Brazil is heading into a significant test of whether private-sector companies can do better than the government has done at developing roads, rails and ports. The WSJ’s Paulo Trevisani reports that Brazil is effectively giving up on a system that’s left the country’s infrastructure depleted and looking to private companies for help by offering multi-year concessions to operate, and improve, transportation systems. It’s a dramatic change aimed at overcoming what officials say is a major roadblock to Brazil’s economic growth. Brazil’s action also carries high stakes for advocates of public-private partnerships in infrastructure development, which haven’t delivered the kind of returns in the U.S. that backers had hoped.
The road, rail and port problems in Brazil are a vivid illustration of how poor infrastructure can hobble broader industrial business. The country’s sprawling commodities business—iron ore, sugar, coffee and cotton are among the goods that underpin Brazil’s export-focused economy—rely on roads that are in perpetual disrepair and undersized ports that bely the country’s rank as the world’s seventh-largest economy. With operators such as oil producer Petrobas and mining giant Vale, Brazil has a big industrial foundation but will need foreign investment for its infrastructure. The lure will be $61 billion worth of projects in the pipeline, but investors will must be convinced Latin America’s largest economy is committed to privatization over the long haul to bring money to the table.
The global glut in raw commodities is hitting cotton in a big way. The market is bracing for a big drop in prices this year as crop production in the U.S. and India soars while demand from China slides. The WSJ’s Julie Wernau reports it’s the latest sign thatcommodity markets are still reckoning with the bust—spurred by surging supplies—that followed the 2000s boom in demand. China in particular is taking in less cotton as the country tries to whittle down strategic stockpiles. For logistics operators, that means lighter inbound cotton shipments and likely less production, and shipping, of finished goods. The glut eventually will dissipate over time, of course, but changes in the apparel market, where consumers are turning to so-called high-performance synthetics, may prove a more long-lasting concern.
There’s little concern in transportation about the overabundance of oil, least of all at the Port of Corpus Christi. While parts of the petroleum world are reeling from low oil prices, the Texas port says oil volumes there haven’t slowed down. WSJ Logistics Report’s Robbie Whelan reports the regional oil hub is planning for a long-term energy boom.Some $30 billion in construction projects by energy-intensive businesses are underway nearby, business that will feed shipping toward the eight public docks and 10 million barrels of bank storage the port built last year. Oil may be abundant, it seems, but the shipping industry will always make room for more.