Brazilian Bottlenecks

In its early years, the World Bank mostly financed large infrastructure projects.  After some (probably accurate) criticism over their handling of dams and village displacement, the Bank moved away from these types of projects and towards ones that focused on health, agrarian reform, education, etc.

More recently though the Bank has come full circle and has started to fund more infrastructure projects because there is a realization that these are some of the most effective ones they’ve funded.  Personally, I think that infrastructure is an understudied topic in development.  It’s clearly crucial to development but it’s something most economists seem to leave to urban planners to solve.

I was reminded of this when I read about Brazilian infrastructure woes with the port of Santos, a city of 530,000 about 40 miles from São Paulo.  Santos is the continent’s largest seaport and the incredible growth in commerce (particularly in soybeans) is causing massive logjams there.  Recently there was a 64 kilometer traffic jam of trucks who wanted to unload their soybean cargo in Santos.  The delay was so bad that China’s biggest importer of soybeans had to cancel an order of 2 million metric tons.

Port_Santos

I’m sure there is no easy solution to this problem, but it is funny how everyone seems to be blaming everyone else for the situation.

Blame the politicians: They have passed legislation that has limited the amount of hours that truck drivers can operate

Blame the weather:  Massive amounts of rain has slowed work at the port.

Blame other transportation systems: A port authority official notes that, “Capacity over the past 10 years has more than doubled but the rail, highway and river access networks are overwhelmed.”  He points out that soybean is perfect for rail transport but that only 25% of soybeans are transported in that manner.

Blame storage facilities: The aforementioned port official also complains that Brazil lacks the necessary storage facilities for soybeans: “Brazil in general can store around 60 percent of its harvest in the producing area. In the United States, they have 130 percent capacity, meaning that they can store in the producing areas the entire harvest plus 30 percent of the next one.”

Blame a shortage of trucks:  Producers want more trucks to transport the soybeans.

My guess is that all of these complaints are valid.  Infrastructure is a complex issue and while everyone can agree that developing countries should “improve infrastructure,” it seems a lot more complicated than that.

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