PERFORMANCE EVOLUTION OF PRIVATIZED BRAZILIAN RAILWAYS – 1997 TO 2010 – PART 2

The Brazilian railway sector is in another moment of transformation. Dissatisfied with the difficulties faced in freight rail transport, the 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.

After analyzing, in the previous edition, the evolution over the years of the rail freight transport sector in aggregate form, the second part of this study presents the operational ranking of railways under concession to the private sector, based on performance indicators that will be presented Next.

RANKING OF DEALERSHIPS

As was done in the first part of the analysis, the comparative study of the 12 railroads in Brazil is based on six performance indicators _ transport production, average distance per trip, net revenue, average price, accident rate and route speed. The result of the best concessionaire serves as the basis for ranking the others and, after ranking, the average of all indicators is calculated to reach the final ranking.
In Brazil, 80% of the cargo transported by rail is carried by just three concessionaires: Estrada de Ferro Carajás (EFC), Estrada de Ferro Vitória a Minas (EFVM) and MRS. In 2010, the three concessionaires transported, respectively, 91 billion RTK, 73,5 billion RTK and 57,5 billion RTK, with most of this cargo being iron ore, one of Brazil's main export products. . The large volume handled by the concessionaires ends up generating economies of scale, allowing cost reduction and signaling greater efficiency in the rail network (ANTT, 2011).

Responsible for transporting a significant part of the production in the Midwest region, ALL Malha Norte is the railroad with the largest scale in terms of average distance. The concessionaire's trains traveled an average distance of almost 1,4 kilometers per trip in 2010, carrying mainly agribusiness products, such as soy and bran, corn and vegetable oil, in addition to fertilizer and fuel. In this regard, EFC was in second, with 868 km covered, and FNS in third, with 757 km. The ALLMN result was very close to that observed in the United States, which recorded an average distance traveled of 1.470 km in 2010 (AAR, 2011; ANTT, 2012).

In terms of net revenue, MRS, EFVM and EFC once again occupy the top three places, this time with MRS in first place, having earned more than R$ 2,2 billion in 2010. Second place, EFC added, that same year , just over BRL 1,7 billion, with the EFVM raising a similar amount. Together, the three concessionaires were responsible for 60% of the net revenue of the Brazilian railway network in 2010, which Evolution of the performance of privatized Brazilian railways – 1997 to 2010 Paulo Fernando Fleury September/2012 – Revista Tecnologística – 93 allowed them to also make the largest INVESTMENTS during this period (ANTT, 2012).

Among the most productive railroads in the country, three (EFC, EFVM and MRS) are among those that practice the lowest average prices in the market. In addition, EFC and EFVM practiced, on average, lower prices than in the United States in the same period, that is, R$ 19 per thousand RTK and R$ 28 per thousand RTK, respectively. MRS charges, on average, R$ 43 per thousand TKU. Such values ​​must be compared with the average tariff AMERICANA, which is close to BRL 38 per thousand TKU. On the other hand, FTC and ALL Malha Paulista have the highest prices, charging, on average, R$ 225 per thousand RTK and R$ 209 per thousand RTK, respectively (AAR, 2011; ANTT, 2012).

It is important to point out that the specific movement of ores on the EFC, EFVM and MRS is one of the main factors responsible for the low average price of rail transport in Brazil. Just for comparison purposes, if the movement of railroads dedicated to ore were not considered, the cost of the modal, in general, would go from R$ 38,9/thousand RTK to R$ 60,2/thousand RTK. To determine the average price, the ratio between the gross revenue of each company in a year and its production (in RTK) in that same year was calculated.

By presenting numbers lower than the average in the United States, EFVM leads the accident rate ranking, with only four accidents/million trains.km. Next come Ferroeste, EF Carajás and MRS, with five accidents/million trains.km in 2010, well below the Brazilian average (15 accidents/million trains.km). On the other hand, TNL managed, in 2010, the mark of 197 accidents/million train.km, taking twelfth place in the ranking (AAR, 2011; ANTT, 2012).
Although the average travel speed on Brazilian railroads is low, when the analysis is carried out by concessionaire, there are cases where the indicators are better than in the United States (average speed of 39 km/h). Among the fastest railways in the country, the EFC and EFVM manage to surpass the North American ones, having recorded, in 2010, 40 km/h and 49 km/h, respectively. At the other end of the table, TNL trains traveled at an average speed of just 14 km/h (AAR, 2011; ANTT, 2012).

PERCEPTION OF RAILWAY USERS

even if the INVESTMENTS have grown in recent years and indicators show some evolution in rail transport in Brazil, the perception of shipping companies is that the performance of concessionaires, in general, worsened between 2006 and 2011. According to a survey by the ILOS Institute with logistics professionals from the largest companies in Brazil in billing, the average score assigned to railroads in 2011 was 5,9, below the 6,4 attributed in that same survey, in 2006 (on a scale of 0 to 10).

Following the general trend, practically all concessionaires saw their average scores drop between 2006 and 2011. The exceptions were ALLMO, which went from 5,3 to 5,9, and ALLMP, which had a slight increase, from 6 to 6,1. Of all the concessionaires evaluated by the companies, the ones that had the biggest losses in this period in the perception of the users were Ferroeste _ from 6,3 to 5,6 _; ALLMN _ 6,4 to 5,7_; and the EFVM _ 6,8 to 6,1 (ILOS, 2012b).

