Cabotage: Everything You Need to Know About This Type of Navigation

Cabotage is an alternative for cargo transport by ships, where navigation takes place between ports within the same country. The term originates from the name of the 16th-century Venezuelan navigator Sebastião Caboto and has been a part of port logistics professionals’ daily lives ever since.

In this article, we will cover everything you need to know about cabotage: how it works in our country, the key documentation required for this operation, and its advantages. Happy reading!

The History of Cabotage in Brazil

Cabotage is not a recent practice; throughout the country’s history, it has played a crucial role in cargo transport. Its peak occurred in the 1930s when bulk cargo transportation was in high demand, as road and rail networks were still underdeveloped.

As road transportation developed, cabotage became less relevant, only to experience a resurgence in the 1990s, driven by the rising costs of road tolls and growing concerns about the carbon footprint of logistical operations.

By 2020, Brazil surpassed the transport of 270 million tons by sea, an increase of 12.5% compared to the previous year. Compared to other transportation methods, cabotage is responsible for 23.6% of the cargo moved in the country.

One of the advantages of this model is Brazil’s extensive coastline and the large number of ports. There are 34 ports, divided into 8 in the South region, 5 in the North, 11 in the Northeast, and 10 in the Southeast. Additionally, the government recently invested in measures to facilitate it, especially concerning costs, with the creation of the BR do Mar program. Let’s dive deeper into this in the next section.

How Does a Cabotage Operation Work?

One of the main characteristics of cabotage is that navigation takes place predominantly along the coast. The route connects port operations, as, unlike long-haul maritime transport (i.e., between the coasts of different countries), the docking at land does not take too long.

The process begins on land, where the cargo is transported by a vehicle, usually a truck, to the nearest port. Upon arrival, the goods are dispatched to the ship that will carry them to the recipient port. There, the goods are sent to the company or customer using a vehicle.

What Is Required?

For a cabotage operation, several procedures must be followed to ensure the safe dispatch of the cargo, in accordance with the regulations of oversight bodies. Let’s look at some of the key points needed for cabotage operations.

Documentation

Any cargo collection, whether industrial, commercial, or service-based, must issue specific fiscal documents, even before being placed on the ship, while still on the truck. The three main documents are: CTe (Transport Knowledge), MDFe (Cargo Manifest), and NFSe (Service Invoice). Let’s take a closer look at each:

Electronic Invoice (NF-e)

This is the main document, as it is mandatory for the commercialization of any product or service and plays an essential role in tax collection. It contains all cargo identification details and serves as a record for service operations.

Auxiliary Electronic Invoice Document (DANFE)

The DANFE is a document created in conjunction with the Electronic Invoice, being its printed version. It allows anyone to access information online and serves as proof that the recipient has received the product, as it includes their signature.

Electronic Manifest of Fiscal Documents (MDF-e)

The MDF-e is generated to regulate the records of the products being transported. In addition to being mandatory, it contains all the information found on the invoice and Transport Knowledge. It also serves to identify the cargo, the vehicle, and the transportation details.

Electronic Transport Knowledge (CT-e)

Like the Electronic Invoice and MDF-e, the CT-e is a digitally issued document and serves the same purpose as an invoice, but specifically for the transportation of goods. It is valid for cabotage, as well as air, road, and rail transport.

Its issuance is crucial, as it is required during inspections, and it is also necessary for regulatory bodies to consult the records in SEFAZ (the Treasury Department of the respective state).

Auxiliary Electronic Transport Knowledge Document (DACTE)

This is the printed version of the CT-e, also known as DACTE. It is simpler than its digital version but contains all the necessary information to track the cargo, along with details allowing for the CT-e to be consulted on the SEFAZ website.

Minimum Volume

As with any cargo transport, there are limits on weight that must be respected to ensure safe and efficient ship operations. The main types of cargo storage are:

• Containers: Containers are stacked using the containerization technique. Ships that carry this type of cargo are known as container ships.
• Bulk: In this type of container, the cargo can be liquid, solid, or gaseous. Usually, there is no specific packaging, identification, or unit count.
• Neo-bulk: These are homogeneous goods transported in batches for a single shipment.
• Loose cargo: Products or materials are stored in bags, boxes, cartons, crates, drums, etc.

Freight Options

To define the freight options, it is important to know the cargo details, so the following information is requested:

• Quantity of products
• Type of packaging and dimensions for cubic measurement
• Description of the merchandise, including any restrictions and product characteristics
• Weight
• Origin
• Destination

Other important details:

• The freight can be door-to-door, port-to-port, or port-to-door.
• Insurance
• ICMS (Tax on Circulation of Goods and Services)
• Cost of generating the CT-e

Types of Operations

Generally, cabotage operations occur between the shipping company owning the vessel and the client. There are two situations here:

• In the first, the shipper is responsible for transporting the cargo to the port, and the client either collects it and delivers it to customers or stores it in their warehouse.
• The second is called “Port-to-Port” service, where the transport company handles the entire logistical process, including transporting the goods between ports and delivering them to the end customer. The company also takes care of planning, including negotiating the freight, choosing vehicles for land transport, routes, and other details.

Advantages of Cabotage

Cabotage offers another way to transport large quantities of goods. It is evident that, since it occurs at sea, it has distinct characteristics compared to air and road transport. These characteristics bring notable advantages to companies using this method. Here are the key benefits of cabotage:

Energy Efficiency

Some types of transport require a high energy expenditure. In road transport, for example, fuel consumption can be problematic due to the distance to the destination. Additionally, carbon emissions from vehicles intensify the release of pollutants.

Cabotage vessels, while still using fuel, are much more energy-efficient than other forms of transport. On average, they release 8 grams of CO2 per ton per kilometer, whereas road transport releases around 52 grams. This not only saves energy but also reduces environmental impact.

Greater Cargo Security

Road and rail transport are subject to risks typical of land environments, such as theft, loss, and accidents. Even with all the safety tools like radar systems, these risks are still present.

Though accidents or thefts can happen in cabotage, it is generally safer, especially because the sea is less crowded with transports and is harder to access without a ship.

Lower Operational Costs

The operational cost is another significant advantage of cabotage, especially compared to road transport. Freight costs can be up to 20% lower due to the nature of maritime transport.

Since it operates on the sea, the travel time is shorter (without traffic jams or toll stops), which directly reflects in lower freight costs. Additionally, the increased security reduces costs related to repairs due to road conditions.

Reduction of Road Accidents

Land-based cargo transport is one of the most commonly used methods by companies. This is partly due to the convenience it provides—there are many roads and streets in the country, making it easy to reach various cities and neighborhoods.

However, while accessibility is greater, the risks to safety are also higher, especially for drivers. According to the Ministry of Infrastructure, it is estimated that 32 people die daily in traffic accidents in the country. Therefore, opting for cabotage to transport goods can help protect employees’ lives.

Carries Large Quantities of Cargo

While many trucks are needed to transport large amounts of goods, cabotage allows for just one vessel to handle the job. As most cargo ships are large and capable of carrying many containers and bulk goods, this is a significant advantage, enabling goods to be delivered in a single shipment.

Conclusion

Today, you’ve learned what cabotage is and how it works, involving the use of ships for the delivery of goods along the national coastline.

Compared to other methods, such as air and road transport, it can be an excellent opportunity for large deliveries, with reduced freight costs and the benefit of being part of a transportation method with increasing investment in the coming years. It is a promising alternative when thinking about the future of logistics.