Rail transport in Brazil: What is the stage in 2020?

Rail transport in Brazil is more recent compared to other countries, being opened in 1854 by the Imperial Railroad Company. This railway line was intended to connect the Port of Mauá, in Guanabara Bay, Serra da Estrela, on the way to Petrópolis, having a length of 14.5 km.

Soon after the installation of this first railroad on Brazilian soil, others began to emerge, mainly due to the development of coffee production in the state of São Paulo, which was undergoing great development in the late 19th and early 20th centuries.

Generally, the Brazilian railway network has been expanded with capital coming from England. As a result, they ended up serving only the oligarchic interest of the groups that controlled the productions, not having a basic plan for integrating the railways, which has left marks in the country until today. 

So, for you to know more about the rail transport scenario in Brazil in 2020, read on. Good reading 

Investments in rail transport in Brazil 

The year 2020 started differently when it comes to the scenario of rail transport in Brazil. At an event held at the Federal Rural University of Rio de Janeiro (UFRRJ), in the city of Seropédica (RJ), the Ministry of Infrastructure announced an investment forecast of around R $ 30 billion to expand and modernize Brazilian railways in the next 5 or 6 years.

In conjunction with this financial contribution, the federal government has also been studying and working to change the legislation that involves the Brazilian railway network. Currently, the regime established in the country is the public concession of the railway lines, where the State transfers the execution of a public service to a private company, in this case the maintenance of a railway, through a tariff paid by the user, under a monopoly regime or not. 

With this, the Federal Government plans a legislative change that allows the authorization regime, where the investor presents greater freedom of action in comparison to the concessions. This model of administration regime is already used in the Brazilian port sector, for example. 

In such cases, investors may have the choice to undertake and invest in new engineering works, with ownership of the railway, the benefit of perpetuity and the freedom to set the line tariff. According to industry experts, this is an important method for those who take long-term risk and provide new rail investments. 

In addition, this is considered a strategy that aims to reduce the dependence on the Brazilian road network, which according to a study carried out in 2018 by Fundação Dom Cabral, is used for the outflow of 75% of production in the country, while the railways represent the inexpressive mark of 5.4%. This dependence became clear with the truckers strike of 2018.

New directions for rail transport in Brazil

Even before 2020 began, Brazilian railways were already receiving more attention. In July 2019, the concession contract for the Norte-Sul railway was signed, an important line that connects Porto Nacional in Tocantins to Estrela D’Oeste in São Paulo over a total length of 1,537 km. 

The company Rumo S.A, which will operate the stretch for the next 30 years, won the auction for R $ 2.7 billion, representing a premium of 100% over the minimum bid of R $ 1.3 billion. The central section of the railway is already in full working order, while the southern section still needs work. Anyway, according to the contractual rules, the concessionaire has until 2021 to carry out the necessary interventions and start the works.

It is estimated that the total demand of the railway, adding the load transported by its own network and that of third parties, will be 1.7 million tons in 2020, reaching the mark of 22.7 million tons in 2055. Among the main transported products are industrialized and grains. 

In addition to this railway, three more railway lines are expected to start operating in the next 15 years in the country. Both are included in the PPI (Investment Partnership Program), the body responsible for coordinating strategic infrastructure works in the country, linked to the Government Secretariat of the Presidency of the Republic. Check out what they are below: 

Ferrogrão (EF-170)

Planned to be 933 kilometers in size, Ferrogrão is designed to connect the city of Sinop in Mato Grosso to the Port of Miritituba in Pará, being a drain valve for grain production in the Midwest. It is estimated that all works on the railroad will be completed in up to eight years.

The investment estimated at R $ 12.7 billion, for the first time in the country, the railway will have a 65-year concession, amortizing the amount invested. In addition, the BR-163 highway, which follows the route of Ferrogrão, should be granted to the private sector in 2020, for a period of ten years.

The projection of cargo transported by the railway is from 25 million to 27 million tons of grain today, reaching the mark of more than 45 million tons in 2050. 

Fico(Railway of integration of the middle west)

Fico, the Central-West Integration Railway, which for the time being only exists in planning and studies, is expected to have a length of 1,641 kilometers in wide gauge, connecting the states of Goiás to Rondônia. The execution of this work will follow a different model, and the first stretch built, about 380 km, should be in charge of Vale S.A. as a bargaining chip for the anticipation of the renewal of the Vitória-Minas Railway concession.

Fico(East-West Integration Railway)

A third railroad designed to expand rail transport in Brazil is called Fiol, the East-West Integration Railway. The project foresees that the line is 1,527 kilometers long in wide gauge, connecting the states of Bahia and Tocantins. The concession for the first stretch of the railway, of just over 500 kilometers, should go up for auction in 2020.  

Two other parts of the route are being developed by the state company Valec Engenharia, Construções e Ferrovias S / A. 

Conclusion 

In general, the change in investment levels in rail transport in Brazil is noticeable, which is an excellent alternative for the transportation of cargo in the country. To learn more about the railroad scenario in Brazil and how to choose the best railway scale click here and talk to one of our experts. 
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