Opinion

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    The World Closer

  • In a Brazilian newspaper dated July the 1st, a subtitle caught my attention; "Obama called Merkel to not let Greece leave the Eurozone." We are talking about globalization, a phenomenon that is already part of our daily life.

    We live in a world that is becoming more connected, where the exchange is more frequent. According to the annual report this year (2015) of the WTO the world trade is expected to continue to growth at a rate of approximately 5% a year until 2020. That means that this phenomenon has only just begun and that multilateral relations will continue tightening throughout the globe, at least for the next five years.

    In this overall picture, it is interesting to see how each region specializes in certain export sectors. Today is already possible to identify some countries as major global suppliers of certain products in which they have specialized to grow competitively in international trade.

    These countries are disputing space by specializing in a specific sector. This is where logistics plays a key role, in a surprising way, defining which are the pawns in this chess board.

    Let us take a specific case. I have selected a postgraduate study at the University of Mackenzie, Sao Paulo, Brazil on "Competitiveness of Brazilian soybeans for export," which I found very interesting:

    Soybean is the most exported product in Brazil and only surpassed on its production by the United States. Therefore is the second largest producer of the most consumed vegetable protein in the world. In the year to which these study regards (2002) the main buyer of these products was the Netherlands, followed closely by China. This is where I would like to introduce the concept of what we call here "Brazil Cost" and emphasize the importance of efficient logistics at the world we live in.

    According to the National Confederation of Industries (Brazil) CNI in its publicationCost Brazil(2000), the main barriers to direct investments in the country, are the inefficient transport sector and high operating costs for the Brazilian ports. Particularly in this last aspect, in the average cost of containers movement at various ports of the world where the port of Santos has the leadership with USD 600. Itself stands out by being above the average of other ports of the country with 300 USD, the 250 USD of the US  to the 120 USD of Rotterdam port.

    Globally, the burden of transport on the final cost of a product is about 10% to 15% depending on the goods and the time of year (GEIPOT, 2000). In the case of soybeans, according to the Brazilian Association of Agribusiness (2000), the share of transport costs in the FOB value of the American Soybean reaches almost 15%, while for the Brazilian soybean reaches 30 %.

     

    This table explains it better.

    Composition of soybean costs (per ton.) - Placed in the Port of Rotterdam

    ITEM

    BRAZIL

    USA

    Cost of Production

    197 USD

    222 USD

    Regional freight and storage

    15 USD

    10 USD

    Freight to ports

    40 USD

    10 USD

    Port charge

    8 USD

    3 USD

    Ocean Freight to Rotterdam

    20 USD

    15 USD

    ICMS (Tax)

    26 USD

    -- USD

    TOTAL

    306 USD

    260 USD

    Source: Brazilian Agribusiness Association (2000).

    As we see clearly regardless of the cost of production being lower, logistics is central to the competitiveness of this world.

    Thus, at Transitex we strive to make each day the world closer, more efficient and more competitive, so that you fell we are working side by side.

     

    See you soon

     

    Enrique Garcia