The cost of transportation represents the largest share of logistics costs in most companies. It can vary between 4% and 25% of gross sales, and in many cases exceeds operating profit. In 1998, the total cost of transportation in the United States was $529 billion representing 59% of all logistics costs and 6,2% of GDP. In Brazil, it is estimated that these costs are in the order of R$ 60 billion.
The transport system in Brazil, which did not receive significant investments for several years, is going through a moment of transition with regard to the possibilities of using more than one modal in the movement of cargo throughout the supply chain. This occurs mainly due to the privatization process of railroads and ports, execution of infrastructural works and also due to the initiative of several shippers and logistic service providers.
The types of products predominantly transported by more than one modal are commodities, such as iron ore, grains and cement, all characterized as low value-added products. Therefore, for these products to be competitive, an efficient transport system is essential, as the cost of transport is a considerable portion of the value of these products.
For products with higher added value, the transport flow by more than one modal is quite incipient in Brazil. In the United States, road-rail transportation showed an accumulated growth of 50% in the last 10 years, having transported in 1998, around 9 million containers and trailers.
As there is an increasing search for a reduction in logistical costs and greater reliability in the service provided, the use of more than one modal in Brazil emerges as a great opportunity for companies to become more competitive, since the road modal predominates in Brazil's transport matrix, even for products/sections where it is not the most competitive.
Although it is possible to observe some examples of logistical solutions that contemplate the use of more than one modal, these initiatives still come up against infrastructural and regulatory issues, such as: efficiency of ports, terminals for integration between modals and regulation of transport operation by more than one modal. The infrastructure of the transport system in Brazil compared to other countries still leaves much to be desired, as can be seen in Figure 1.
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Considering the indices of extension of the network/territorial area, it can be seen that Brazil is in a much lower situation than several countries. In relation to Argentina, for example, the relative difference in the rail network reaches one third, and in relation to the United States it is little more than one fifth.
DEFINITION
When analyzing the concept of transport by more than one modal, we find in the literature a set of definitions that do not necessarily converge. The great divergence is related to the difference between the terms intermodality and multimodality.
As it really is not just a question of semantics, well-defined characteristics were identified within the evolution of the use of another modal for cargo transport.
Phase 1 – Movement characterized only by the use of more than one modal.
Phase 2 – Improved efficiency in the integration between modes. The use of containers, handling equipment in terminals and other instruments specialized in transferring cargo from one mode to another, makes it possible to improve performance in cargo transshipment.
Phase 3 – Total integration of the transport chain, in order to allow an integrated management of all the modals used, as well as the transfer operations, characterizing a door-to-door movement with the application of a single document.
The first phase is characterized by combined transport, that is, the use of more than one modal with low transfer efficiency. In the second phase, it is observed that, initially, the term intermodality was treated basically from an operational point of view, simply as a combination of different modes of transport. This concept was presented by some authors during the 80s. In 1993, at the European Conference of Ministers of Transport, the concept of intermodality was defined as: “The movement of goods in a single loading unit, which uses successive modes of transport without handling the goods when changing from one mode to another”. In the American book Intermodal Freight Transportation (1995) there is the following definition for intermodal transport: “Transport carried out by more than one modal, characterizing a door-to-door service with a series of transhipment operations carried out efficiently and with the responsibility of a single service provider through a single document. For intermodal transport using containers, the cargo remains in the same container for the entire trip”. This definition represents the third phase. However, the Ministry of Transport in Brazil defined the third phase as multimodal transport, following the European line.
From now on, the intermodal nomenclature will be used to indicate the third phase, since in our understanding this term is more appropriate to define the characteristics of this phase. With this, the concept of multimodality is represented by the second phase. It should be noted that throughout the text, the term multimodality will be used to highlight the current scenario in Brazil.
REGULATION
One of the main barriers to the implementation of the concept of intermodality in Brazil concerns its regulation. Law No. 9.611 of February 19, 1998 provides for the practice of the Multimodal Transport Operator (OTM)1. This law defines multimodal cargo transport as that which, governed by a single contract, uses two or more modes of transport, from origin to destination, and is carried out under the sole responsibility of an OTM. This operator must necessarily have the necessary assets to carry out the transaction.
One of the biggest difficulties for this law to become a reality is linked to the tax issue. With the implementation of the use of a single transport document (Knowledge of Multimodal Transport), some states, represented by their Treasury Departments, argue that they would be harmed in the collection of ICMS. This law is currently in the Civil House and about to be made official. For a Brazilian company to be accredited as an OTM, it must file a request with the Ministry of Transport. Today, only 11 companies have this credential.
In the USA, a law called ISTEA, “Intermodal Surface Transportation Efficiency Act”, was enacted in 1991, which sought to provide the transport sector with legislation that was more up-to-date and more consistent with recent developments in the economy. American and world. Currently, it is considered revolutionary by the agents involved in transport activities. The primary objective behind the drafting of this law was the US strategy to develop a national intermodal transport system that is economically efficient and that provides the Nation with the necessary mechanisms to remain competitive in a globalized economy.
