In Brazil industry, 40% of businesses would rather not use roads

Nearly 40 percent of the companies in Brazil’s industry would rather stop using roads if there were another means of transportation available with good infrastructure, a survey released released this week by the National Confederation of Industry (CNI) found. Railroads are the main route for transporting goods for 28.5 percent of the industrialists.

According to the study, the state of railroads poses a major obstacle to the transition. As it stands today, only eight percent of industrial companies transport their production by rail. Of this total, 63 percent describe the rail system as OK, poor, or terrible. A mere 31 percent say it is good or excellent.

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Without the option for railroads, 99 percent of businesses utilize trucks. At some point, they also resort to air transport (46%) and ports (45%).

Bottlenecks

Transport is cited as the chief bottleneck by 73 percent of respondents, followed by energy (13%), sanitation (6%), and telecommunications (5%).

The country is currently reported to invest only 0.65 percent of its gross domestic product (GDP) in transport infrastructure. In CNI’s assessment, investment adding up to two percent of the GDP is required to modernize the country’s logistics structure and make it suitable for both the internal flow of cargo and exports and imports.

Among the reasons for the sector to change their means of transportation, the industrial companies named the perspective of cost reduction (64%) and faster delivery (16%). For 46 percent of investors, the cost is the biggest problem in logistics and operations.

Of the business people interviewed, 84 percent consider the cost of transportation and logistics in the industry to be high or very high, and 79 percent name freight as the number-one cost in logistics. Other issues reported include cargo robbery (22%), poor conditions facing the means of transportation (20%), and low fleet quality (7%).

Drawbacks

Despite the willingness to switch to rail, corporations consider the state of the roads as the biggest problem in cargo transportation today. Road infrastructure was cited by 67 percent of interviewees as the greatest logistic bottleneck. Next come railroad infrastructure (34%), the lack of expansion or duplication of highways (10%), fuel costs (9%), and access to ports (9%).

Commissioned by CNI, the survey interviewed 2.5 thousand executives from large and medium-sized industrial firms across the 27 Brazilian states, 500 in each region. The interviews were conducted between June 23 and August 9. The margin of error is two percentage points up or down, with a confidence interval of 95 percent.