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Logistics and Transportation

:
Efficiency in Government Decision Making

André Luis Garcia Barreto *

The planning of investment in transport infrastructure, public or private,
has always been and always has been criticized, despite the efforts leading to a
big loss of goods transported on the roads. Often this loss was a result of
insufficient resources and idleness generated by several factors inherent in the
will of the planner.

The sudden change in demand has also led to idleness or lack of
resources and are now living a great moment of unease about the logistics
infrastructure of the country, they start to be counted several losses by
shedding of grains on the roads, due to poor retention, high freight costs, lack of
transport capacity and even losses generated by the port system, which shows
a logistical bottleneck due to their inefficiencies.

Unsurprisingly in Brazil the road system prevails over other modes of
transport. Recent statistics are lacking, but it is estimated that road transport
currently accounts for 65% of the total cargo transported in the country. In the
50's the road transportation accounted for about 40% of the total transported in
Brazil and its participation in the array of transport rose considerably from the
60's, spurred by the coming of the automobile manufacturers and the subsidy
on fuel prices. Also contributed to this history of service and insufficient capacity
of other modes and lack of regulation of the transportation sector.

State of Sao Paulo accounts for more than 30% of Brazilian GDP has an
array of transportation even more skewed: over 90% of its economic wealth
being transported by road, rail by 5.5% and 1.2% by other modes. In Sao Paulo
is 200 thousand kilometers of roads compared to only 5.1 thousand kilometers
of railways and 2.4 kilometers of waterways. Countries of continental
dimensions like Brazil, like the United States, Australia, Canada and Russia
have more balanced arrays, encouraging the use of alternative modes and
practice of intermodality. To get a idea of the disparity, the United States come
with 228,464 kilometers of railways, Russia with 87,157 kilometers, Canada
with 48,909 kilometers, with only 29,798 kilometers of Brazil, a number lower
than that of our neighbor, Argentina, which has a mesh 34,091 kilometers of
railway.

In Brazil, the road system faces several structural problems, which include:

· excessive number of companies in the sector, leading to increased
competition and loss of bargaining power with Customers;
· "commoditization" of the product transport ;
· poor road maintenance;
· theft charges;
· age of the fleet of trucks;
· heavy tax burden;
· little return cargo;
· high wait times for loading and unloading

The latest survey conducted by IBGE in 2001 indicated the existence of
47,579 transport companies, number 37% higher than that found in the survey
conducted in 1999, which counted the presence of 34,586 companies. This
same survey found that in 1992 were 12,568 enterprises, therefore, an increase
of 279% in the number of companies in less than 10 years. Estimated to be
about 72,500 businesses today, and 12,000 of them with more than 5
employees. The market is saturated, it is estimated that 85% of the existing
charges are outsourced. And as there is no legal or economic barriers to the
entry of new competitors, the situation tends to worsen. Many companies in the
sector will do so before the challenges, but other new companies will emerge a
much higher speed.

Transport services go through a process of "commoditization", ie virtually
no significant differences between the options and decisions of the vast majority
of clients are based solely on cost.

The degradation of the highway causes increases in operating costs of up
to 40% additional fuel costs of up to 60% and travel times larger by 100%. The
CNT in 2004 held about 75,000 km of highways in Brazil showed that 74.7% of
extending evaluated presented some kind of imperfection. In the U.S., a net of
6,406,296 kilometers, the same ratio does not reach 5%.

In Brazil, a highway network of 1,744,433 kilometers, only 9.4% is paved.
Brazil has already invested about 2.0% of GDP in infrastructure, transport,
spent a miserly 0.5% in 2008. The item risk management has risen from 5% to
15% of the gross proceeds of transport companies, involving something around
R $ 1.5 billion per year. And despite all of apparatus designed to prevent cargo
theft, gangs innovate every day, imposing new challenges to authorities and
transport companies. 76% of the fleet of trucks in Brazil has more than 10
years, U.S. experts recommend using up to 8 years. The average age of our
fleet is 18.8 years and in studies were found vehicles with more than 40 years
of use. Are more than 800,000 trucks over 20 years of use, almost half of the
Brazilian fleet of trucks, estimated at 1,850,000 vehicles. The average
American does not exceed 7 years.

The tax issue is another important point. Directly, it consumes about 30%
of revenues of railway, an extremely unfair when you consider that financial
institutions have a load equivalent to 55% of it. In addition to the 61 taxes in
Brazil, companies still spend the equivalent of 1% of its revenues to ensure
compliance with tax obligations 93 catches, materialized in books, statements,
guidelines, forms, etc. With 57.1% of Brazilian GDP concentrated in the
Southeast Region and 17.8% in other Southern states, it is virtually impossible
to balance the flow of cargo when traveling back and forth, squeezing the
already small margin the company's cargo transportation. The return on
revenue from large transport companies charge varies from 2% to 4%, as
shown in the ranking of the largest companies in the sector published by the
magazine Modern Transport Novembro/2004.'s very little to much effort.

The current situation is worrying and frightening future. There is a very
large dependence on public authorities to the main problems to be solved, but
in practice there are few signs that something really concrete to occur.
Meanwhile, transport companies will have to further tighten their belts and hope
that some enlightened soul can properly appreciate a strategic and important
sector of our economy!
When developing new policies of the federal government for national
investment to strengthen the economic infrastructure will occur primarily through
the modernization of the energy, telecommunications, sanitation, water and
transport. The latter is the basis for interconnection and national mobility that
allows connections for all modes between the vast and distant regions of Brazil.

As a result, the Ministry of Transport in partnership with the Department of
Engineering and Construction (DEC), prepared a National Plan of Logistics and
Transport (PNLT). The partnership aims to guide the national public actions and
/ or private infrastructure, transport and logistics, in a medium and long term.

The National Plan of Logistics and Transport (PNLT) aims to create a database
and analysis tools in the logistics concept, to provide support to the planning of
public and private infrastructure and transport management.

Thus, the transport sector can contribute to the achievement of the economic,
social and environmental impacts of Brazil, towards sustainable development.

* Logistics Specialist at the University Of Miami and Director of the Institute of Logistics Sagres.