Privatization plan for the port system is creating opportunities

Leitura de 6min

Nowadays, the biggest problem of privatization processes is their complexity and bureaucracy.

Brazil currently occupies the 135th position for port infrastructure in the World Economic Forum’s 2012 competitiveness ranking, out of a total of 144 countries. This was five positions down from the previous year’s ranking, and a bad result for all businesses whose profitability depends on port services. For domestic and foreign investors, however, this state of affairs can be seen as challenging and an opportunity. Why is that?

In a bid to rectify this situation, the federal government recently announced a package of measures that will enable private investments in ports. The main goal of the project, which seeks to attract investments totaling R$54.2 billion around the country through 2017, is to make the various areas more dynamic and competitive.”

Right now, the biggest problem for the privatization processes is their complexity and bureaucracy, in particular for foreigners. In such a situation, the work of a consultant is effectively a gateway, a viable alternative for the investor to get a better grasp of all the steps that are involved in this operation. There are also large hinterlands that form part of the privatization process.

Operating costs

Bottlenecks in the Brazilian port system also lead to a significant increase in operating costs, according to data released by Brazilian tax authorities:

Brazilian Foreign Trade:

2002: R$315 billion

2010: R$675 billion

Cost of transporting soybeans (farm to quayside):

2003: US$15.00 in the U.S.; US$28.00 in Brazil – 87% more in Brazil

2011: US$23.00 in the U.S.; US$85.00 in Brazil –  270% more in Brazil

The hinterland area encompasses the entire logistics park, in particular the container patio, and has the potential to provide good business opportunities involving investors and port operators. This is another situation in which a consultancy such as JLL can be of help, because cargo operations are very dynamic in Brazil.

The federal government initiative is positive, in that it seeks to rectify a problem that has been known about for many years. There is clear interest from foreign investors, who now wish to transfer their expertise to Brazil. For its part, JLL has the opportunity to make available its extensive knowledge of this market, offering customers a more promising vision.”

In this case, know-how is acquired through visits by the company’s professional staff to major port facilities such as those of China and Singapore. These contacts also give us an idea of the level of interest that these entrepreneurs have in Brazil. It’s important to remember that the (Brazilian) government also promotes opportunities in this sector internationally, by participating in industry-specific events such as the road shows in New York and London.