Waterway transport: China as an example for Brazil

Have you ever imagined what it would be like if we had a river that, flowing into Santos, passed through ABC, São Paulo, Jundiaí, Campinas, São Carlos, Ribeirão Preto, Uberlândia, and even Anápolis? And that we could use this river to transport the production of these cities to the port of Santos and to supply their industries with the necessary inputs, removing the thousands of trucks that make this route regularly from the highways? This idea may seem like a dream, but water transport is a reality in several countries and helps to balance the transport matrix, as in China.

water transport

The waterway transport system is based on internal waterways (lakes and rivers) to move cargo between its logistical terminals – lake and river ports. This modal is indicated for transporting heavy loads over long distances due to its high transport capacity and the significant fixed costs and lower variable costs of its operation. The use of the waterway modal, integrated with complementary modes (such as road), allows for important savings in the cost and carbon footprint of the logistics activity.

Figures 1 : Capacity ratio between different modes. Source: CNT

As barriers to the use of the waterway modal, one can cite the high investments to prepare the rivers to receive vessels and the need for adapted structures in cities to handle loads quickly. Before building a waterway, it is also necessary to consider the different uses of that river (fishing, electricity production, tourism, ecosystem maintenance) in order to maintain responsible use of the river, both socially and environmentally.

yangtze river

The Yangtze River, in China, is best known for the Three Gorges hydroelectric plant, the largest installed capacity in the world, with 22.500 MW of power. However, the importance of this river is much greater than just the generation of electricity. One of the longest rivers in the world, the Yangtze flows into Shanghai and allows the development of cities on its banks.

About 6.300 km long, the Yangtze passes through the cities of Chongqing, Wanzhou, Wuhan, Anqing, Yangzhou, Chuzhou, Nanjing and Suzhou, until it reaches Shanghai, the economic capital of China and home to the largest port complex in the world, which handles more than 700 million tons every year.

The port of Shanghai assumes outstanding importance on the global stage, not only because of the importance of its city as a producer and consumer hub, but also because it serves as a transshipment point between international maritime routes and the Yangtze waterway system, which has more than 1.000 kilometers accessible to medium and large vessels and connects important Chinese cities to the Huanghai Sea and the Indian Ocean.

Figures 2 : Waterway Map of China Source:World Port Source

Port of Nanjing

One of the cities that benefit from the Yangtze River and its waterway system, Nanjing is home to a wide variety of industries and acts as a bridge to mainland China and even Central Europe. Among the companies that chose Nanjing for their operations, we have large state-owned petrochemical companies and the production lines of companies such as Siemens, Ericsson and Volkswagen.

To attract industry to itself, Nanjing has one of the largest river ports in the world and quick access to the port of Shanghai: there are more than 200 berths, 44 of which are prepared to receive vessels with a cargo capacity of more than 10 thousand tons (deadweight) – in the port of Santos, there are 66 berths in total.

The focus of the port is really on petrochemicals, with the largest pier for oil tankers in China and with the development of a chemical industrial park, but the complex operates various types of cargo: for the year 2017, the report One Hundred Ports 2018: Maritime Intelligence, Lloyd's List, indicates that the throughput from Santos was 3.853.719 TEUs (42nd in the world); in this same period, the port of Nanjing handled 3.170.000 TEUs (49th in the world).

The recent growth of the port has gone through the integration with the railway lines that pass through the city. Nanjing, in addition to having one of the largest river ports in the world, has the second largest railway station in area on the planet and the Lloyd's List indicates that there was a 560% increase in shipments of cargo to Central Europe from Nanjing, strengthening the position of the city as a route to the West.

Figures 3: Railway network of China and Taipei

However, a risk presents itself to the port of Nanjing in the growth of neighboring ports that may capture some of Nanjing's demand. In order to better integrate the ports and reduce competition between them, the government of Jiangsu, the province in which Nanjing is located, established a single port authority encompassing the ports of Nanjing, Lianyungang, Suzhou, Nantong, Zhenjiang, Changzhou, Taizhou and Yangzhou, so that there is a coordinated development of the region.

What about Brazil?

