All about the logistical costs of rail transport

The logistics structure in Brazil is quite outdated. When we talk about logistics, we mainly discuss how production reaches the domestic and foreign market. In this sense, the logistical costs of transport, bureaucracy, lack of investments, poor use of technology, among other factors, make it difficult to improve this area in the best possible way.

This difficulty in improving Brazil's logistics processes makes production smaller than it could be. If national transport, addressing the main modes of transport (road, rail, pipeline and air), were more organized, received large investments and were better distributed, the scenario could be different.

Currently, the country's logistical transport structure is divided in this way: highways hold more than 60% of transported cargo, railroads around 20% and pipelines and air take the remaining 20%.

This disparity is one of the main current problems, pointed out as one of the great challenges for the logistical growth of the country. The highways, which are dominant, have the highest logistical costs of transport, making the transport price quite high. 

But what exactly are these rail transport costs? What are the rates, how is the calculation done, what is the freight? Well, that's what we'll see next. 

What are shipping costs?

When we talk about logistical transport costs, we are addressing everything that involves the production transport stage to planned destinations, whether in the domestic market or to export stations. 

If you own a car, and you need to take a trip, you will certainly add the bills referring to the use of the vehicle during that journey, such as maintenance costs, fuel, tolls, etc. 

For companies that work with large-scale freight transport, this is no different. In order to ensure that these goods are transported safely, within the indicated deadlines and with as little loss as possible, it is essential to calculate the logistical costs of transport and place them in the company's scale sheet.

These costs are varied. In the expense sheet, companies must include the vehicle's operating costs, maintenance, insurance, fuel, freight, administrative costs, delivery costs, among others.

According to the ABML (Brazilian Agency for Movement and Logistics), the logistical costs of transport represent, in most cases, around 1 to 2% of all companies' revenues. In specific cases, depending on the type of goods to be transported and the customers, costs can reach 7%.

This number is quite expressive, and errors in calculations or difficulty in planning the logistical costs of transport can make it difficult for companies to organize their finances. 

Rail Fares

An important aspect that needs to be considered in order to know how to organize and calculate the logistical costs of rail transport is to understand what rail fares are and what those fares are.

Well, in addition to the various costs we have already mentioned so far, a company that wants to take advantage of the rail transport service must also bear the values of the rail tariffs established by the companies that have the concession of the corresponding road.

These rates are fixed, according to the law in force in the country. The regulation of the tariff ceiling is established by ANTT (National Land Transport Agency).

However, in addition to the standard rate, established by the company and in accordance with the agency's ceiling, there are also affordable rates, which each railroad concession company has. This rate is added to the regulated rate to obtain the final result.

Fees vary according to each route, taking into account the condition of the railroads, the distance to be covered and the type of product that will be transported. 

On the website of MRS Logística, one of the main railroad concession companies in the country, you can download an attachment with a tariff table established by the company to have a better basis on how it works and what these values are. 

Calculation of the cost of rail transport

In order to calculate the logistics of rail transport, it is essential to take into account, essentially, the mileage of the route and the journey and the weight of the goods proportional to the rail tariff.

When a company needs to know how much it will spend to make a trip on a national railroad, this is the main information they need to obtain to generate an accurate and efficient calculation, managing to organize themselves financially to cover the costs without affecting their contribution financially.

This cost is known as rail freight and all companies that want to use a railroad line in the country need to pay these amounts so that the trips are completed and so that they can continue to enjoy this sector. 

Comparison between road and rail logistics costs

As we said, one of the main logistical difficulties in the country is precisely the disparity in the use of railroads in relation to the use of highways. This scenario has been in place since the 1960s, when the government decided to invest heavily in the growth of the automobile sector and, consequently, in the road segment.

However, this difficulty in increasing production is not only due to the fact that the roads are dominant, but rather the logistical costs of transport. 

If we take into account all the aspects that need to be established to calculate the logistical costs of transport, such as operational costs of roads, vehicles, freight, fuel, trips, etc., the railroad sector ends up being much cheaper.

To start with, just one rail vehicle has the same transport capacity as more than 100 trucks. Depending on the number of cars, the capacity is even greater.

At the same time, the route taken by a train on a railroad is also much faster and more effective than that of trucks, since there is no traffic and the railroads cut important paths to reach their destinations. 

This reduction in travel time is essential so that the logistical costs of transporting railroads are lower than those of highways.

In relation to tariffs, the values end up being equivalent. Even though rail operating fees are in some cases high, toll costs on highways are not far behind. 

In this way, if we compare the two modes of transport, the railroads end up having lower costs, as fewer vehicles are needed in operation, trips are shortened, freight rates go down, fuel decreases, among other important factors. 

Conclusion

As we have seen, the logistical costs of rail transport are fundamental factors that companies using the routes need to pay attention to. These costs can represent up to 7% of the entire budget of a company, and therefore cannot be disregarded. As companies depend on cargo transport for their products to reach the desired spaces, it is essential that they know how to calculate exactly what these costs are and how they can vary according to the type of product, route and mode of transport that they will use to transport your goods. 

Searchs:

http://www.avm.edu.br/docpdf/monografias_publicadas/k214947.pdf

https://www.inovarse.org/sites/default/files/T16_374.pdf

https://cargox.com.br/blog/transporte-de-carga

https://patrus.com.br/blog/conheca-os-7-principais-custos-logisticos-e-como-otimiza-los/