Logistics in Brazil

Brazil is one of the world’s fastest growing economies. But high logistics costs are endangering this growth. The costs are largely the result of regional differences in infrastructure, an underdeveloped rail network, high harbor fees and difficulties associated with the development of the Amazon region. The highway network plays a leading role in Brazil. Since the 1990s, the market of the Brazilian transport sector has been becoming more consolidated.

Geographic challenges in Brazil

Expanses of rain forests in the lowlands of the Amazon in the north, plateaus and mountains in the south and the Andes in the west shape the geographic face of the South American country. As a result of the difficult terrain, the infrastructure in the rain-forest region of the north is poorly developed. In agricultural terms, the savannas in the mid-west are particularly important. But a large share of the country’s population lives along the Atlantic coast in the east.

Core countries for trade

Brazil’s most important trade partners are the United States, Argentina, China, Germany, the Netherlands, Japan and Chile [1].

Brazilian infrastructure

Brazil’s transport infrastructure is characterized by strong regional differences. Several well-built highways are available in the economically powerful southwest and south. But the picture is completely different in the Amazon region in the north: Here, the opportunities are very limited - both in terms of density and in terms of the availability of various means of transport.
Brazil’s transport system is heavily dependent on the highway network. Sixty percent of total transport volume is handled by it. This applies especially to economically active regions, even though other means of transport are available there - particularly São Paulo. One major challenge is the long-term reduction of the high amount of road traffic. This will be possible only after a sufficient number of intermodular distribution centers have been set up.
Rail transport in Brazil cannot yet be measured by American or European standards in terms of quality and density. The 29,000 kilometer rail network is poorly developed, and parts of it are in bad condition. It is primarily based in the states of São Paulo, Minas Gerais, Rio de Janeiro and Rio Grande do Sul. Another problem is the different track gauges used in parts of Brazil.
The fees charged by Brazil’s harbors are considerably higher than in places like Hamburg, Singapore and Antwerp. Many ports have tremendous problems as well. Some lack handling capacities. Ships have reduced capacities because of low navigational-channel depths, and highway and rail connections are inadequate. Added to all of this are poorly trained personnel and a lack of parking for trucks [2, 3, 4].

Logistics requirements and service areas

Since 2003, Brazil’s economy and exports have been growing tremendously. But the resulting upswing is being endangered by disproportionately high logistics costs. These costs are estimated to be about 20 percent of gross domestic product, or twice as high as in OECD OECD countries.
The global trend toward integrated logistics solutions in contract logistics Contract logistics can also be seen in Brazil. For instance, just-in-time Just-in-time solutions are frequently sought by the automotive industry, prompting many service providers to offer them. But the efficient and cost-effective implementation of these solutions is being hindered by bureaucratic hurdles.
The transport sector was once strongly fragmented. But since the end of the 1990s, it has become extensively consolidated. This development has been fueled by large, multinational and primarily European logistics service providers. As a result of the increased competition, domestic carriers have evolved into logistics service providers.
In terms of CEP services Courier, express and parcel services , the Brazilian market is very well developed in the main economic regions in the south and southeast. The northern section of the country has some catching-up to do [2, 3].

Logistic centers in Brazil

The most important centers are located in the south of the country, primarily in the economic centers of São Paulo and Rio de Janeiro. Cities like Porto Alegre - near the important trading partner of Argentina - are gaining logistical importance as well. In the country’s interior, cities like Goiania and Belo Horizonte serve as centers [2].

Important logistics service providers

Important providers of logistics services are DHL, TNT, America Latina Logistica, Companhia Vale de Rio Doce, Expresso Mercurio, Penske and Ryder [2].

Recommended reading

Fundamentals of Logistics Management | Grant / Lambert / Stock / Ellram 2005

References

[1] The World Fact Book | Central Intelligence Agency 2007
[2] Brasilien | Oliveira 2007. In: Transport und Logistik | Bundesagentur für Außenwirtschaft (Hrsg.)
[3] Logistik in Brasilien | Häussler. In: Investitionshandbuch Brasilien 2006/2007 | Bundesagentur für Außenwirtschaft (Hrsg.)
[4] Global Perspectives. Brazil | Council of Supply Chain Management Professionals (CSCMP) 2007

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