Imagine two freighters full of grain. Now imagine both stranded in the interior of Minas Gerais. In the city of Araguari, in the west of the state of Minas Gerais, one of the largest transshipment terminals in Brazil in terms of grain storage capacity has dimensions comparable to two vessels. And it can get even bigger.
The structure is part of the rail terminal of VLI, logistics company controlled by Vale. Last month, the mining company sold 35.9% of the company to the Japanese group Mitsui and to the Investment Fund of the Government Severence Indemnity Fund (FI-FGTS). Another part of VLI is also being negotiated with Canada’s Brookfield Asset Management.
The Araguari terminal is considered by VLI its best equipment. A reference to other four grain terminals in project. In operation since February 2012, the terminal has a storage capacity of 126,000 tons (120,000 in the mega warehouse and 6,000 in an attached silo). The employees brag about naval comparisons. Last year, 3.4 million tons of soybeans and corn were handled here. And turnover in 2013 is higher. Only in the first six months of the year, it was 2.3 million.
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Twenty-four hours a day, seven days a week, trucks carry soybeans and corn brought, in order of volume, from the states of Mato Grosso, Goiás and the western region of the state of Minas Gerais. The freight is stored and then loaded onto trains that follow to the port of Tubarão in the state of Espírito Santo, and from there to buyers, especially in Asia. VLI customers are foreign and Brazilian trading companies.
These trading companies operating in the Triângulo Mineiro, where Araguari is located, have an already well established rail structure. The city has a secular history as an intersection of railroad tracks. What has changed for the grain trade in the region with the Araguari terminal was the time the loads takes to reach the holds of ships anchored off the coast of Espírito Santo. To fill up a 90-car train, four or five days were needed. Today, VLI takes six to eight hours of operation.
On the afternoon of last Wednesday, when Valor visited the terminal, one of the computers in the small control room showed that it just took 3 minutes and 38 seconds to fill up two cars at once with 73.2 tons of corn.
A change in the railroad design allowed this time saving. VLI built a reverse loop – a round branch attached to the main track that greatly facilitates the maneuver of trains – and, moreover, began to concentrate the loading of the cars in its new terminal. Before, it had to dismember the consists. It sent 20 cars to the Bunge’s warehouse, another 20 to ADM’s and other 20 to Selecta’s, for example. The three have smaller warehouses in the vicinity of the new terminal. It was an operation that took too long and, currently, a minor part of the freight still follows that model.
The new VLI’s structure required investments of $68.71 million.
This terminal is one of the largest in Latin America and is a proxy for other projects that we will do. Our aim is to grow a lot in the agribusiness and, for this, we have to rely on efficient terminals like this, in addition to integrate the terminal, the railroad and the port and have good levels of service for trucks to be able to unload quickly. This is our first project, and we have others that we are going to do in the coming years, the commercial director of VLI Fabiano Lorenzi told Valor.
He said the company already is considering increasing the structure of Araguari. We prepare this terminal so that we can almost double its static capacity, Lorenzi said. I am having conversations with our customers to define whether or not we will increase the structure. What I can say is that we have some things [about expansion] being discussed.
Brazil has a great shortage of grain storage. According to data from Conab, the storage capacity registered in the country is 145 million tons, and forecasts for the harvest of grain of this 2012/13 season point to at least 190 million.
Owning a fleet of 600 locomotives and 13,000 cars, VLI included the Ferrovia Centro-Atlântica and the North-South Railroad. It has several intermodal terminals besides Araguari. Among them are Palmeirante (state of Tocantins) and Pirapora (state of Minas Gerais) – both for grains. Other three in the state of Minas Gerais are for transshipment of steel products. The company also operates port terminals. In 2012, VLI had net revenues of $1.19 billion, and agribusiness accounts for about 40% of its business.
Shipper of VLI in Araguari, France’s multinational company Louis Dreyfus Commodities informs that it transports by train a quarter of the grain it sells in the country. More than 10% of its grain pass only through Araguari. According to Luciano Lafaiete, director of supply chain of LDC, the terminal contributed to the consolidation of supplier portfolio and logistics of the company in eastern Goiás. He does not talk about freight rates, but says that, since the volumes of LDC are big, the rail modal offers a significant gain in organization compared to the road modal.
In Brazil, trains are the preferred option for transporting ore and coal. Last year, they accounted for 77% of railroad freight. Agribusiness was second (14.4%).
VLI sees a trend of migration of freight from road to rail on some routes – particularly in new agricultural frontiers in the North and Midwest. The road transport does not sustain the increase in agricultural production of the country. We talk about super harvest, the expectation that Brazil surpasses the U.S. in soybean production. See the chaos on the roads to access the port terminals. With the railroad we do not have it, says Lorenzi.
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