Railways and Waterways in Logistics of Brazil

Railroads and Waterways in Brazilian Logistics impact cargo handling

“If we had a better balance between transport modes, with 33% of cargo being transported by road, 32% by rail and 29% by waterway, the logistics cost in Brazil would be 5.2% of GDP (Gross Domestic Product) , making our products more competitive and generating employment and income throughout Brazil”. The statement is from Professor Balduir Carletto, Master in Production Engineering from UTFPR (Federal Technological University of Paraná) and Coordinator of the Technology and Logistics Course at Faculdade Santana, in Ponta Grossa, PR.

All logistics specialists agree with the thesis of redistributing cargo handling in different modes. But, due to government mistakes over the last 60 years, we are stuck on the first word of the previous paragraph: “If…”. In 1960, Brazil had a railway network of 38,000 kilometers in length. Shortly afterwards, due to the prioritization of investments in highways, this number was reduced to just over 30,000 kilometers.

When it comes to waterways, the waste is even greater. We have a country rich in waterways. There are 63 thousand kilometers of navigable rivers. Only a third of this natural structure is used, in a rudimentary way. According to the Federal Government, today 62% of Brazilian cargo is transported by road, 23% by rail, 11% by waterway (including cabotage), 3.5% by pipeline and 0.5% by air. “This poor distribution of loads between the different modes makes the Brazilian logistics cost stay at 12% of GDP. To get an idea of ​​what this means, in the United States, a country with continental dimensions similar to Brazil, this percentage is only 8%”, says Balduir Carletto. The professor also says that “this is because in the past our rulers chose the most expensive land modal of all, the road. Railroads are two and a half times cheaper than highways and waterways have an operating cost three and a half times lower than that found on the road network.” Simply put, railways and waterways offer the possibility of transporting much more cargo with less fuel and human resources. In addition, these modes pollute less and allow cargo to arrive on schedule, practically without delay.

According to an article published in Tecnologística in 2015 by Ana Tereza Spinola, from the Getúlio Vargas Foundation, and Antonio Freitas, from the National Society of Agriculture, “the losses of producers throughout Brazil due to logistical inefficiency reach R$ 9 .6 billion a year. In addition to the losses being significant for the Brazilian economy, they have been growing at an average annual rate of 6%. If losses continue to increase within this average, as occurred in the last eight years, the accumulated value will reach BRL 1.009 trillion in 35 years ”.

On the other hand, so that we can better understand the positive impact of a cheap and efficient modal on the national economy, we can look to the past. According to economist William Summerhill, in the book “ Order Again s t Progress ” , published in 2003 by Standford University, in the United States, the Brazilian GDP grew 19% between 1869 and 1913, largely thanks to, to the investments made in railroads by Emperor Dom Pedro II and the first presidents of the Republican Era.

In order for this to happen again, in 2019 the Federal Government launched the Railroad Revitalization Program. A process led by VALEC, a public company linked to the Ministry of Infrastructure. The backbone will be the Norte Sul Railway, which starts at the Port of Belém, in Pará and ends at the Port of Rio Grande, in Rio Grande do Sul. It is 3,100 kilometers long. Work that has lasted for several decades. Another four ways are being made possible:

1. The 750-kilometer Pantanal Railway, between Panorama, São Paulo, and Porto Murtinho, in Mato Grosso do Sul, on the border with Paraguay;
2. FIOL (West-East Integration Railway), with 1500 kilometers, between Figueirópolis, in Tocantins, and the Port of Ilhéus, in Bahia;
3. FICO (Center West Integration Railroad), 1600 kilometers long, between Campinorte, Goiás, and Vilhena, in the State of Rondônia;
4. The fourth railway is the Transcontinental, whose route is still being studied by the EPL (Company of Planning and Logistics), of the Federal Government. There are two options for now: leave Campos de Goytacazes, in Rio de Janeiro, go to Norte Sul, enter Campinorte, on FICO, and continue to Rondônia and then the State of Acre, where, in the sequence, the railroad would cross Peru to the shores of our neighbors on the Pacific Ocean. The other option would be to cross countries in the Southern Cone of America towards Chile, with the same objective. That way we could make trade with Oceania and the Far East (China, Japan, South Korea, Thailand and other countries) on the Asian continent cheaper.

