How to choose an agent in Brazil?

For those who work in the freight forwarding market, all options must be analyzed to prevent the company from being held hostage by a market or country. Crises happen and the more options you have, greater the chances of overcoming difficulties.

Having said that, looking for nations around the world with stable economies, even if not perfect, is an alternative for diversification and escape from large centers, such as China, the United States and Europe, since the markets that most move the global economy are also saturated and full of competitors.

In this context, Latin America is full of small and medium-sized countries and this article will be dedicated to the largest of them: Brazil.

What business does Brazil do?

Brazil, a continental country that is part of South America, is a nation with a huge territorial extension and excellent production capacity, mainly non-industrialized products, such as commodities in natura like soy, beans, sugar, wood, or slaughter-stock such as beef, chicken, and pork.

In addition, Brazil is an excellent importer of industrialized products from India, China, the United States, and Europe, which means it has several businesses that are transported by air and sea, since it is in Brazil that the largest Latin America port is located (Santos) and the largest airport too (Guarulhos).

Are there customs barriers?

Brazil is not a protectionist country per se, but in the land of Coconut Water and Açaí Fruit it is possible that some companies encounter very specific barriers, some aimed at controlling pests or diseases, others at protecting the local industry, which is quite vast in diversity, but small if worldwide compared.

When talking about Brazil it is important to think that mistakes are expensive, so avoid working with adventurers. Any documental issue during an import can become an expensive barrier for the cargo agent, especially if the agent abroad is responsible for the shipment (in cases of Incoterms C and D), since in these cases the importer in Brazil does not has full control over the operation.

What are the risks of doing business with Brazil?

There are many freight forwarders in Brazil. The legislation allows closing a company that has financial problems and opening a new one in the same sector, often without paying off the debts from the previous company. That’s why it’s important to look for a serious and solid partner.

Political risk

In political terms, Brazil is considered a stable medium risk nation (Source: BCB), economically it is an emerging country, and it is among the 15 largest economies in the world. However, some local factors linked to the lack of decorum on some public figures make the future of the Latin American country uncertain.

Economic Risk

Due to its floating exchange rate economic policy, it is quite common for Brazilian freight forwarders to have problems honoring their debts on time, since in a matter of days it is possible for the dollar to have a variation against the local currency of up to 10%.

Legal Risk

Brazilian legislation is quite complex, both when it comes to the commercial sphere and when it comes to taxes. Only Brazilian companies are allowed to pay taxes in Brazil, which means that it is not possible for a Brazilian corporation to import in the DDP modality. In addition, to clear a cargo in Brazil requires that powers are granted to a customs broker, so exporting in the EXW modality also ends up being complicated to execute.

What are the highlights?

In the same way that there are thousands of opportunities in Brazil for international business, there are also many adventurers there who want to earn easy and fast money. So, before anything else, try to check a few points:

Network

Check if the agent is part of a common freight forwarder network or if the agent has been approved by a recognized agent network.

Experience in the market

Try to find out how long this agent has been on the market and how long employees usually stay with the company.

Certifications

Ask if the freight forwarder has ISO, AEO, or other certifications relevant to the market, especially one that is not easy to obtain for those who do not have economic and legal stability.

Clients

Check to see if the agent serves relevant clients, mainly global ones (as they have strict compliance policies) and ask if any of these clients could serve as a reference.

References and indications

Talk to other agents around the world who also work with Brazil to understand if anyone knows the agent and search for referrals. It is important to check when the last shipment was made by the agent to understand if he went through the last economic crisis in one piece.

Visits and fairs

Don’t just do business virtually. It is important to visit the Brazilian agent, even if at international fairs or network events. If it is possible to travel to Brazil for a visit with the decision-makers to see the company’s facilities consider this as an investment in security.

Payment credit

Payment credit should only be given to Brazilian companies that are known or that are part of networks with credit protection. Contracts or agency agreements can be made as long as they comply with international treaties that have been ratified by Brazil, otherwise Brazilian legislation may not recognize the agreement.

Conclusion

Brazil is a rich nation, full of opportunities, but it requires attention when choosing a freight forwarder to work with. There are several factors that lead an international logistics company to succeed in Brazil and when you find an agent that works correctly, the tendency is that this partnership will last for many years.

Brazilian freight forwarders are also loyal to these companies that seek lasting and sustainable partnerships. It is quite common for a Brazilian freight forwarder to recognize when he makes a mistake and to share the extra expense generated by the fact.

Full of opportunities and challenges, Brazil is a welcoming country, willing to learn and thirsty for new business and opportunities