Monday, December 27, 2010

Holiday Perspective (Infrastructure, part n)

Lining up in Paradise

The nice thing about going on holidays is that it gives a fresh perspective on many things. In this singular case, it is the same old topic which I believe will most likely keep Brazil from growing: The lack of infrastructure investment.

Spending my holidays with my family in the south of Brazil, we did a few fun things, which strangely enough, brought the infrastructure topic right back up to the front line.

We are currently on Ilha do Mel in the Paraná state. The island is a small gem, to over 90% an ecological reserve without a single car, comprised mainly of wooden huts. The island is also just off the coast from Paranaguá, one of the most import ports of Brazil. From any point off the seaside coast of the island, I can see at least 30 ships lined up single file to move into the port. In addition, I have just read that this is the average number of ships lined up to enter the Santos Port, Brazil's most important one. Considering each ship is roughly 200m long and 500m away from the next one, we are talking about a 30km queue... on average. 
In November, I had met with a supplier and he told me that while he was awaiting urgent cargo, his ship's captain decided, while in queue, to continue the journey onwards to Buenos Aires first, to unload a part of his cargo, as Santos had informed him he was 55th in line and would take roughly 2 weeks to enter the harbor.

The second story is also about Paranaguá, in this case the access to the port. There is a lovely historical railway from Curitiba down to the port, built 1883 which crawls through the mata atlantica at an excruciating slow speed over very narrow bridges with spectacular views. It is well worth the journey.

Anyway, while we were heading down the track, I was also surprised at the amount of workers on the line conducting maintenance work, most from América Latina Logística S.A., which is the operator of the track. We also passed several freight trains parked next to the single track, the longest of which had 88 (!!!) freight wagons. I have seen longer ones, mainly in the west of Canada, but considering the ones here run along a track that was originally built over 130 years ago, this is quite a feat. I then asked a few people and yes... this is the MAIN route to transport cargo via rail to Paranaguá... It is hardly a surprise then that large corporations in  Brazil, such as Vale, are investing massive amounts of money to provide for their own private railroads.
Scenic cargo route
In parallel, once again I read a critical (Brazilian) article, in this case one about sustainability and growth in Brazil, and here, once again, infrastructure investment was put as key to SUSTAINABLE development. To ensure the country will not collapse in the next years, infrastructure investment must grow from the current 2% of GDP (China has 6%) to at least 4% immediately - starting with basic sanitation, ports, airports, roads... Oh boy, a long way to go.

Wednesday, December 1, 2010

Bullet Train Delayed

High-Speed Train Route Proposal (From Wolters Kluwer)

A very typically Brazilian story - the bullet train Brazil wanted to partially build in time for the Olympics in 2016, and be completely finished by 2017 (see the entry from Wolters Kluwer above), has been delayed.

The 20bn USD project was supposed to have all bids in by Nov 20 and the decision by Dec 16 has now been postponed to April 29 to allow "all interested companies to participate". Also, according to the auctioning body, this delay will not delay construction... really? So they will just work 6 months faster?

I do not want to sound negative, but

a) The project will never be finished on time, Brazil has a great history of announcing and then not delivering - especially this bullet train has been a company fantasy for decades (just like the maglev in Germany)

b) The project will cost a fortune - 20bn will never be enough

c) The route will run a completely different route

If Brazil is lucky, the project will be completed by the 2020 Expo... for which a site also still has to be found.