Brazil's transport matrix awaiting investments

Brazil is a country very dependent on road transport. This phrase is common knowledge for many Brazilians and a historical reality for those who work in the logistics sector. Year after year we are faced with this dependency, waiting for a change to occur and for us to start using cheaper and more efficient modes on a larger scale. In this direction, the federal government has sought to move forward with measures such as the recent approval of the Cabotage Incentive Program (BR do Mar), with Provisional Measure 945 that simplifies the leasing of port terminals and with the Investment Partnership Program (PPI) , which has brought private investment to the logistics infrastructure. However, such measures need time to change the cargo handling scenario and, from what we observed in the 2019 Transport Matrix, reality still portrays such historical dependence.

In 2019, Brazil moved 61% of its cargo through highways, considering the TKUs (useful ton-kilometer) handled. In the same period, 21% of cargo was transported by rail, 12% by cabotage, 4% by pipeline, 2% by waterway and less than 1% by air. Compared to 2018, there were small changes, such as growth of 1 pp in road transport and a reduction of 2 pp in rail, the latter affected by the reduction in production and movement of Vale's ore trains, as a result of the Brumadinho tragedy in January 2019.

Comparing with the transport matrix of other countries, we can see how unbalanced is the use of different modes for cargo transport in Brazil. Considering the railway modal, for example: Australia moves 55% of its cargo through this modal, while Canada moves 34% and the United States 27%. The Waterway modal (cabotage + waterway) is widely used in China, where 48% of TKUs handled in the country use rivers and seas, in addition to being widely used in Japan (44%) and the European Union (36%). Pipelines are heavily used in Canada (40%) and the United States (22%). The only modal in which Brazil stands out is, in fact, the road modal, in which Brazil reaches rates much higher than countries and regions such as Japan (51%), European Union (50%), United States (43% ) and China (35%). The comparison of the matrices can be seen in figure 1.

Figure 1: Transport matrix in countries (% of TKU). Sources: ILOS (Brazil); National Bureau of Statistics of China, Bureau of Transportation Statistics (USA), Eurostat (EU), North American Transportation Statistics (Canada), Department of Infrastructure, Transport, Cities and Regional Development (Australia), Statistics Bureau (Japan).

The Brazilian road modal is essential and should also be encouraged through improvements in road conditions, for example. However, it is important that each mode is used according to its vocation, in order to reduce logistical costs for shipping companies and increase their international competitiveness. If we consider the main products exported by Brazil (iron ore, soybeans, corn and sugar), we observe large volumes and low added value, which brings the need for very efficient logistics. In recent years, the container cabotage has grown double digits year on year, “stealing” loads from the highways to those stretches where maritime transport is more efficient. Another positive point, as mentioned at the beginning of this post, is the federal government's commitment to bring private investment to the Brazilian logistics infrastructure, which can benefit other modes, such as rail, for example. We recently wrote about this policy of concessions in logistics, explaining the auction schedule and the benefits that the program could bring to the country.

We hope that, in the coming years, we will begin to see a reduction in this enormous dependence that we have on road transport and that we will be able to promote different modes of transport to serve shippers in a clean, safe and efficient way.
Transport and Infrastructure will be the theme of one of the tracks on 26th International Supply Chain Forum, which ILOS will promote between the 13th and 15th of October, for the first time 100% online. It's worth checking out and watching!