Poor logistics cost Brazil firms time and money

Wed Jun 17, 2009 5:14pm EDT
By Reese Ewing
SAO PAULO, June 17 (Reuters) - Brazil has ample cash to revamp its dilapidated transport network even amid an economic recession but corruption and bureaucracy have hampered badly-needed improvements, a senior industry official said on Wednesday.
Paulo Protasio, president of the National Cargo Transport Association (ANUT), said Brazil's economy would be hamstrung in a few years unless the government and private sector found ways to improve movement of goods through ports, railways, rivers and highways.
"There's no lack of money or good projects," Protasio said on the sidelines of a seminar on infrastructure hosted by the agribusiness association Abag.
"The problem is poor management," he added. "The transport ministry says it's got 12 to 14 billion reais ($6.1 billion to $7.1 billion) to invest this year but only about 30 to 40 percent of that budget will ever get used."
The director of ports and services at the local arm of Bunge Ltd (BG.N), Antonio Carlos Rodrigues Branco, said Brazil's infrastructure is in critical condition because tax revenues from the transport sector have been used misused.
"The tax burden is high for the sector but government has always used funds poorly. Maritime tax revenues have gone to fund other areas of government interest rather than rebuilding and improving ports, or they have been embezzled to buy politicians country estates," Branco said.
Despite Brazil's competitive advantages in arable land, fresh water, mild climates and ample sunshine, the lack of port, railway, river barge and highway capacity to get farm goods produced deep in interior savannas to the coast has largely offset these pluses.
Chief Executive of Hamburg Sud-Alianca's Eastern South American Region Julian Thomas said that Brazilian ports were some of the most expensive in the world and yet inefficient compared to those in North America and Europe.
"By our calculations, we lose about $62 million a year due to the inefficiency and lack of capacity in Brazilian ports," he said. "Our ships lost 20,697 hours just waiting in Brazilian ports last year. That's like having two ships idle off a port for the whole year. We lose about 10 percent of our container business due to these delays, which is unacceptable."
He estimated Hamburg Sud accounted for about 20 percent of the movement of goods through Brazilian ports, mostly in the container market.
"We need to reach an agreement and prioritize infrastructure projects so we can get them off the drawing board or in as little as five years everything could grind to a halt," warned Carlo Lovatelli, president of Abag.
(Editing by Lisa Shumaker)