Brazil already uses waterway transport in some regions, the main one being the Amazon Basin. However, the modal is not very representative within the transport matrix – only 2% of cargo transport in Brazil is carried out by waterways, while road transport represents 60% of the total. This is a reflection of the low investment made in waterways in the country, which, despite having 63.000 kilometers of potential routes for navigation, uses only 19.500 kilometers for transport, as shown by the CNT survey. General Aspects of Inland Navigation in Brazil.

Figures 4: Waterway map of Brazil

As waterway transport is more suitable for regular and large-volume cargo, Brazil's potential for using this modal is mainly agricultural and ore cargo. In the 2018 Antaq Yearbook, the 3 main cargoes transported by waterway were soy, bauxite and corn.

It is true that the river described at the beginning of this article does not exist, but it is possible to envision a more robust waterway system of great value to the country, integrated with the main export logistics corridors.

The southern corridor has important rivers, such as the Paraguay, Paraná and Uruguay. The three are already used for waterway transport, their potential, however, is limited: the Uruguay River has formations that are harmful to navigation, such as sandbanks and islands, being navigable between Uruguay and Argentina; the Paraná-Tietê waterway transports soybeans and other products along its 1.023 kilometers of waterways, but navigation may be restricted during long periods of drought and rain, reducing the reliability of transport; and the Paraguay River is used as a waterway for the transport of iron ore and manganese, but stretches with high sinuosity reduce the speed of vessels.

This corridor is complemented by the Mercosur waterway, formed by the Lagoa dos Patos and other rivers, but its small extension means that it is neglected in favor of road transport. In addition, the waterway system would not have sufficient demand to justify the necessary investments in infrastructure, and transit in foreign waters within Mercosur would make transport more expensive, making it economically unfeasible for a variety of stretches and loads.

The corridor with the greatest potential for taking advantage of waterway transport is the North, which contains the Amazonas, Madeira, Solimões, Tapajós-Teles Pires and Tocantins-Araguaia Waterways. This makes it possible to connect the Midwest region of the country to the ports of Manaus, Vila do Conde and Santana, being an economical alternative for the flow of agricultural production towards Brazilian trading partners, such as China. Another cargo that uses the North corridor waterway system is bauxite, which is mine in the region.

The North corridor, however, still needs major improvements to reach its waterway potential: the waterways need better signaling and beaconing, renewal of dredging, in addition to new vessels; the highways that connect the Midwest to the river ports in the corridor are precarious, requiring paving and duplication. To correct these problems, high investments in infrastructure will be necessary in a large area of ​​the country.

At a time when the government is adopting a cost-cutting policy, transferring responsibility for infrastructure investments to the private sector (as discussed in the post With government tendency towards privatization, country seeks to improve its infrastructure), and that China seeks to develop the logistics network of its trading partners (theme of the post The New Chinese Silk Road: Opportunity for Brazil?, by consultant Carlos Carvalho), the question remains: would long-term returns be enough to attract investment from the private sector? Would China have the patience to deal with the Brazilian authorities?

While this reflection is nothing more than a mental exercise, we can be inspired by the port of Nanjing and imagine the future of the country's waterways.

Technical Mission Logistics | China

ILOS organizes its International Mission to China between the 24th and 29th of November and will visit the facilities of the port of Nanjing, where a meeting with the port authorities and a tour of the industrial park (with drive through of the terminals) will allow a greater understanding of the logistics in mainland China. In addition, participants will have technical visits to distribution and fulfillment centers of large retailers (JD.com, Alibaba), factories (Volkswagen, BESCO), among others. To apply and learn more about this opportunity, visit the mission page.

Sources:

http://worldpopulationreview.com/countries/countries-by-gdp/

https://www.ceicdata.com/en/china/gross-domestic-product-prefecture-level-city/cn-gdp-jiangsu-nanjing

http://www.johomaps.com/as/china/chinarail.htmlhttps://www.seaoo.com/blog-en/port-nanjing/

http://www.portodesantos.com.br/outros-links/bercos-de-atracacao/

http://web.antaq.gov.br/Anuario/https://transportationstore.informa.com/wp-content/uploads/woocommerce_uploads/2018/09/LL-Top-Ports-sampler.pdf

http://repositorio.ipea.gov.br/bitstream/11058/2714/1/TD_1931.pdf

http://www.dnit.gov.br/hidrovias/hidrovias-interiores/hidrovia-parana