PERFORMANCE EVOLUTION OF PRIVATIZED BRAZILIAN RAILWAYS – 1997 TO 2010 – PART 1

Fourteen years after the start of the privatization process, the Brazilian railway sector is in yet another moment of transformation. Dissatisfied with the difficulties faced in freight rail transport, large shipping companies are articulating among themselves, and with the National Land Transport Agency (ANTT), to re-discuss the regulatory framework of the current rail concession contracts.

The purpose of this document is to make an impartial analysis of the performance of Brazilian railroads in the last four years of the XNUMXth century, and in the first ten years of the XNUMXst century. For that, statistical data from ANTT, international data collection and field research with national shippers were used.

This article is organized in two parts. In the first, the temporal evolution of the rail freight transport sector is analyzed, in aggregate form, as well as its comparative performance with other countries such as, for example, the USA and China. In the second part, the study seeks to compare the performance of each of the 12 railways under concession, based on indicators that will be presented later on.

AGGREGATE PERFORMANCE ANALYSIS AND INTERNATIONAL BENCHMARK

For the first part of the study, the railway performance indicators were divided into two distinct groups: those that analyze scale indicators and the results obtained by the railways; and those that assess the attractiveness and quality of services received by users. The first group includes the production of freight transport (measured in TKU), the average distance traveled per trip (measured in km) and net income (measured in BRL). The second group comprises the average product (measured in R$/thousand TKU), the accident rate (number per million trains. km) and the average commercial speed (km/hour).

FIRST PHASE OF PRIVATIZATION – 1997 TO 2001

Before analyzing the development of Brazilian rail transport in the last decade, it is important to understand the starting point of the concessionaires when they receive the assets transferred by the Federal Railway Network (RFFSA). The low density of railway lines, the lack of intra and intermodal integration, the enormous lack of INVESTMENTS, the high accident rate and low average speed negatively impacted the financial and operational performance of the new concessionaires. The fragility of the railroads when the concessions started was such that it forced the concessionaires to spend the first four years in an intensive process of technological, organizational, commercial and operational recovery.

As can be seen in Table 1, the concession of railroads to the private sector led to a rapid and significant improvement in the performance indicators of the Brazilian network, with the exception of average commercial speed and average distance, which were very little changed between 1997 and 2001 (from 21,1 km/h to 22 km/h and from 518 km to 531 km, respectively). The greatest growth took place in INVESTMENTS, which more than doubled, jumping from R$ 350 million in 1997 to R$ 810 million in 2001, which corresponded to an increase of 131% in four years (AET/GEIPOT, 2000 in CASTRO, 2002; ANTT, 2006; FLEURY , 2007).

The increase of INVESTMENTS led to a significant operating gain. In the first four years after privatization, there was a 17% increase in the average volume transported, going from 138 billion RTK in 1997 to 162 billion RTK in 2001. The number of accidents was also reduced, going from 80 accidents per million train.km (1997) to 49,1 accidents/million train.km in 2001 (ANTT, 2006; FLEURY, 2007).

In addition to the operational improvement, there was also a significant increase in the average rail transport product, as a result of the ratio between the concessionaires' gross revenue and the volume transported by them during the year (in TKU). While in 1997 an average of just over R$ 17,5 was spent on handling one thousand TKUs, in 2001 this amount rose to more than R$ 22,5 per thousand TKU. During this period, concessionaires' revenues rose by more than 50%, reaching R$ 2001 billion in 3,5, against R$ 2,4 billion raised by them in 1997 (ANTT, 2006; FLEURY, 2007; ILOS, 2012a) .

MORE INTENSE EVOLUTION BETWEEN 2001 AND 2010

The evolution of the Brazilian railway network was even more intense from 2001 onwards. Practically all the indicators showed a substantial improvement in the period between 2001 and 2010, mainly those related to the results of the concessionaires (transported volume, net revenue and INVESTMENTS). On the other hand, the indices that assess the attractiveness and quality of railways – such as the average product, the average commercial speed and the number of accidents – evolved at a slower pace, from the perspective of customers.

These conclusions become more evident when analyzing Table 2. The transported volume of cargo grew by 70%, with the movement of 278 billion TKU in 2010, compared to the 162 billion TKU transported in 2001. almost tripled in the period, from R$3,5 billion to R$9,5 billion, even in the midst of the international financial crisis (ILOS, 2012b).