CARGO TRANSPORT IN BRAZIL
After all, why use more than one modal? The answer to this question is quite simple. It is enough to think that the use of more than one modal represents the aggregation of advantages of each modal, which can be characterized both by the service and by the cost. Associated with these possibilities, one must consider the added value of the products to be transported, as well as security issues. In figure 2 we can see the comparison of the service characteristics between the modes.
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For example, road-rail transport has the advantages over road transport, the low cost of rail transport for long distances and the accessibility of road transport. Combined, they allow delivery to the customer's door at a lower total cost and relatively longer time, thus seeking a better balance in the price/service ratio.
If we compare the competition between road and rail, we can see that for a given distance and transported volume, the use of more than one modal is the most efficient way to carry out the movement, as can be seen in figure 3, which was developed by ATA (American Trucking Association) to demonstrate the characteristics of distance and volume of greater competitiveness of road transport.
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In Brazil, this table has considerable distortions regarding the ability of the intermodal alternative to compete, mainly due to the existing infrastructure and the regulation itself. Figure 4 shows the railroad's market share as a function of the transported distance. Very different from the United States, the railroad in Brazil loses ground over long distances, precisely where it should be more competitive.
Although the railways are transporting much more north-south than before privatization, the volume is still far below the existing potential. An example of this transport is the regular flow between Suape and Paulínia offered by FCA and which passes through 3 railroads. The transit time, as well as the unavailability of transport capacity, are limitations for the growth of this movement. This means that there are loads from the north/northeast coming to the south/southeast using road transport, covering more than 2000 km. Cabotage emerges as a good option, as long as it solves the efficiency problems of port terminals, integration with other modes and the very frequency of vessels that are offered to the market.
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As we can see in figure 5, the current transport matrix has a significant distortion. The road modal corresponds to 62% of the volume transported in TKU, while in the United States this modal represents 26% and rail 38%. It is important to highlight that the participation of the railway modal in Brazil is strongly dependent on iron ore. Without this transport, its share drops from 20% to 9%.
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A study carried out by GEIPOT (Empresa Brasileira de Plano de Transportes), linked to the Ministry of Transport, called “Corredores Estratégicos de Desenvolvimento” from February 1999, considered the main cargo flows in Brazil and the current existing infrastructure, establishing with Therefore, a set of projects aimed at improving the performance of the transport system. As a result, it obtained a forecast for changing the transport matrix for 2015, if the projects suggested in this study come to fruition. The expectation is that the road modal will pass to approximately 24,8% and the railway to 65,1% of the total movement. It is important to highlight that this study focused mainly on the transport of commodities.
A critical point for choosing road transport for cargo that should be handled by another mode lies in the fact that road freight is, in many cases, at a level below the reasonable levels of business remuneration. Mainly for the approximately 350 self-employed transporters in Brazil. This type of carrier does not assess all of its costs and therefore charges less than it should. Currently, with the propagation of tolls in the main stretches of the country, road hauliers are under considerable pressure to remain competitive.
INTEGRATION BETWEEN MODALS
Technically, the integration between modes can occur between several modes (air-air-road, rail-road, water-rail, water-road) or even between more than two modes. For example, soybeans produced in Goiás are transported by truck from the farm to the port of São Simão, in Goiás. From there, it goes to Perde-neiras, in the interior of São Paulo, through the Tietê-Paraná waterway. Finally arriving at the Port of Santos via Ferroban, totaling around 1340 Km. In this operation, a convoy of 2200 tons of soy transported by the waterway represents the absence of 70 trucks on the roads. In this case, although the time is longer than the road modal, the freight cost is considerably lower, going from US$ 34,5 to 46 (road modal) to US$ 25 (multimodal).
In these operations, the terminals play a fundamental role in the economic viability of the alternative. The most worrying thing is that it is precisely the terminals, one of the main barriers to the development of intermodalism in Brazil.
One of the main techniques used in intermodalism, mainly in the United States, is related to the coupling between modes. Focusing on the integration between road and rail modes, this type of approach can be classified as follows:
- Container on flatcar (COFC): Characterized by placing a container on a railway wagon. There is also the possibility of placing two containers on a wagon (doublestack) to increase the productivity of the railway. In the United States and Europe this type of operation is common. However, in Brazil, for many stretches it would be unfeasible, mainly due to height restrictions in tunnels.
- Trailer on flatcar (TOFC): Also known as piggyback, it originated in the early days of the American railroad. It consists of placing a trailer (semi-trailer) on a platform wagon. This operation has the main benefit of reducing costs and time with transshipment of cargo between modes, thus avoiding investments in handling equipment in road and rail terminals.
