November 14, 2013

Brazil's River Transport System Little Utilized

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazil has one of the largest river systems in the world but only a small portion of those rivers are used to transport grain or bulk commodities to export markets. Brazil has 63,000 kilometers of rivers, 41,000 kilometers are navigable and 21,000 kilometers could be used for commercial navigable. This data is from the recently released report "Interior Navigation" from the National Transport Confederation (CNT).

The investments in river navigation projects authorized by the federal government from 2002 to 2013 totaled R$ 5.24 billion, but only R$ 2.42 billion was actually applied. CNT estimates that it would take an investment of R$ 50 billion to fully optimize the river system in Brazil. Included in that total would be opening and dredging shipping channels, construction of barging terminals, construction of locks where needed, construction export facilities, and building and dredging of ports. CNT faults the lack of investments on the federal government's general inability to focus on infrastructure development in Brazil.

The report detailed the lack of connections between potential river transportation systems and existing railroad and highway systems in the country. Even if barging operations are developed, a land transportation system must be developed as well to deliver the bulk commodities to the river system.

This report also urges the federal government to consider river transportation in its overall plan to increase hydroelectric production in the Amazon Region. The government has already started construction on several of the more than one hundred dams being proposed for rivers in the Amazon Region, but virtually no consideration was given in the planning process to include barging operations in the dam's construction. Over the objections of the agricultural community, virtually the only rational for the construction of these dams was to generate electricity.

River transportation in Brazil was never a priority until recently because very few rivers in southern Brazil actually flow to the Atlantic Ocean. Due to a mountain range which parallels the Atlantic Coast, the topography of Brazil slopes to the west so rivers in southern Brazil actually flow away from the coast. Most of the water in southern Brazil enters the Atlantic Ocean via the Parana River in Argentina. In central Brazil, virtually all the water flows north to the Amazon River and enters the Atlantic Ocean in far northeastern Brazil.

Therefore, until grain production started to move into the cerrado regions of central Brazil, there was no urgency to develop the river transportation system. That has now changed with the tremendous increase in grain production in central Brazilian states of Mato Grosso and Goias and the ensuing high cost of trucking that grain to export facilities in southern Brazil. An efficient barging system would greatly reduce the cost of moving grain in Brazil to export facilities.