A factor of attention for the concessionaires must be the opinion of the companies that effectively use the modal. In general, the perception of non-users about railroads was worse than that of non-users, possibly because customers are more exposed to modal problems. The greatest difference of opinion was detected at Ferroeste, where professionals who do not use the railroad gave an average score of 6,1, while the concessionaire's customers attributed an average of 4,5. FTC, ALLMO, TNL and FNS also showed significant differences between the two groups (ILOS, 2012b).

Despite registering the best score among the concessionaires (6,8), EF Carajás has also had its efficiency questioned by its customers. These still evaluate it as the best concessionaire in Brazil, but the average score attributed by them has dropped from 7,3 to 6,6 in the last five years (ILOS, 2012b).

Among the 12 railways studied by the ILOS, eight received an average score equal to or greater than the general Brazilian average in 2011: EF Carajás (6,8), MRS (6,5), EFVM (6,1), FCA (6,1. 6,1), ALLMP (6,0), EF North-South (6,0), ALLMS (5,9) and ALLMO (2012). Of these, EFC, MRS, ALLMS and ALLMP also stood out in the opinion of only the professionals who effectively use the railway modal (ILOS, XNUMXb).

The perception of shipping companies may also vary according to the segment of the economy in which they operate. In the ILOS study, the best scores came from the Hygiene, Cleaning, Cosmetics and Pharmaceuticals sector, mainly from the ALLMN, ALLMO, ALLMP and FCA concessionaires. From agribusiness, the best evaluations were for EF Carajás (7) and for MRS (6,8). The FTC's best assessment came from the Food and Beverage sector (6,7), while TNL had its best score from the Retail Trade sector. At MRS, the best evaluation was made by the Construction Material sector (7), the same as in Ferroeste (6,4), North-South (6,8) and Carajás (7,6), according to ILOS, 2012b. When the analysis is made only by railway users, ALLMN and ALLMS received their highest scores from companies in the Chemical and Petrochemical sector, 8 in both cases. EFVM, FCA and MRS were best evaluated by the Steel and Metallurgy sector – grades 8; 7 and 7,3, respectively (ILOS, 2012b).

Regardless of the score they received from the interviewed companies and the advantages of the modal in terms of costs, the railway concessionaires in Brazil have to deal with another problem: more than 70% of the national companies do not transport cargo by rail, either due to incompatibility between the modal and the type of cargo or due to difficulties in boarding. In all, 22% of the country's large companies have already tried to move their cargo by rail, but encountered problems and gave up. Among the main obstacles mentioned are the lack of infrastructure at the port-railway interface, the unavailability of terminals, the lack of a railway branch and the unavailability of routes and destinations (ILOS, 2012b).

CONCLUSION

Not coincidentally, the current criticisms of the railway modal occur precisely at a time of great economic growth in the country. The greater demand for rail transport ends up bumping into the capacity limit of the Brazilian network, dissatisfying those who have problems loading products and making it difficult for new users to enter.
The difficulties intensify with the low density of the Brazilian network, which negatively influences the decision of companies in choosing the modal to transport their cargo. The need to use other modes to take and/or pick up the goods at the rail terminals sometimes ends up making the use of the rail mode unfeasible due to the high total costs.

Despite the current problems, the privatization of the Brazilian railway network has brought improvements to cargo transport. Investments grew substantially, boosting modal production and concessionaires' revenues.

However, when it came to investing, concessionaires gave priority to seeking economies of scale and left the search for the quality of service offered to the customer in the background. The result was the maintenance of low average commercial speed and still high accident rates when compared to rates abroad. The increase in the average product in this period contributed to the dissatisfaction of modal users.

Leaving the global analysis for a study by concessionaire, it is clear that there are three railroads that stand out from the rest. These are the Estrada de Ferro Carajás (EFC), the Estrada de Ferro Vitória a Minas (EFVM) and the MRS, which present the best results, respectively. In addition to ranking the concessionaires, the study shows that the greater the economies of scale, the better the service levels that the concessionaires will provide to the customer tend to be. Owners of the best economies of scale in Brazil, EFC, EFVM and MRS also have a good level of service, sometimes presenting results comparable to international benchmarkings. Of the six indicators analyzed, EFC led three (transport production, average price and travel speed), EFVM one (accident rate) and MRS one (net revenue).

The good work of EFC, EFVM and MRS is recognized by logistics executives in Brazil, who named them among the three best railroads in the country. One of the differentials of these concessionaires is the fact that they are controlled by their main customers (EFC and EFVM – Vale; MRS – consortium formed by Gerdau, Usiminas, Vale, CSN and MBR).

The relationship between scale and service level was also perceived at ALL Malha Norte, ALL Malha Sul, FCA, FNS and Ferroeste, which have a reasonable scale and also demonstrated a reasonable level of service for customers. The poor scales of ALL Malha Oeste and TNL have impaired the quality of services provided to users.

The expectation is that the scale economies of the railway modal will be expanded in the coming years through the Growth Acceleration Program (PAC). The forecast of the Federal Government is that more than R$ 44 billion will be allocated in the period between 2011 and 2014, so that the Brazilian network will reach, in 2015, 35 thousand km of rails.

In addition to allowing cost reduction for companies and benefiting cargo handling in Brazil, the INVESTMENT on railroads will also be positive for the well-being of the population. A train with 77 wagons replaces approximately 216 trucks in cargo handling, relieving the already troubled highways that cross the big cities. In addition, the train emits less greenhouse gases than trucks, helping to improve environmental sustainability.

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