Like other shippers in Brazil that export high volumes by sea to Asia, North America and Europe, Klabin Riocell is disadvantaged by the high northbound container freight rates to these markets, particularly the US and Europe. In terms of the effect on its operational costs, the company has been badly hit by the trade imbalance between Brazil and these latter markets during the last two years (as analysed in detail in CI July 2003 - see 'Latin connections', pp69-75). Unlike in the past, northbound rates from East Coast South America (ECSA) to the US and Europe are now more than double those prevailing southbound. This situation is cold comfort to Klabin Riocell. Not only is the company the biggest wood pulp producer in South America - and one of the largest in the world - but since being established in 1972, its sales efforts have focused almost exclusively overseas. Today, about 95% of its production is exported, which in 2002 equated to over 230,000 tonnes a year shipped from the port of Rio Grande. This is the closest port to Klabin Riocell's production plant and 22,000 tonne capacity warehouse, both of which are located in Guaiba, in the southern Brazilian state of Rio Grande do Sul.
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