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Infrastructure: An exemple of how the lack of infrastructure investments threatens the Brazilian growth.
BR-163 is symbol of Brazil's problematic road infrastructure
By André Borges | Lucas do Rio Verde, Sorriso, Sinop and Guarantã do Norte, Mato Grosso
The mud-strewn path of federal highway BR-163
From chaos to mud, the road spans approximately 3,000 kilometers. The trucker that went for the first destination, with chaos, is today agonizing in the interminable lines forming around the Port of Santos. Those that went for the second option, try their luck in BR-163, the promise of a federal highway that is completing 30 years this week and that has never been really fulfilled.
There's no third way. The drama experienced today by those that farm soybean and corn in the north of Mato Grosso state, Brazil's biggest grain producer, reveals to the world the embarrassing situation of national logistics. The confusion now happening in the ports of the South and Southeast regions cannot be understood and explained only due to the limitations of the ports. To understand them, one must face the mud.
For a week, Valor traveled over 1,500 km of BR-163, also known as Cuiabá-Santarém highway. The trip started in the Mato Grosso grain-producing region, in the municipalities of Lucas do Rio Verde and Sorriso, and continued north to the port of Santarém, in the state of Pará, where BR-163 has its terminus in front of a small ocean of fresh water: the meeting of the Tapajós and Amazonas rivers. On the Mato Grosso side, the one-way road, with its weathered asphalt, bears intense truck traffic. Berms are precarious and don’t even exist in some stretches. But the route becomes even more complicated as it reaches the Pará state border.
From the dust-ridden municipality of Guarantã do Norte (Mato Grosso), which marks the border between the two states, until the city of Santarém, the traveler experiences 1,094 km of adventure. As one advances toward the Amazon, the reasons that lead thousands of truckers to skip this road and hurdle for days in the roads leading to the Santos and Paranaguá ports become clearer.
Almost 600 km of BR-163 remain exactly as they have always been: a risky dirt road. In the asphalted stretches – many times only a couple of meters are actually covered – there are serious signage problems. Potholes and quicksand test the ability of drivers. Trucks skid over the mud. Sometimes they roll over in the middle of the way, spilling tons of grains into the jungle.
Opened 30 years ago, BR-163 was born with the vocation of turning itself into one of the main corridors for transport in the Central-West region. From its northward path, it's possible to access the Amazonas waterway, a privileged exit for Brazilian production to reach global buyers. But a series of problems have been delaying the true fulfillment of its mission.
Cuiabá-Santarém is an example of the main bottlenecks blocking the evolution of Brazil's logistics infrastructure. Problems with eminent domain and environmental licensing, corruption and mismanagement have undermined the highway's potential. A recently concluded study by the National Confederation of Industry (CNI) calculates that up to R$1.4 billion could be saved every year with cargo transportation in the region if the highway was actually concluded. If really converted into a viable alternative for cargo transportation, the route would help to reduce bottlenecks at Brazil's busiest ports, along with directly lowering transportation costs for farmers. Calculations by Movimento Pró-Logística, a lobbying group of several business sectors of Mato Grosso for the betterment of Brazil's infrastructure, point to a reduction of 34% in transportation costs for each ton of soybean and corn leaving farms. Brazil's domestic transportation prices are 425% higher than Argentina's and 370% higher than in the US.
Devoid of alternatives, farmers continue trying to do their part. In the 2011/2012 crop, the so-called “Nortão” (Big North) of Mato Grosso harvested 52% of the Brazilian soy and corn crop. That's 68.2 million tons. It's an impressive result that should be celebrated, but farmers are not in a very festive mood. “I have the impression that we actually created a problem by overproducing. It's as if we had done something wrong and now we'll have to pay the price for that,” says farmer Elso Vicente Pozzobon, who's also a board member of Mato Grosso trade group of soy farmers Aprosoja. “We invested in technology and more than doubled our production in the last few years. But our road has been the same and the situation became unsustainable.”
BR-163 is not the solution for all the problems of Brazilian infrastructure, but concluding it could foster a turnaround in the country's logistics map. Transportation capacity for the ports of the North region is estimated at 45.5 million tons. In addition to Santarém, ports such as Vila do Conde (Pará) and Santana (Amapá) would start to be accessed, among other terminals being planned for the Amazon region. The benefits would be not only domestic. Using Brazil's northern coast can cut down three to five days from the travel time between Santos and the Dutch port of Rotterdam. That means greater competitiveness and lower costs.
Domestic distribution of goods in Brazil would also benefit. The road would help with the transportation of manufactured goods from the Manaus Tax Free zone, which today follow by boat to Belém (Pará), to later travel a further 2,900 km by road to São Paulo. Through BR-163, the trip would be two days shorter.
“There's no reason for this not to move ahead. We have to turn the country's logistics map around and think about the Northern arch,” says Edeon Vaz Ferreira, managing director of Movimento Pró-Logística. “We expect our work to move forward and the situation to be solved as soon as possible. The country cannot dismiss that anymore.”
In the 745 km of BR-163 between Cuiabá and the Pará border, an industrial census by trade group Sebrae, focused on fostering business development, listed more than 800 companies that would gain a boost from the highway's conclusion. While the promise goes unfulfilled, businesses that live in some way from the road's degradation continue to prosper.
In Lucas do Rio Verde, the Sabiá Tire Shop has become a mandatory stop for truckers. Owner Lúcia Abegg says she opened the store ten years ago with two employees. It has today 14 tire workers who are unable to meet all demand. “We have been seeing 200 trucks a day with all sorts of problems. Trucks create a huge line in front of here. They get nervous with the waiting. We try to serve everybody, but it's hard,” Ms. Abegg says. “They break the coil, the brakes, the spacers, get flat tires. We're unable to meet all of the demand. We have to work seven days a week non-stop.”