Once a rail-based economy, most of Brazil’s railway system is today slow, polluting, overcrowded and falling apart. Nationalized in 1957, the country’s rail network suffered from two decades of military dictatorship that focused its efforts on promoting road transportation. Metropolitan areas are poorly connected to city centres, and most of Brazilian freight is now carried by road, leading to costly bottlenecks and delays. Improving its railroad lines would lower costs for doing business and attract more investors to its natural resources sector.
In August 2012, Brazilian President Dilma Rousseff announced $60 billion in private investments for road and rail projects. Furthermore, the government said it wants to attract investments for the building of 10,000 kilometres of rail systems, and it plans to double the capacity of its freight rail networks. Extensions for the São Paulo and Rio de Janeiro metros and other metro and light rail projects in many Brazilian cities are also on the agenda—although not proceeding fast enough for many Brazilians. (See “Brazil’s World Cup Fiscal Fiasco”.)
Canadian rail leader Bombardier Inc. is one of the companies busily improving Brazil’s rail infrastructure. “We have just delivered the world’s largest mass-transit monorail system to the city of São Paulo,” boasts Luis Ramos, spokesperson for Bombardier in Brazil. The $1.44-billion project, which will move up to 48,000 people an hour along a 24-kilometre track, is due to enter operation in time for the World Cup later this year.
Bombardier has built a $15-million plant near São Paulo to build trains for its monorail system. The key is speed, says Ramos. “The monorail system takes half the time required to build an underground metro.”
That speed is crucial for Bombardier; many foreign firms are attracted by Brazil’s huge investment in transportation infrastructure, and competition is fierce. According to a study led by Roland Berger consultants, Brazil’s rail transport industry is expected to be worth $3.2 billion a year by 2017. That has lured many of Bombardier’s competitors into Brazil as well. For every major rail company, that means one thing: full steam ahead.