THE CASE STUDY OF BRAZIL ANDRE DE FAZIO, MSc PORT DEVELOPMENTS IN AN EMERGING COUNTRY São Paulo, May 2014
ANDRE DE FAZIO, MSC Academic Record: MSc - Maritime Economics and Logistics (MEL) Erasmus Univ. Rotterdam (EUR) Holland Post Graduate in Business Administration Getulio Vargas Foundation - FGV/SP Brazil B.S. in Civil Engineer Catholic University PUC Campinas Professional: Current: EcoRodovias Group Logistics Planning Manager Brazil. UFSC - National Plan of Port Logistics - PNLP - Technical Head - Brazil CMA CGM GROUP / Terminal Link - Manager for Terminal Investments Brazil CSN/ Sepetiba Tecon - Commercial Manager Brazil P&O Nedlloyd - Engineer The Netherlands ODEBRECHT GROUP - Civil Engineer Brazil Others: Speaker Speaker Speaker Speaker Speaker Speaker - PIANC / SMART RIVERS CONFERENCE Maastricht Holland- 2013 TOC AMERICAS - Panama 2012 TOC AMERICAS - Panama 2011 Maritime Economics and Logistics Decennial Conference EUR - Rotterdam, 2010 15th Brazilian Congress of Civil Engineers Brazil 2009 XXI COPINAVAL - Pan-American Congress of Naval, Maritime Transportation and Ports, 2007 Director of the Infrastructure Department of FIESP (Industry Federation of SP State)- Brazil Co-Founder and Director of the Committee of Young Entrepreneurs - CJE - FIESP Member of the Advisory Board of the Regional Council of Engineers and Architects- CREA-SP 2
AGENDA - Introduction - The Brazilian Paradox: - powerful emerging economy x lack of infrastructure - Trade opportunity and challenges - Brazilian Case Study - Conclusion 3
INTERNATIONAL TRADE (X7 BTW 1993-2013) Brazilian trade balance (Exports + Imports) 1993-2013* US$ bilion FOB 4
BRAZILIAN INTERNATIONAL RANKING ON LOGISTICS (1/2) Performance Index LOGISTICS LPI Logistic Performance Index World Bank The average of 7 evaluations, with results that vary between 1 and 5 Brazil LPI 5 Singapore LPI = 4.19 Singapore LPI = 4.09 First Place Second Place 4 Brazil Brazil 3 LPI = 3.20 41st. place LPI = 2.75 61st. place 2 Afghanistan LPI = 1.21 Somalia LPI = 1.34 Last place Last Place 2010 SOURCE: World Bank, 2012 Approx. 30th. position In 2022 among the 10 Best LPI = +/- 3.90 2012 Brazil LPI = 3,13 45st.place 1 2007 LPI = +/- 3.45 TARGET by 2012 5
BRAZILIAN INTERNATIONAL RANKING ON LOGISTICS (2/2) 35 3,28 If all items graded at same level, Brazil would be better ranked 6
BRAZILIAN PORT SYSTEM - 34 Public Ports - 129 Private Terminals Port of MANAUS Port of SANTARÉM Port of MACAPÁ Port of BELÉM Port of VILA DO CONDE RORAIMA AMAPÁ AMAZONAS PARÁ MARANHÃO Port of ITAQUI Port of PECÉM Port of FORTALEZA Port of AREIA BRANCA Port of NATAL CEARÁ Port of CABEDELO Port of RECIFE Port of SUAPE RIO GRANDE DO NORTE PIAUÍ PERNAMBUCO ACRE TOCANTINS RODÔNIA SERGIPE BAHIA MATO GROSSO Port of MACEIÓ Port of SALVADOR Port of ARATU Port of ILHÉUS Port of BARRA DO RIACHO GOIÁS Port of VITÓRIA Port of FORNO MINAS GERAIS Port of NITERÓI MATO GROSSO Port of RIO DE JANEIRO DO SUL Port of ITAGUAÍ SÃO PAULO Port of ANGRA DOS REIS Port of SÃO SEBASTIÃO PARANÁ Port of SANTOS Port of ANTONINA SANTA Porto de PARANAGUÁ CATARINA Port of SÃO FRANCISCO DO SUL RIO GRANDE Port of ITAJAÍ DO SUL Port of IMBITUBA Port of PORTO ALEGRE Port of PELOTAS Port of RIO GRANDE 7
VOLUME HANDLED AT BRAZILIAN PORTS (X 3 IN 20 YEARS) Million tons 8
BRAZILIAN PORTS SYSTEM - CONTAINER Geographical distribution of Container moves Brazil - GDP: R$ 4,1 trillion1 Navigable coastline of 8.5 thousand km2 Investments envisaged in PAC 2 (2011-2014): R$ 958,9 billion4 North 6.5% Northeast 12% Port in Brazil - Responsible for more than 80% of current trade2 5,0 million containers handled3 (organized public ports and private use terminals). 84% of containers handled by public ports3 Southeast 50.5% South 30.9% 1 2 3 4 IBGE Casa Civil (Office of the Chief of Staff) ANTAQ - National Water Transport Agency MDIC - Ministry of Developmente, Industry and Foreign Trade 9