The growth in revenue allowed, in the same period, a significant increase in the volume of investments in the rail network. In 2010, concessionaires contributed R$4,32 billion, more than five times the amount invested in 2001, which totaled R$810 million (ILOS, 2012b).

INTERNATIONAL BENCHMARKING

In addition to the evolutionary analysis, a study of the performance of the Brazilian railway modal can be improved through an international comparison. With 29 kilometers and an average density of 3,5 km of tracks per thousand square kilometers of land area, the rail network in Brazil does not serve a significant number of states, with around 50% of the rail lines concentrated in São Paulo. Paulo, Minas Gerais, Rio de Janeiro and Rio Grande do Sul (ILOS, 2012b). In comparison, the network in the United States is seven times denser than Brazil's, with 24,7 km of track per thousand square kilometers of land area and covering virtually the entire US territory (CIA, 2011). In China, the situation is similar to that of the United States, and the 8,3 km of road per square kilometer of land area covers a large part of the country (NBSC, 2011).

In addition to making it difficult to attract new cargo, the low density of the network also impacts on the production of rail transport. While trains in the United States travel, on average, 1.470 km per trip and transport 2,72 trillion tons per year, railroads in Brazil transported 10 times less – 278 billion RTK, over an average distance of 639 km. In China, production was 2,8 trillion RTK, having traveled, on average, 759 km per trip. (AAR, 2011; ANTT, 2011; MINISTRY OF RAILWAYS OF CHINA, 2011).

Infrastructure deficiency leads to a higher rate of accidents in rail transport in Brazil. Although this value has been significantly reduced in recent years, the rate of 15 accidents/million trains.km (2010) is still very high when compared to the United States, which registered, in the same period, only 4,1 accidents/million trains. by train. km (AAR, 2011; ANTT, 2011).

Higher production led North American railroads to collect, in 2010, a gross revenue of US$ 56 billion, more than nine times higher than that collected by Brazilian concessionaires in the same period, which was around US$ 6,1 billion (AAR , 2011; ANTT, 2011).

The privatization of Brazilian railroads at the end of the XNUMXth century contributed significantly to the improvement of the transport sector in Brazil. The significant increase in the volume transported, the reduction in accidents and the average distances traveled allowed for a significant increase in the companies' revenues, which resulted in a volume of INVESTMENTS high.CONCLUSIONS OF THE FIRST PART

These results, however, reflect the average for the sector as a whole. If we look at each of the railways individually, we will certainly see that, while some performed very well, others left much to be desired. In order to identify the ranking of railways, based on the indicators analyzed above, we will publish, in the next issue of Tecnologística, the second part of the study that deals with the operational ranking of railways under concession to the private sector.

BIBLIOGRAPHY

AAR, Class I RAILROAD Statistics. Available at: www. aar.org. Access date: 15 Dec. 2011.

ANTT, Statistical Yearbook of Land Transport, 2006. ANTT, Evolution of Rail Transport, 2011.
ANTT, Railway Concessionaires. Available at: www.antt.gov.br/concessaofer/concessionariasfer.asp. Accessed on 18 Jan. 2012.
CASTRO, N. Structure, Performance and Perspectives of Rail Cargo Transport, Research and Economic Planning, v.32, n.2, 2002.
CIA, World FactBook. Available at: https://www.cia. gov/library/publications/the-world-factbook/. Date of access: 14 Dec. 2011.
FLEURY, P. Brazilian railways – ten years of privatization. Available at: www.ilos.com.br. Date of access: 14 Dec. 2011.
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ILOS, Overview of Logistics Costs in Brazil, Rio de Janeiro, 2012a.
___, Panorama Logistic Operators and Railways: The Best in Brazil in the Perception of Their Users, Rio de Janeiro, 2012b.
CHINA MINISTRY OF RAILWAYS, Statistical Bulletin. Available at: www.china-mor.gov.cn/zwzc/tjxx/tjgb/201105/t20110511_23696.html. Date of access: 14 Dec. 2011.
NBSC, China Statistical Yearbook. Available at: www. stats.gov.cn. Date of access: 14 Dec. 2011.