Buoyed by government incentives, Brazil’s automotive market has performed well during the global recession, but without investment in its infrastructure the country could be facing a logistics blackout when sales and production take off again in earnest.
This was the message from last week’s Automotive Logistics South America conference in São Paulo where speakers encouraged manufacturers and LSPs to work more closely together, as well as with other industries, to lobby the government for change.
The economic recession may have stalled a looming logistics blackout, according to delegates from manufacturers and LSPs. Mauricélio Gomes Faria, Fiat’s Logistics Director in Latin America, said that two years ago Brazil’s soaring cars sales almost overstretched the logistics infrastructure. Trucks face potholes in major roads and need to navigate mud tracks in remote areas, while the ports are congested and bureaucratic, and rail is almost non-existent.
Faria feared that when the economy picks up, inadequate infrastructure can stall material imports from ports or jammed roads. This could really hit Brazil in two years, he warned.
Stephan Gruener, Managing Director of LSP BMS, agreed that the government needs to take urgent action to solve infrastructure hurdles. The economic downturn eased the pressure on Brazil’s creaking roads and ports, and stopped the infrastructure from collapsing. “Brazil has a potential to make a big leap [to gain new business], but the problems in infrastructure need to be resolved first,” said Gruener.
Delegates also felt that current government initiatives were too slow. As a case in point, Brazil’s government infrastructure programme Programa de Aceleração do Crescimento Brasileiro (PAC) is unlikely to bring quick solutions, as it will only be effective in five years, according to José Ricardo Chiarello, Volkswagen do Brasil’s Head of Logistics. “We haven’t seen much movement on projects so far,” he said.
While it was agreed that action is needed, the industry appeared less certain about how to best to lobby the government.
Jansen Esteves, Delphi South America Foreign Trade & Logistics Manager, said that a combined message from associations such as the Brazilian Association of Autoparts Manufacturers (Sindipeças) and the Federation of São Paulo Industries (Fiesp) was better than individual actions. Esteves urged the private sector to work more with the government.
Roberto Avelli, Supply Chain Executive Manager & Active Director, Renault Mercosur, pointed out how Renault worked with other sectors from food to maritime companies to push through reforms to ease congestion at the southern Paranagua port.
Volkswagen’s Chiarello highlighted the importance of logistics for the automotive industry. People often only think of logistics when there’s a problem such as a delay of parts. “But they forget, the business is only alive because of logistics,” Chiarello said.