Prof. Paulo Fernando FleuryFull Professor - Coppead - UFRJ

April 2009

Logistics Infrastructure in Brazil:Challenges and Opportunities

ILOS Institute is a knowledge-based organization , reference in Logistics and Supply Chain Management in Brazil

Spin-off of COPPEAD Business School – Federal University of Rio de Janeiro

5 Integrated Business Units: Market Intelligence, Consulting, Executive Education,

Forums and Infrastructure Business Development

More than 17 years of experience in consultancy, executive education and market

intelligence

More than 100 professionals

ILOS Institute clients are among the leaders in their fields of activity…

Basic Materials Logistics Service Providers Intermediate Goods Consumer Goods

About Brazil

Brazil is a country of continental dimensions, and Latin America’s largest country in territory, with an area of 8.5 million square kilometers.

Brazil

Brasília

Transport Matrix (TKU)Brazil x USA

Transport and Cost Matrix

Railroad

Highway

Waterborne

Pipeline

Airborne

38,5%

29,6%

11,5%

20,1%

0,4%

ModalBrazil (2006)

% TKU1 US$ / 1.000TKU

United States (2006)% TKU1 US$ / 1.000TKU

19

284

6

7

833

17

107

27

30

688

25,8%

56,5%

12,8%

4,8%

0,1%

Source:”Logistics Panorama – Logistics Cost in Brazil” 2008 COPPEADAnalysis: ILOS Institute

Dimension and Conservation Conditions of Paved Highways

Pavement Conservation Condition

Source: Highway Research CNT 2007

211,7 thousand km of paved highways.

Dimension and Pavement of the highway network Brazil x USA

65%

12%

35%88%

United States2006

Brazil 2007

Not PavedPaved

The total of highways in Brazil is 1.634 thousand Km. In the USA is about 6.427 thousand km.

Source: Highway Research CNT 2007, DOT

212 thousand km

1.422 thousand km2.220 thousand km

4.207 thousand km

Sources : ANTT- Annual Report of Railroad Concessions-2002; GEIPOT; Association of American Railroads - AAR

0,35

Brazil

2,4

USA

Railroad NetworkBrazil x USA

Density of km of railroad lines per 100 km2 of territorial area

Major Challenges of Railroad Modal

• Low density of railroad lines,• Low average speed,• Different sizes of gauge,• Unavailability of railways in many

harbors.

EFC (CVRD)CFN

FCA (CVRD)

EFVM (CVRD)

MRS

FTC

ALL

Ferroeste

Ferronorte (ALL)

Ferroban (ALL)

Novoeste (ALL)

EF Norte Sul

Main Challenges

Brazil has approximately 29.013 km of railways.

Bill

ions

of T

KU

Source: ANTT e ANTF•ANTF Estimative• Analysis: ILOS Institute

Growth of Railroad Transportation Movement after Privatization

Since 1997, with the privatization of the railroad network, there were constant increases in the number of TKU moved.

Growth of 102% between 1997 and 2008.

Main Brazilian Ports

Harbors

In Brazil, there are 46 ports and 124 private terminals.

Source: ANTAQ

Millio

ns To

ns

Cargo Movement in Brazilian Ports (million tons)

The cargo movement in Brazilian harbors is increasing with an average of 7% a year.

Source: CEL/COPPEAD Research 2007

PortsMajor Problems mentioned by

Industries

% of answers

Location of Main Brazilian Airport

PortoAlegre

Florianópolis

CuritibaSão

PauloRio de Janeiro

Vitória

BeloHorizonte

Campo Grande

Cuiabá

Goiânia

Brasília

Manaus

BoaVista

Macapá

BelémSão Luís

Teresina Natal

Fortaleza

João Pessoa

Recife

MaceióAracaju

Salvador

Petrolina

Corumbá

Campos

São José dos Campos

Campinas

NavegantesJoinville

Foz de Iguaçu

32 Main Brazilian Airports.

Average Annual Growth (2003-2007)

Source: Infraero

1,21

1,36 1,36

1,23

1,32

2003 2004 2005 2006 2007

(millions of tons)

2,4% a year

Cargo Movement in Brazilian Airports

PAC Investments (Growth Accelerating Program)

Source: Ministry of Planning

The total investment planned in PAC is of US$ 259 billion.Total investment in logistics is $ 30 billion (2007-2010).

Million US$

PAC Major Logistics Investments

• Improvements and duplication of routes.

• Expansion of existing network.

Highways

Railroads

Ports

• Dredging.

Railroad NetworkCurrent x Planned

29.013 KM

8.000 KM

Current Network Railroads from PAC

Source: ANTT; ONG “Contas Abertas”

+-

New Brazilian Railroad Network

37.000 KM

With this new network, it is expected that the railroad modal will be responsible for about 32% of the Brazilian transportation matrix in 2025.

2006

2025

Source: ANTT; ONG “Contas Abertas”; ”Logistics Panorama – Logistics Cost in Brazil” 2008/2006; PNLT

+-

32%

Density (Km/km2)

2,3

0,5

0,8

1,9

13,4

0,4

5,3

Source: ANTT ; CIA Fact book

Extension (Thousand Km)

Even with the new investments, Brazil will still be below the world average in both density and extension of railroads.

Brazil

New Brazilian Railroad Network

• Thank You !!!!!