Drought in Amazonas could make electronic products more expensive for end-of-year parties

Manaus (AM) – The drought affecting Amazonas has placed all 62 municipalities in a state of emergency, affecting 598,000 people, or 150,000 families. The Rio Negro, in Manaus, registered its record level during the drought, with just 12.70 meters, on the 27th. This was the highest low in 121 years.

With several segments harmed by the phenomenon, the industry would be no different. With around 500 high-tech industries, generating half a million direct and indirect jobs, the Manaus Free Trade Zone (ZFM) was affected and companies needed to take measures to contain the losses. Among the measures are the anticipation of collective holidays and reduction of the assembly line, among others. However, experts estimate that the financial impacts will still be felt by Brazilians.

Without being able to dock at the city’s port, ships loaded with inputs coming from other regions to supply the factories at the Manaus Industrial Pole (PIM) navigate with difficulty in the area due to the lack of signage on the Amazon rivers. In an interview with Rede Amazônia, the director responsible for ships that transport cargo to Manaus, Luis Resano, made a comparison of the transit of goods before and after the drought.

“Normally, we have 14 to 15 ships arriving in Manaus during a month and this represents a transport of 15 thousand containers arriving and another 15 thousand leaving. Therefore, we are going for the fourth week without having to go to Manaus. Therefore, the region is lacking supply and production is also being held back”,

reported the professional.

Even with the difficulties of the ebb, commerce remains optimistic about Black Friday, according to experts. Economist Denise Kassama assesses that most of the companies established in the ZFM were already prepared to face the moment, so the impacts will be minimal.

“Commerce is betting a lot on the issue of Black Friday and this issue of drought, many industries in the Industrial Pole, at least the large ones, follow the weather forecast, and have already anticipated production so as not to fall into the risk of suffering from drought, because everyone year the river goes down, but most industries changed their planning so as not to compromise”,

he said.

With more restricted navigability, companies need to spend more than expected to transport their products to large urban centers, which can affect the final price of the material produced at ZFM. The biggest concern revolves around the possible reduction in discounts, which is one of the biggest attractions at this time of year.

“To the [empresas] who were unable to anticipate production, will probably have a higher cost to transport their products from large centers. Possibly, if it is not possible to go by river, it will be by air, so one part may have a reduction [de descontos]but commerce tries to balance the higher cost with the cheaper cost, to be able to offer this discount, because ‘Black Friday’ without a discount, is not worth it”,

highlighted Kassama.

Impacts on electronic products

One of the main products produced at ZMF is electronics. The executive president of the National Association of Electronic Products (Eletros), Jorge Nascimento, said in an interview with Portal UOL, that the industry’s main concern currently is the flow of air conditioning and televisions, “white goods”.

Because they are larger and heavier products, it is difficult to send large stocks by plane, as ships are unable to do so due to the drought. Aircraft have a higher cost, but the quantity of products held in the luggage compartment is more limited compared to ships. The situation concerns the supply of stores, which are preparing to welcome consumers during the Christmas season.

“Air conditioning and television are the main problems at the moment in our electronics sector. At the end of the year they are the two most sought after products. We have the production of microwaves, dishwashers, computers, cell phones, tablets, headphones, but these two are the products that we need to transport production via river. Computer and cell phone can be used on planes, for example”,

said Nascimento.

The retail professor at Strong Business School, Ulysses Reis, believes that “white goods” products produced at ZFM will suffer financial impacts due to logistics costs. In the view of economist Denise Kassama, these effects will not be as large as expected.

“When we talk about ‘white goods’, not everything is produced in the Free Zone. For example, refrigerators, stoves, freezers are ‘white goods’ and are not produced at ZFM. Other than that, it is clear that air conditioning is white goods, fan, microwave. It depends on whether the companies were able to sell their products before experiencing this navigation difficulty caused by the drought. I insist again, it will have an impact, but it won’t be that big, in my opinion”,

concluded the specialist.

The team at In time contacted Suframa and the Amazonas State Industry Center (Cieam) to talk about the matter, but so far, there has been no response. The space is open for manifestation.

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