Brazil: Overcoming logistical hurdles the next challenge
Brazil is committed to growth, and there is every reason to believe it will move aggressively to address the logistical issues that hinder exports — an example that the United States, with its own infrastructure deficits, might well take to heart.
The South American giant’s growing pains are well known. According to a U.S. Grains Council consultant, Brazil will harvest a record corn and soybean crop this spring. About 38.5 million metric tons of beans will be exported. Rain delays, however, have slowed both the harvest and the movement to port, as well as loading.
About 70 percent of Brazil’s soybean production moves by truck, and road conditions are poor. The trip from Cuiaba to Rondonopolis, a distance of 125 miles on a federal highway takes 8 hours. On the country roads, the situation is even worse.
Labor regulations — a sensitive issue in the United States as well – also impede shipping. A new law requires that truck drivers rest 30 minutes every four hours, with a minimum of 11 hours a night rest. This is causing delays and early morning congestion at the ports. In addition, the Customs, Agriculture, Health, and Treasury personnel at the ports are only available for eight hours a day, with an hour for lunch — while ships idle in harbor, waiting to load.
The impact on the bottom line is dramatic. The cost of moving a metric ton of corn or soybeans from Mato Grosso to the Port of Paranagua, a distance of 1,435 miles, has increased 506 percent in the past year. During the same period, soybeans were up just over 20 percent — but three quarters of the increased price was absorbed by higher freight costs.
Brazil’s export surge is dramatic, but there are bumps in the road. It is clear that the United States needs to act as aggressively as the Brazilians to modernize our own infrastructure to stay ahead in this race for an export edge.