São Paulo – According to projections some years ago, railways should currently answer to 30% of the Brazilian goods transport network, but the share remains at what it was in the middle of last decade, between 25% and 26%. Cargo transport on railways has grown in absolute terms, from 392 million tonnes in 2005 to 475 million tonnes last year, but that was not enough to expand the sector’s participation in the Brazilian logistics chain, dominated by highway freight.
The increase in the volume transported was basically due to productivity gains on railways, that is, more cargo being transported on the same lines, as the size of the railway grid has grown little since they were privatized, in 1996 and 1997, despite the government having announced great projects in the sector in recent years.
In 2012, the country should have had 34,500 kilometres of tracks, but it has little over 30,000, including metro lines, urban and passenger trains. It is worth recalling that in the past Brazil had as much as 38,000 kilometres of railways, many now destroyed.
"The level [forecasted] was not reached," said Rodrigo Vilaça, executive president of the National Association of Railway Transport (ANTF), an organisation that includes concession holders operating in the sector. In an interview to ANBA in 2006, he estimated that the participation of trains in the grid would reach 28% in 2008, but the target has now been transferred to 2015.
But why does the grid not grow? According to Vilaça, the international financial crisis that began in 2008 had a negative impact on the sector, and there was little expansion on the elimination of bottlenecks in the system, bureaucracy is significant and public investment is low. "It is not even a problem of [lack of] money, it [the process] jams on environmental regulation and in expropriation of lands,” said the executive. That is not to mention a scandal involving José Francisco das Neves, Juquinha, the former president of Valec, a state-owned company operating in the sector, who was even arrested under suspicion of embezzlement of funds for works on the North-South Railway.
This opinion is shared by other specialists approached. "The licensing for works of this extension are hard to get as they have a significant impact on several different regions, and it is a long and uncertain process,” said the coordinator of the post-graduate engineering programme in Transport Engineering at the Polytechnic School of the University of São Paulo (USP), Cláudio Barbieri da Cunha.
The delays and uncertainty, as well as the high cost of capital in the country, help scare private investors who could be interested in expanding the network, according to Cunha. Vilaça says that concession holders have invested R$ 30 billion (US$ 15 billion) since privatisation, whereas the government has turned R$ 1.9 billion (US$ 1 billion) to the sector. The investment by companies, however, was not in expansion of the grid, but in purchase of rolling stock, recovery and maintenance of railways and implementation of new technologies. According to the concession model, the responsibility for the construction of railways and removal of bottlenecks in existing railways is the government’s responsibility.
And that is one more difficulty, according to Cunha, as the Public Power must tender construction, which is a slow and complex process, and state investment follows a "perverse reality" which "does not depend on parties or ideology”, one that prioritises government works that may be inaugurated in the term in office, which is generally not possible with railways, as they are long-term enterprises. According to the president at ANTF, projects in the area have five year maturity.
To engineer Adriano Branco, a consultant and former Transport secretary of the State of São Paulo, there is no policy for the sector. “Sometimes a government report for redistribution of modals appears, but years go by and things remain the same,” he pointed out.
“We are at the limit of our creativity,” pointed out Vilaça. What has allowed for expansion of the volume transported, according to him, was modernisation of equipment, control of trains and personnel training. "IT has significantly helped us improve productivity,” he added. ANTF estimates that Brazilian railways should transport 520 million tonnes of cargo this year.
Concentration
Cunha points out that much of the investment was by the owners of the cargos, who do not exactly plan to make money with the freight, but to gain efficiency and reduce product transport costs. “It is difficult to attract the private sector, unless [the investor] has a high-performance captive cargo, like ore,” pointed out the professor. This is the case with mining company Vale, one of the main railway operators in the country. “But the (company’s) business is not transport, it is selling ore,” he added.
Another example is that of Rumo, a logistics company connected to Cosan, a producer of ethanol and a distributor of fuels. The company invested R$ 1.3 billion to change highway transport for railway transport, using a line connecting the interior of the state of São Paulo to the Port of Santos, an ALL concession. “The company does that to reduce costs and be sure of the transport, it aims to solve problems itself,” pointed out Branco.
With this, according to Branco, the system “does not open a door to other cargo”. This is clear in the restricted volume of products transported on trains. According to the ANTF, in 2011, iron ore and coal answered to 76.61% of the total transported by railways, followed by agribusiness (11.51%), metal works (3.77%), oil products and ethanol (2.79%) and inputs for the civil construction and cement industry (1.41%).
Due to the importance of agricultural production to the economy of Brazil and to the country’s trade balance, for example, it would be logical to expect these items to have a more expressive share in railway transport, but most of the crop is transported by lorry, even from the most distant locations. “Good cargo is cargo that has regular demand, 365 days a year,” pointed out Cunha. And as there is a period between one and another crop, agricultural products are not that good, different from ore.
Branco mentions another example, that of the railway south of São Paulo that is currently degraded, but whose recovery would be important for one of the poorest regions of the state, where there is agricultural, ore and cement production. “The concession holder [responsible for the railway] presented a bill, and wanted guarantees of a specific volume of financing by the owner of the cargo,” he pointed out. “It is almost 200 kilometres in a region of great need,” he pointed out.
Package
The National Transport and Logistics Plan (PNLT) by the government of Brazil forecasts investment of R$ 200 billion (US$ 100 billion) in railways by 2020 and the expansion of the grid by 11,000 kilometres. The objective is to make railways responsible for 35% of transport in the country by 2025, more than all other modes.
The government is expected to present a package of concessions this week, including 8,000 kilometres of railways, as well as making changes in sector regulation. The current model is criticised by specialists as it makes it hard to attract private investors and as it has o result on expansion of the network.
However, even before its release, the package is not seen in very good light. “Unfortunately – it is even sad to report this -, almost every year we have announcements of funds to be turned to infrastructure. However, for these announcements really to come off paper, we have never seen anything faster than five or 10 year. That is, I cannot believe that in the short term there will be any change – the perspective may be for the next 10 or 15 years,” stated economist Priscilla Biancarelli Nunes, coordinator of the Esalq-Log group, at USP’s Luiz de Queiroz Higher School of Agriculture (Esalq).
Vilaça, however, finds the “signals positive” if they are a model to attract funds to the sector. He evaluated that the theme has gained importance in the national agenda. “[Talks about] the High Speed Train have brought up the matter,” he said, referring to the project for a train connecting the cities of São Paulo and Rio de Janeiro. (Read about the cost of freight in the link below)
