Cargo Transportation Costs in Brazil
Cargo transportation in Brazil is not cheap. Despite the existence of many navigable rivers and a large space to construct, or improve the railway network, the country still insists on working with a very expensive logistic system.
How is Cargo Mostly Transported?
The government first started to invest in ground transportation in the twentieth century, constructing highways when the automotive industry started to operate in Brazil. Indirectly, this industry growth led the Brazilian State to work on better streets, avenues and highways.
Such investment would be good and favorable to the population if the country really needed all this support for cargo transport. However, the country has good conditions to invest in cheaper ways of cargo transporting, such as good waterways and railways, for example.
Trucks are the major responsible for transporting cargo throughout Brazil. Still, when compared to trains, they may not be the best option as one cargo truck can only transport 30 tons, while a train can transport 3 thousand tons. On the other hand, the Brazilian railway network is very poor and cargo trains are mostly forced to operate at night and at 20km/h.
How Much Does it Costs?
Costs vary according to the product you are planning to transport, but if you use trucks, be aware that it will be expensive, regardless on the product. Just to give an idea of how expensive it can be, sometimes transporting products within the country can be three times more expensive than transporting them to China, for example.
If the product is technological, security can be responsible for a major part of the final cost. Depending on the company, the insurance can add 30% to the end price of the product.
Distance is another point to be considered due to the fuel costs. As most trucks use diesel, have in mind that one liter of diesel costs BRL 2.50 and that most trucks make 6km/l. So a transportation service covering 500km would charge about BRL 208,00 only for fuel costs. Some major companies spend more than monthly BRL10K only investing in security.
Problems related to costs are not restricted to companies - that usually have to spend much more money as the country does not provide the proper infrastructure to create other options than the expensive ones –, but the population is directly affected by such lack of governmental investment, once transportation costs will be added to the price of the product.
Why is cargo transportation so expensive in Brazil ?
As mentioned before, the investment for cargo transportation in Brazil is focused on ground transportation, which is not cheap for several reasons, but mostly due to:
Security is one of the major problems regarding cargo transportation. Insurance companies have started to refuse the transportation of medications, cigarets, alcoholic drinks, mobile devices and technology products in order to reduce the loss, as this type of products are the major targets for robbers.
Cargo theft suffered an increase of 25% since the second semester of 2011 only in São Paulo, which is the city responsible for more than 50% of the ground cargo transportation in the country.
Infrastructure is another problematic topic, once highways do not present good conditions in many places. There is a lack of maintenance in many important Brazilian highways. Despite the very expensive tolls, the bad conditions are very clear and traveling at a reduced speed, cargo transportation gets more expensive.
Another important point is that if the country had a larger railroad network, cargo transportation would be easier and cheaper, once transporting products by trains costs 30% less than transporting by trucks and is almost 50% cheaper than air freight.
If the government decides to work on waterways, costs could be reduced in 60%, but such initiative is not part of the government program yet.