding of the country’s history and economic capabilities, as well as a logistics partner with experience in the region.

 

Introducing Brazil

There’s more to Brazil than Carnival, favelas, and the Amazon rain forest.

 

The Amazon rainforest is one of Brazil’s largest geographic areas and most valuable resources.
The Amazon rain forest is one of Brazil’s largest geographic areas and most valuable resources. - Image source

 

A Brief History

The Portuguese landed in Brazil in 1500 and their impact on the region is still felt today, most obviously in the fact that, unlike most of Latin America, Brazil’s national language is Portuguese.

Brazil’s history is inherently tied to shipping and exports: since the colonial period that began in the early 1500s, brazilwood was the first export to Europe, but sugar soon became the dominant export.

For over 300 years, Brazil remained a Portuguese colony. In 1822, Brazil gained its independence from Portugal when Dom Pedro I became emperor. The Brazilian Empire lasted until 1889 when the Brazilian Republic was born.

Like the rest of Latin America, the 20th century was a turbulent time for Brazil. Foreign influence, military coups, and political unrest marked the era, issues which the country is still trying to recover from in 2018. Hosting the 2014 FIFA World Cup and the 2016 Olympic Games were a huge step towards Brazil becoming recognized as a stable democracy on the world stage.

 

Geography and Demographics

One of the reasons Brazil is such an influential country is its sheer enormity: the country takes up half of the South American landmass. Brazil encompasses one of the world’s most biodiverse regions and includes over 30% of the world’s tropical rainforests. Beyond rainforests, Brazil has sprawling plains (known as the pampas) and woodland savannahs that dominate much of the land.

 

The 2014 FIFA World Cup spurred increased investment in Brazil, including stadiums and infrastructure.
The 2014 FIFA World Cup spurred increased investment in Brazil, including stadiums and infrastructure. - Image source

 

With a population over 200 million, it’s little surprise that cities like São Paulo and Rio de Janeiro are some of the largest in the world. The country has an incredibly diverse population, including people of European descent, mulatos (mixed African and European heritage), mestizos (mixed European and Indian heritage), Africans, Asians, and indigenous Indians.

 

Economy and Infrastructure

Brazil’s economy is as successful as it is largely because of its sheer volume of natural resources, including minerals, agriculture, and wood. In the late 20th century, Brazil emerged onto the global economic stage alongside Russia, China, and India. Collectively, they’re referred to as the BRIC nations.

The BRIC nations “currently represent about 25% of the world's land mass and 40% of its population.” The natural resources of Russia and Brazil combined with the manufacturing power of India and China make these four countries a formidable economic bloc. As a result, China is one of the most influential investors in the Brazilian economy.

Brazil’s Top Imports (2017)   Brazil’s Top Exports (2017)
1. Mineral fuels including oil: US $21.6 billion
2.Electrical machinery, equipment: $20.7 billion
3. Machinery including computers: $17.4 billion
4. Vehicles: $11.2 billion
5. Organic chemicals: $8.4 billion
  1. Oil seeds: US $26 billion
2. Ores, slag, ash: $22.4 billion
3. Mineral fuels including oil: $18.7 billion
4. Vehicles: $14.7 billion
5. Meat: $14 billion

 

Thanks to that growth, from 2003-2014, Brazil lifted 29 million people out of poverty, according to the World Bank. Since then, the country alternates between recession and growth, in part due to political strife and infrastructure woes.

Brazil’s infrastructure has long been a problem for the country, a fact exacerbated by the size and geographic features of the land. Nearly 80% of the roads in Brazil are unpaved. It’s no wonder why it costs more money to transport grain from the fields to the ports of Brazil than it does to ship it to China.

 

The Challenges of Shipping to Brazil

The challenges of shipping to Brazil fall into three main categories: infrastructure, regulations, and language. But that doesn’t mean you should avoid this massive economic powerhouse. Despite the rough economic times, consumer confidence in Brazil is climbing—it’s currently on par with consumer confidence in the U.S.

To successfully ship to Brazil, it’s essential to maintain realistic expectations about the process and to have a good logistics partner that’s intimately familiar with the region.

