Editorial: The City of Tomorrow (Part 4)

Editorial, by Stone Korshak

RIO DE JANEIRO, BRAZIL – Picking up from last week, logistics and shipping is another area with a lot of room to develop in Brazil. Beyond servicing the offshore oil industry, overhauling the infrastructure for import and export has been a focus for Rio’s state government in recent years.

In 2010, Brazil’s ports handled 833.9 million tons of goods: 489.6 million tons of which was exported goods, 126.8 million tons imported, with the rest transported domestically. Ports in Brazil were expecting to handle a billion tons of cargo for the first time in 2012, according to estimates by ANTAQ, Brazil’s National Agency for Waterway Transportation, a 12.3 percent more than in 2011.

Rio de Janeiro State is set to take the top spot in shipping from neighboring Espírito Santo soon. Over the last three years, the percentage of ships arriving in Rio’s Guanabara Bay has increased by 146 percent, according to the Companhia Docas (Dock Company).

Statistics by Docas show in 2009, 1,568 ships entered in Guanabara Bay, in 2010 it were 2,374 vessels. This is a growth of more than 51 percent in one year. In 2011, 3,861 ships entered, an annual growth of 63 percent. Most of 2012’s growth was attributed by the growing shipment of containers.

The boom is not just happening in Rio of course, The National Association of Shipbuilding and Offshore Construction and Repair Industry (SINAVAL) has projected that the Brazilian shipbuilding industry will generate approximately 30,000 new jobs in the next two years through four new shipyards being developed across the country.

The yards of Jurong Aracruz in Espírito Santo; Enseada do Paraguaçu in Bahia; EBR (Estaleiros do Brasil Ltda.) in Rio Grande do Sul; and CMO in Pernambuco are expected to significantly add to the 78,000 currently employed in Brazil’s marine industry.

In May last year legislation was passed to ensure the nation’s ports start running 24 hours a day and the government had earmarked over R$54 billion for 159 port projects through Brazil to be implemented by 2016 as part of plans to improve the country’s infrastructure, also including upgrades to airports, roads and railways.

Yet in Brazil, and especially Rio de Janeiro, all the spending and plans do not necessarily translate to progress, or opportunity for foreign business ventures. Many critics suggest that the national elections in October of this year will set the path for either more protectionist policies from the PT party, or a new business-friendly era from the opposition.

In any case, the key advice for anyone thinking about business is in Rio and Brazil is local knowledge, and there is no substitute for 3-5 years on the ground to understand the cultural nuances. No matter if it is real estate, oil and gas services, shipping and logistics or anything else, at times it feels like the system is set up to bleed foreign business interest dry.

Most smart and successful business people think they can make it work with energy and perseverance, and some can, but it takes time and – especially in Rio – patience to see your ship come in.