With all these investments, Brazil will have 36 thousand kilometers of railway network. However, “the ideal number for our country would be at least 52,000 kilometers of railroads”, says Professor Balduir Carletto. That is, other investments will be necessary. It’s always good to look to our business partners. The United States has 195 thousand kilometers of railways, China has 100 thousand kilometers and Germany, which is the size of the State of São Paulo, has 45 thousand kilometers.

There are also some challenges that will have to be overcome with State intervention. On the banks of Brazilian railroads, there are 430 housing invasions in right-of-way areas, which forces train drivers to greatly reduce the speed of locomotives and wagons, delaying trips and subjecting the transported loads to the on-duty robbers. The removal of these people, in a humane and rational way, is a necessity. In addition, in Brazil we have 12,000 level crossings in urban areas, when the rails cross the streets of the cities they cross. In 2600 of these passages the situation is critical. The construction of railway rings or viaducts and trenches would be classic engineering solutions to solve the problems generated by poorly planned urbanization.

For all these works to become viable, there is only one option: partnership with the private sector. The privatization process has already started. In March of this year, Rumo inaugurated a 172-kilometer section of the north-south railroad, between São Simão, Goiás, and Estrela D’Oeste, in São Paulo. The investment was BRL 711 million, including a 530-meter bridge over the Paranaíba River. The concession took place in 2019 and will last 30 years. In early April, another 537-kilometer stretch between Caetité and Ilhéus, in Bahia, was auctioned, which should receive private investment of 3.3 billion reais over the next three decades. According to the accounts of the Executive Branch, this concession should generate 55 thousand jobs in the region. According to the Federal Government, the objective with these and other initiatives is to increase the percentage of participation of railroads, in the movement of national cargo, from 23% to 35% of the total in the coming years.

In addition to the railroads, we have a natural road network with 63 thousand kilometers ready for use, distributed in eight river basins. Not to mention the 7,500 kilometers of coastline, which allow smooth cabotage navigation. But, as already mentioned in this text, only one third of Brazilian rivers are explored. Our main river waterway is the Tietê-Paraná, which is 2400 kilometers long. In 2019 alone, 10 million tons of commercial cargo were transported there. In this regard, our natural resources are superior to those of the United States, which has 41 thousand kilometers of navigable rivers. The difference is that there they use this potential to the full.

We have some challenges in this segment as well. The draft (depth) of Brazilian rivers is relatively low. The dredging service is essential. We still need to rebuild many bridges, whose columns are in the middle of the rivers, making river navigation difficult with large barges (the larger the barge, the lower the cost per ton transported). And that’s not all. We still need work on locks (so that our rivers are navigable from North to South and East to West) and river ports. Or at least TUPs (Private Use Terminals). The concession of these terminals for periods of 30 years can leverage the sector.

These investments have a number of advantages for the national economy, some of which have already been mentioned, such as reducing transport costs, greater energy efficiency, reducing road maintenance costs, less pollution, lower risk of fatal accidents and socio-economic development of the regions. Riverside.

Today in Brazil we have 34 ports and 130 TUPs. Most in the Atlantic Ocean, that is, on the Brazilian coast. Our largest port is Santos (SP), in São Paulo. But he is not the most efficient. Suape, in Pernambuco, and Paranaguá, in Paraná, have greater speed and quality in cargo clearance. The problem, again, is the draft of our ports, which is very low. Increasing depth will allow larger ships to berth, attracting foreign investment and facilitating cabotage navigation along our enormous coastline. In addition to a greater draft, our ports must offer better security to system operators and easier access to rail and road modes. To complete, today we have an extra difficulty with the lack of ships, but foreign vessels could be rented to meet this demand.

If you like this type of subject and are looking for solutions in this area, more specifically when we talk about Intralogistics, that is, Logistics within companies, know that we are here to help you. Chat with us.