Logistics in Brazil
Ranked as the 9th economy in the world and about to host the 2014 World Cup and the 2016 Olympics, Brazil still struggles with transportation problems, as the country's infrastructure does not seem to follow its economic growth.
The 9th economy in the world, according to IMF, and the major one in Latin America, Brazil has experienced a significant growth over the last decade. Known for its important role concerning the export of commodities, in 2010 Brazil was ranked as the third agricultural exporter in the world.
However, when production grows it is threatened by the lack of infrastructure regarding the transportation system in the country. Just to give an idea, trucks can face lines of 150km before shipping their cargo.
The process of modernization of transportation in Brazil started in 1970, during a period that is known as the Economic Miracle due to the growth the country was experiencing. Aware that the first step towards economic growth was the integration among the five different regions in Brazil and the connection of them all to the major ports, Médici, who was then the Brazilian president, started to invest foreign money in the construction of roads.
As the Economic Miracle did not last, the constructions were left behind and some of them remain unfinished, like Transamazônica, inaugurated in 1972 as an attempt to connect he North of Brazil to the rest of the country, and still has 2200 km of unpaved road.
Road transportation in Brazil corresponds to 58% of the national logistic system. However, according to the National Confederation of Transportation, 69% of the Brazilian roads are in bad conditions. The most damaged ones are those located in the North and Northeast of Brazil, preventing the economic development of these regions.
For example, Transamazônica, that passes through these two Brazilian regions, only operates six months a year, as the unpaved part of the road gets almost inaccessible during the rainy season, that goes from October to March.
The muddy spots increase the price of transportation, as only a few truck drivers are willing to work during the rainy season and also due to the fact that a route that during the summer takes five days to be completed, takes up to 18 days during the winter.
Most Brazilian roads are very narrow and full of holes. Many of them lack proper signlization - in many spots the signs are covered by bushes -, and proper road sholders. An example of all these problems is BR 101, also known as “Highway do Death” due to its 3632 km of very narrow roads. The highway runs the country in a north-south direction and is one of the most traveled roads by truck drivers in Brazil.
Brazilian railroads are mostly concentrated in Southeast (47% of the total), while the North and Center-West together correspond to 8% of the railway system. The most commonly transported items are grains, steel products, wine, water, stones and cement.
From the very beginning, Brazilian railways were created to meet the demand generated by the export of commodities and not to promote the integration between the isolated areas and the main centers, what led to the bankruptcy of smaller railways when certain commodities were no longer being produced.
Following road transportation, railways are the second most important transportation method in Brazil and corresponds to 25% of the Brazilian logistic system. Brazilian railways are present in 22 of the 26 states and some of them are connected to Argentina, Bolivia and Uruguay.
Besides the competition with road transportation, entrepreneurs point out some other reasons why such transportation is not viable:
- Inflexibility – there are only a few routes available, what reduces the flexibility of the operations;
- Low speed – in some areas, local communities invaded the railroad surroundings, forcing the trains to operate at 5 km/h, when they could operate at 80 km/h ;
- High costs;
- Wagon's unavailability.
The railway system in Brazil demands the construction of new routes and the recovery and modernization of the existing ones. The obstacles to these changes are the presence of irregular buildings surrounding the railroad and the already limited infrastructure of the ports, that currently can't handle all the trucks unloading everyday.
Aware of the necessity of modernizing the railway system, the federal government aims to construct 12.000 km of railroads until 2023.
Even though Brazil has 40.000 kilometers of potentially navigable waterways, this transportation method only corresponds to 13% of the country's logistic sector.
Lower costs (10% cheaper than road transportation), safety and the cargo integrity are the main advantages of waterways. The most commonly items transported by them are food, chemical and flammable products, cellulose, paper and electronics.
The main obstacles to waterways in Brazil are the poor disclosure and the high cost of the fuel, which is much more expensive then the one used by the major ships, in charge of exports. Also, the shipping cost per container is extremely high when compared to other countries. There is also a great deal of bureaucracy and Brazilian ports are not so well prepared as the European ones, for example.
The usage of waterways is decreasing in Brazil, what results not only on social problems – such as unemployment and poor economic development of certain areas of the country -, but it also increases the saturation level of Brazilian roads.
Since a major airplane crash in 2006, airline transportation in Brazil has been facing a period of crisis. Overcrowded airports, cancellations and delays started to be part of the routine of those who rely on airplanes.
According to specialists, the main cause of the Brazilian crisis is the saturation of the aerospace and the current airports' infrastructure, specially in big cities such as São Paulo, Rio de Janeiro and Brasília. Such lack of infrastructure results on the poor use of this transportation, that currently corresponds to only 0,65% of the national logistic sector.
Such saturation is due to the fact that airline tickets, that used to be a privilege of the richest ones in Brazil, are now more affordable and sometimes even cheaper than a bus ticket. In 2014, during the World Cup, the already crowded airports are expected to receive extra 5 million passengers.
Another obstacle is that Brazil does not invest in airplanes exclusive for cargo transportation. The ones existing are usually the conversion of airplanes once used to transport passengers. Cargo was never a priority, being transported in the free spots of the airplanes' basements .
Although being more expensive than the other transportation options, air transportation offers the advantage of being significantly faster and for that, it is more indicated to the transportation of specific items, especially the lighter ones.
There are several projects concerning the expansion of the capacity of Brazilian airports, but that is not enough. It is also necessary to hire more professionals and to invest in the training of the current ones, as well as in the expansion of air control structures if Brazil wants to offer services that are minimally capable of keeping up with the economic growth as well as of hosting major events such as the World Cup and the Olympics.
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