- Car less: As the name suggests, this is a technology that does not use conventional rail cars. It consists of adapting a cart that is coupled to an equally adapted railway wagon, known as a railway truck. With this system, a specific or mixed train can be created, that is, with other types of wagons.
In Brazil there are some developments of car less technology, one of them is called Rodotrilho2.
Cargo transportation using one of the ways mentioned above is still not very representative in Brazil. For example, of the approximately 8 million containers that were handled in 1998 by the port of Santos, the largest in the country with 40% of container handling, only 4% was handled by the railroad. Since in 1999 the movement was around 2,5%.
Another interesting fact is that in Brazil there is no regular flow of car less technology. However, we are going through a time when these operations will become a reality. Several companies, such as: Coca-Cola, Brahma, OPP Trikem, Gessy Lever, among others, are beginning to evaluate and test this type of technology to obtain a reduction in transport costs without compromising the quality of the service provided. It is true that the consolidation of this practice necessarily involves a more reliable railroad and investments in the necessary equipment.
It is important to point out that in these operations it is necessary that one of the parties is responsible for the movement, as well as defining who, in fact, will make the investments in the assets. In the United States, there are 5 alternatives in intermodal transport using rail and road, which can be characterized by two important variables: responsibility for the cargo (issuance of documentation and receipt of freight from the shipper) and ownership of the assets (investment in trailers). These alternatives are presented below:
| 1 type: The railroad, through a platform wagon, moves the cart of the road transporter that is responsible for the load. |
| 2 type: The railroad is responsible for moving the cargo. Both the cart and the wagon are owned by the railroad. There are variations of this type with regard to collection and delivery. There is the possibility that the shipper himself is responsible for these activities. |
| 3 type: The shipper/customer provides the trailer and the railroad is responsible for moving it. |
| 4 type: It differs from type 3 only in terms of ownership of the wagon, which in this case belongs to the shipper. |
| 5 type: It is characterized by the joint venture between road and rail transport. One of the two may be responsible for handling the cargo. |
These possibilities tend to occur in Brazil, mainly after the regulation establishing the presence of the OTM. Investments to be made in assets such as specific semi-trailers can be made by the shipper, rail or road carrier or even by a leasing company. In fact, there is uncertainty about who will invest, which undoubtedly causes a considerable delay in the evolution of the process. Although financing agents believe in the possibility and success, the assets in question have little liquidity, thus making the financing process difficult. To show how the Brazilian market is in this segment, there are currently less than 90 semi-trailers in Brazil, belonging to Noma, Randon and the American company Wabash, and less than 40 trucks (adapted wagons) owned by the railroads, which , in fact, can technically make the operation feasible. The MRS, FCA and ALL railroads have already tested this transport alternative and are preparing to offer this type of service.
INTERMODALITY TRENDS IN BRAZIL
The main factors for the evolution of intermodality in Brazil are related to infrastructural actions that depend on private and public investments, OTM regulation and investments in assets that make this practice viable, as well as the positioning of companies (shippers) in systematically evaluating the emerging alternatives.
The federal government, through the Brasil em Ação Program, carried out a set of projects that made it possible to develop transport alternatives using more than one mode. The expectation is that new investments will be made to complement the projects already carried out.
Shippers themselves are starting to invest in terminals. Good examples of this initiative are CSN, Cargill, Usiminas and Feterco. As for the investment in specific trailers for the intermodal system, there is still a doubt about who will invest. In some cases, this problem is already being addressed through the establishment of partnerships.
Companies are beginning to emerge that, instead of offering only the transport service, are becoming capable of offering solutions that integrate other activities to the desired service, such as: multimodal transport, movement in terminals, storage, inventory management, follow-up load, among others. The law that legitimizes the function of the OTM will be a facilitator for service providers to move towards offering a complete service. However, the implementation of all the procedures of this new law is conditioned to a period of adaptation.
The use of information technology is a fundamental factor for the development of a service that integrates the modes, as well as providing information about the status of the cargo to the shippers/customers. UPS, the largest courier company in the world, uses the railroad in an integrated way for its deliveries in the United States, making information about the package available over the internet. Some Brazilian railroads have already started this process, with the implementation of GPS (Global Position System) in their fleets.
The introduction of car less technology will make it possible to increase intermodality. This condition is strongly associated with the operational improvement of railways and the positioning of those involved in obtaining an integrated solution.
Although Brazil still has a lot to do in all aspects discussed, the application of the concept of intermodality is about to become a reality. It remains to be seen the intensity with which transport service providers will move towards offering integrated logistics solutions, which include intermodality, as well as other logistics activities.
1 – This law can be obtained through the GEIPOT website: www.geipot.gov.br
2 – For a better understanding of how this system works, consult the article “Multimodality arrives at Coca-Cola” in Tecnologística magazine, November 1999.
