Brazilian railroad expansion: Is it the future?
For Brazil to have the railroad scenario it has today, a series of changes were necessary, mainly structural. Built to transport coffee in the 19th century, the first railroad in Brazil, the Estrada de Ferro Mauá, is completely different from the railroads we currently have.
The following article aims to compare some remarkable decades for the Brazilian railroad expansion, beginning in the 1990s, when important changes in the railroad logistics model occurred. To better understand the history of rail transport in Brazil and understand how it was established since the creation of the first railroad, access this content, where we talk about the history of national railroads.
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Why compares the decades?
Railroad expansion depends on several factors, mainly the existence of new investments in railroad construction, improvement of infrastructure and understanding of the logistical advantages of this mode of transport.
In the 20th century, especially in the beginning, railroads were the main transport sector in the country, taking important products to the municipalities and also to the export ports.
With the development of the road sector, this scenario changed and highways became the main routes for the growth of exports and supply of inputs. In the 1960s, for example, Juscelino Kubitschek's government implemented plans to further expand the highways, practically leaving aside the railroads.
As the railroad sector depended on public support for its growth, it lost strength and began to be abandoned. This scenario only changed significantly in the 1990s, when the investment model in the sector was modified.
With the change, which we will explain later, the railroads once again received significant investments and the current governments started to look more closely at the sector, looking for ways to increase the railroad expansion.
Expansão ferroviária na Década de 90
Until this period in Brazilian history, railroads were built and managed exclusively by the public authorities. As governments focused on expanding the road sector, investment in railroads fell, scrapping stations, tracks and trains.
At the beginning of the decade, in 1992, the then president Fernando Collor implemented, with his team, the National Privatization Program. This program was created so that public companies could be activated or managed by the private sector.
The program, which was only put into practice in 1995, under the government of Fernando Henrique Cardoso, had a direct impact on the railroad sector. The railroads, which previously belonged exclusively to the government, began to receive concessions, that is, private companies could invest in the railroad lines, managing them for a period previously established in the concession.
After the start of the privatization process of the railroads, several lines were auctioned in 1996 and started to be managed by private companies in the transport logistics sector.
This project was essential for the acceleration of the railroad expansion and for the reduction of the government's effective costs with this, creating conditions for the scrapped lines to be reinvigorated and receive new incentives.
Still in the 1990s, more than 28 thousand km of railroad line, that is, the entire length, was “handed over” to the private sector, totaling 11 railroad networks. Check out the companies that won the auctions during this period:
- Ferrovia Novoeste S.A.
- Ferrovia Centro-Atlântica S.A.
- MRS Logística S.A.
- Ferrovia Tereza Cristina S.A.
- Companhia Ferroviária do Nordeste
- Companhia Ferroviária do Nordeste
- Ferrovia Sul-Atlântico S.A.
- Ferrovias Bandeirantes S.A.
- Companhia Vale do Rio Doce
2000s
The 2000s are considered by many specialists as a time of railroad expansion, mainly due to the increase in investments in the sector.
With the consolidation of the concessionary model, the railroad sector started to receive capital from the private sector, essentially from concessionaires, and also continued to receive investments from the public sector.
The 2000s, especially from the year 2003 onwards, were a period of railroad expansion, as the globalization boom made this necessary, as has already been stated by representatives of the country's main rail transport associations, such as the Brazilian Association the railroad Industry (Abifer) and the National railroad Transport Association (ANTF).
With the increase in demand due to globalization, mainly in relation to exports, the railroad sector started to play a fundamental role and investments started to grow.
According to ANTF data, in the period 1997-2007, investments to improve the railroad sector grew by around 87.6%, which totaled R $ 14.4 billion injected into the segment's infrastructure.
The growth in cargo transportation was also significant. In the same period, the tons transported per useful kilometer increased by 84.7%, while the volume of transported cargo increased by 75.4%.
In addition to the growth in investments and the increase in transported loads, another factor of success in the privatization process of the railroad lines was the decrease in accidents. If in 1997 there were 75.5 accidents per million trains / km, that number came close to 16 at the end of the decade, a considerable improvement.
Finally, the 2000 - 2010 decade was marked by the auction of yet another important concession. In 2007, a section of the North-South railroad was auctioned to Vale, the only participant in the auction, for R $ 1.478 billion.
Years 2010
During this period, there was a great perception that the railroad sector had a much more beneficial logistics for companies. Part of this perception was due to the costs of transportation and freight, linked to the quantities of cargo that could be loaded, favoring the railroads over the highways.
As a result, investments for the railroad expansion to continue at full speed continued to increase. Between 2006 and 2015, investments reached 40 billion reais.
For the railroad expansion to occur in the way we imagine, the investments made must be linked to good results in production and transport capacity, in addition to considerable improvements in the infrastructure of the lines, which has been verified in recent years.
According to ANTF, for example, there was an increase of 195% in the number of existing locomotives, from 1997 to 2019. The number of wagons in the same period increased from 43,816 to 115,434, an increase of 163%.
A determining factor for the railroad expansion in this decade was the insertion of the company RUMO Logística in the railroad sector. The company is currently the largest in the industry, with the highest number of kilometers of railroad lines in the country.
In 2019, for example, RUMO won an auction for a section of the North-South railroad, about 1,500 km. The last auction that had taken place in the country was in 2006, when VALE purchased another section of the North-South railroad.
Projections until 2030
Railroad concessions have a duration of 30 years, with the possibility of an extension for another 30. As the first concessions were made in 1996, there is a possibility of major changes in the lines in the coming years, since the concessions end in 2026.
Despite these possibilities, one thing is certain: it is necessary to continue to improve railroad expansion.
Experts in the transportation industry continue to state that the solution for improving cargo flow in the various Brazilian regions, and also for export ports, is the growth of investments in railroads, as the costs and the quantity of cargo for travel are advantageous.
As a result, it is not only the private sector that is most attentive to rail expansion. The government, seeing these growth possibilities, mainly in relation to exports, plans to invest heavily in the infrastructure of existing lines and in the creation of new railroad stretches.
In 2020, the Ministry of Infrastructure foresaw in its investment scale an amount of 30 billion to be invested in the rail sector in the next five years.
Several factors are important for this public investment to be made in the railroad sector. The most decisive factor for the railroad expansion is the need to expand the flow of products related to agribusiness, the main producer of export inputs in the country.
Agribusiness currently depends on the road sector to achieve the desired outflow, which increases logistical costs and impairs distribution capacity.
Aiming at the growth of this productive sector, the solution is in the railroads, as you can see better by clicking here.
As a result, the government's projection is that, in order to achieve the ideal flow rates, it is necessary that the railroad sector represents 30% of the country's transportation matrix, which would be double that currently represented.
Conclusão sobre a expansão ferroviária
Railroad expansion is an increasing need for Brazil. If we compare the size of the Brazilian railroad line with that of other world economic powers, such as the USA and China, Brazil is far behind, which hinders national development. This expansion is totally linked to the level of investment made in the sector, and government officials and private companies are realizing that the solution is to increase the capital injection for the growth of infrastructure and quality of the Brazilian rail networks.
https://www1.folha.uol.com.br/fsp/dinheiro/fi0410200718.htm
https://www.ilos.com.br/web/tag/transporte-ferroviario-de-carga/
https://web.bndes.gov.br/bib/jspui/bitstream/1408/14136/2/BNDES-Setorial-46_Ferrovias_P.pdf