 

Infrastructure Challenges

Unpaved roads are the most obvious challenge to shipping goods throughout the country. Since the primary shipping method is via truck, this can slow down deliveries once they’re in the country. It also causes Brazil to have one of the highest logistics costs in the world.

It’s not all gloom and doom, though. Private and public investment—thanks in large part to the FIFA World Cup and Olympic Games—has helped improve the infrastructure in the country, climbing the rankings to 73 out of 137 countries according to the World Economic Forum.

 

 

Regulations and Customs

Imports into Brazil are highly regulated; to import goods such as pharmaceuticals and cosmetics, the Brazilian government requires foreign companies to establish a local office. Additionally, everything imported into the country is inspected by customs, even if it isn’t subject to taxes.

Brazil has a complex regulatory system, initially designed to prevent businesses from evading taxes and corruption; according to World Finance, though, these regulations are too complex. As a result, shipping to Brazil requires special knowledge of the Brazilian regulatory network to avoid getting hit with fines. Even still, navigating all of these regulatory agencies can cause goods to progress through customs slowly or even to get stuck there.

Currently, Brazil places high tariffs on imported goods as part of its “Buy Brazil” policy; while these tariffs greatly increase the cost of doing business with businesses and consumers in the country, the U.S. Government recommends that companies find “strategic Brazilian partners” to ease some of these challenges and gain the trust of Brazilian consumers.

In recent years, Brazil has tried to simplify the customs process for non-commercial consumers. They introduced the Simplified Customs Clearance process for express delivery shipments, which cuts out many of the complexities in exchange for a flat 60% duty on all goods.

 

Language Barriers

If your company has experience doing business throughout the rest of Latin America, it may be more difficult to do business there for one reason: the language difference. With the majority of business being done in Portuguese, your Spanish-speaking staff and partners will be less helpful in Brazil

To ensure that packages don’t get delayed, it’s important to fill out all of the information in Portuguese, and to have a shipping partner with knowledge of Portuguese to handle issues with customs.

 

The Effect on Shipping

When you combine all of these challenges, they have a clear impact on shipping times and outcomes. Large parcels may take as long as 63 days to import, although small packages ship much more quickly. The high tariffs also make it significantly more expensive to sell goods in the country. The iPhone, for example, is nearly double the price in Brazil due to taxes on imports.

Another effect of all the regulatory red tape is the CPF (short for Cadastro de Pessoas Fisicas), the tax ID number of Brazilian citizens that’s required to be included on any shipping label for a parcel destined to an individual consumer.

 

Find Your Next Opportunity in Brazil

Bottlenecks resulting from the complex regulatory landscape in Brazil aren’t uncommon, but with the right logistics partner, they’re not a reason to avoid doing business there. If your business is looking to expand into the Brazilian market, The Balance has some tips for making that opportunity a reality:

 

  1. Invest your time in creating relationships in the country—including a social network of contacts.

  2. Maintain some sort of presence in the country, either through a personal contact or a company with experience in the country.

  3. Attend trade shows to introduce your company and familiarize yourself with the market.

  4. Understand how trade regulations and standards will affect your business.

 

While there’s some economic turmoil, the long-term outlook for Brazil is bright thanks to the rich diversity of its natural resources (unlike Venezuela, which relies heavily on oil), the growth in new industries, and its relations with other emerging powerhouses like China.

The key to overcoming Brazilian market barriers is finding a shipping partner with the experience to navigate all of the country’s logistics hurdles. For decades, SkyPostal has forged relationships with local carriers and service providers to create a closed loop delivery system. Thanks to this system, SkyPostal customers avoid many of the issues associated with shipping to Brazil.

SkyPostal customers shipping to Brazil enjoy real-time feedback to help them navigate tax issues and ensure same-day customs clearance. If you’re interested in shipping to Brazil or other countries throughout Latin America, contact us today to learn more about our rates and services.

Shipping to Brazil means going through one of its many ports.c
Shipping to Brazil means going through one of its many ports. - Image source