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International Trade

Olympic Challenge – Brazil

With the games just around the corner, the official website Rio 2016 says, “Rio is ready to welcome the world”. But is it really? Will the Olympics spark new interest from international trading partners and will it have a positive effect on the already troubled infrastructure? What will Rio 2016 mean for the future of cargo movement in Brazil? In the hope of attracting commerce in the wake of the games, Brazil has spent billions on the renovation of its roadways and rail systems. Much of this expansion was confined to the movement of people to and from Olympic venues. But as the British newspaper The Guardian reported as of July 7th, almost 2 million event tickets remained unsold. If that number doesn’t change, how will it impact profits needed to pay for existing and future road and rail projects? Projects designed to move cargo to and from the interior? Rail expansion undertaken in 2012 anticipated the construction of ‪6,835 miles of 1,600 mm gauge rail through 2025. Last year the project was scaled back to 3,100 miles in favor less government ownership and a broader partnership with private industry to build and operate new lines. Any single operator can control up to 30% of the total capacity. While the privatization of national railways is not a new idea, the central government has successfully stepped away from a direct commitment to goods movement by rail. Another example of initial ambition turned to apathy can be seen in the massive undertaking to build Brazil’s Transamazônica Highway. Begun in the early 1970’s this ambitious project was designed to span 2,000 miles linking Rio de Janeiro to Brasilia and the Trans Oceanic Highway. Indeed coastal sections of the roadway feature modern six lane expanses with massive bridges cutting through the lush rolling countryside. Further inland, roadbed turns to rutted track often barely accessible during the rainy season. Brazil’s hope for the economic expansion, which Olympic Fever might ignite, may be lost in the woods unless more money is applied to goods movement. Olympic fever can only carry the nation so far however. Welcome to Hell. A country continually plagued by strikes, it appears national spirit hasn’t unify the people or moved them toward reconciliation and redevelopment. Just this month the Torch NPR’s Olympic newsletter reported striking firefighters and Police Officers showed up at Rio’s International Airport with signs reading “Welcome to Hell”. Protests over wages and insufficient fuel for first response vehicles are aimed at arriving visitors; but they could have residual effects on cargo movement if handlers take this lead begun by other unions. “InSight Crime” noted that cargo theft costs Brazilian companies more than $558 million a year and that the crime rate was up 11% for the first three months of this year. Unfortunately the principle source of this theft was organized crime and police corruption according to the article. Growing unrest within the various unions could have further negative impact on the promotion of international commerce, which the games are attempting to encourage. It remains to be seen how Rio de Janeiro will attract new growth. After the crowds have gone what will Brazil offer the international businessman? What will be Brazil’s future after the XXXI Olympiad? Let the games begin!
Matt Guasco
Matt Guasco

President

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