EXPECTED INVESTMENT IN LOGISTICS USD 150 Billions in 30 years Source: EPL - Empresa de Planejamento Logístico 10
ROADS Expansion of the main roads (and logistics corridors) in Brazil. Privatization processes of main roads. 11
ROADS CONCESSION OF 9 AREAS (7.500 KM) 12
RAIL New Legal Framework. End of Monopoly on Rail Transportation. Expansion, Integration and Modernization of rails. 13
RAIL 14
WATERWAYS Waterways: Madeira Tapajós Teles Pires Tocantins Araguaia Parnaíba São Francisco Tietê Paraná Paraguai Paraná Sul (Mercosul) Amazonas - Solimões 15
PRIORITY CONSTRUCTION OF 27 LOCKS River Locks Status Source: Ministry of Transports 16
EXPECTED INVESTMENT TO CONSTRUCT 27 LOCKS R$ 11,6 billions 1 AVG: USD 250 millions Per lock Source: Ministry of Transports 17
PORTS CHALLENGES Expand Port System Capacity. Clearly define the institutional framework. Improve the management efficiency (performance) of Brazilian Ports. Improve Port acesses (road/rail/waterways). 18
BRAZILIAN CASE STUDY BANANA CHAIN 19
BRAZILIAN CASE STUDY BANANA CHAIN 20
CASE STUDY BANANA CHAIN The most consumption fruit in the world (+2,37% a.a. in the last 8 years). Main Global Players: Dole Food Company, Del Monte Foods, Chiquita Brands International Consumption Per capta (kg/hab./year): Philipinnes 42, Brazil 30. Productivity (ton./hectare): Costa Rica: 53,95 (#1), Brazil: 13,55 (#9) Freight rates (+ local taxes), for a 40 reefer cntr (13 C- 14 C): Ecuador to R dam: USD 4.500 per Cntr. Brazil to R dam: USD 3.400 per Cntr. 21
CASE STUDY BANANA CHAIN Despite been one of world largest producer, Brazilian production is mainly for Internal Market. For internal market, plantations are in SC, PR, MG and SP states. For exports, mainly Mercosul and Europe, production are in RN and SC states. In 2013, Brazil exported +8% than previous year, reaching ~100 millions tons (1% of Global Marketshare). 22
CASE STUDY BANANA CHAIN 40% Farm: production, working force 60% Logistics: transport, storage, handling 23
BRAZIL CURRENT CHALLENGES ON LOGISTICS Physical: - Insufficient infrastructure capacity Inadequate hinterland connections Limited port draft City-locked ports generating congestion Management: - High logistics cost Bureaucratic system Environmental issues High waiting time at Ports Reduce Logistics Costs. 24
CONCLUSION Expand capacity of the port system Promote Hub and Spoke concept, linking Ports to Logistic Platforms Balance Modal Split (road, rail, waterways, cabotage, pipeline) Improve the management efficiency (performance) of Ports 25
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CLOSING REMARKS Brazil is the 21st-century power to watch. Finacial Times, 19 Oct. 2009 Brasil is South America s mosti influential country, an economic giant and onde of the world s biggest democracies. BBC News 5 oct. 2010 Brazil has always been considered the country of the future but that future never became reality...now the time is here, a world economix power with a booming internal market as well as a major player in the world trade market. This is the right time to be in Brazil! Brazil is likely to become the worl s fifith-largest economy, overtaking Britain and France. The economist, 14 Nov. 2009 27
CLOSING REMARKS Has Brazil blown it? The economist, Sept. 2013 28
EUROPE HUB N SPOKE DEEP SEA TERMINAL <-> LOGISTIC PLATFORMS ECT/Rotterdam para MOERDIJK CONTAINER TERMINALS www.europeangatewayservices.com 29
THANKS FOR YOUR ATTENTION André de Fazio, MSc andre.fazio@ecorodovias.com.br + 55 11 3787.2667 30