Cabotage service as a solution for freight transport: what can we expect?

  • 30/04/2019
  • 9 minutes

Brazil is a massive country and its size attracts opportunities that must be properly seized. With continental dimensions and a huge coastline, it figures as the 16th biggest coast in the world. In it, at least 37 public ports are installed. The coastline extends for over 8,5 thousand kilometers, and it can get up to 10 thousand km if we also count the Amazon River.

You can also listen to this article in the audio version.

With those numbers in hand, it’s possible to understand the importance of cabotage service for freight transport. The service fits alongside the greatness of the national territory and can facilitate and remove hindrances of the segment.

The word “cabotage” derives from the name of Venezuelan navigator Sebastião Caboto, who, in the 16th century, explored North America by traveling from the coast of Florida until the mouth of the Saint Lawrence River, in a region that’s Canada today.

Being a practice developed in the American continent, it’s to be expected that Brazil be highly advanced in this service. But, although interests have been growing stronger, there are still few that recognize the advantages of cabotage. That’s possibly due to it still being fairly unknown.

According to Angelo Baroncini, CEO of Cia de Navegação Norsul, the adoption of cabotage in the country is still timid. “Nowadays, cabotage maritime transport represents something between 10 and 12% of the transportation modal”, he explains. To him, a country with proportions such as those of Brazil should have better distribution in the transportation modal, between maritime, railroad, and road.

Nevertheless, in the early 2000s, the Ministry of Agriculture registered an increase of over 350% in cabotage transport in the country. A growth that tends to continue!

The growth of cabotage service in Brazil

For Baroncini, everything leads us to consider a growth in freight transport done through cabotage. He sees two turning points.

The first one was the truckers strike in May 2018, when Brazilians realized that they needed more alternatives in freight transport. The second was the return of production growth in the industries. From there, according to the CEO, “a higher volume of cargo, especially of ‘containerized’ cargo [that can be stored in containers], is expected to migrate from the road modal to the maritime cabotage modal”.

The advantages of opting for the cabotage service would be perceived as much by the users as by the country and the government. This creates an ideal context for favoring the practice, since all parties win out in this business.

The advantages of cabotage service

According to Baroncini, the advantages for the charterers would be quickly perceived in the form of lower insurance costs, lower risk of accidents, and lower chances of cargo being robbed or stolen. Therefore, the merchandise has a greater guarantee.

At the same time, the country would be able to meet the Paris Agreement and its freight transport would see a reduction of almost 90% in CO² gases emission when compared to road transport.

Another advantage is that the government wouldn’t have to make almost any investment in route maintenance. “The sea doesn’t need to be built, like railways and highways, and much less go through maintenances”, points out the specialist.

By being able to transport a great volume of cargo at once, the cabotage service unlocks the road network. Baroncini also adds that, for distances greater than 400-500 km, the cost of shipment by tonne/km is more competitive in cabotage.

Companies that are already benefiting from cabotage services in Brazil

With so many advantages, some companies have already advanced in opting for cabotage transport in Brazil. Some observe clear benefits, such as industries installed in continental coast regions, due to their proximity to the sea. Also favored by the practice are companies that need to move great quantities of raw material or semi-finished products.

Baroncini also recommends cabotage service as ideal for industries that carry out projects in wind farms, towers, generators, and wind turbines up to 75 meters long, as well as liquid cargo, chemicals, and fuel.

The future of maritime freight transport

Even though it’s growing, cabotage in the country should go through regulatory adjustments. “We still don’t have regulations that work 100%”, explains Baroncini, citing Law 9.432/1997, which determines the arrangement of waterway transportation and provides other measures.

For him, more legal security is needed so as to not inhibit investors, a worry that is not exclusive to the sector, as we’ve shown in our article about the oil and gas segment. Baroncini also says that the excess of bureaucracy remains a point to be perfected, and it has been going through redefinitions. The subject has been treated by government agencies for a review.

Knowing the characteristics of each port and what are the challenges and advantages of each one can facilitate the charterer’s life when it’s time to set out the details of cabotage. We’ve talked a little more about that on our post with all the information you need to know about the Port of Paranaguá.

To those looking for a cabotage service solution for maritime freight transport, you can rest more assured with Wilson Sons, which has teams with specialists in the main commodities transported in Brazil. Besides, the company has a sector dedicated to providing market and port intelligence to its clients.

Its objectives are crystal clear: cost optimization, ships carrying their full cargo capacity, and the best prices on the market. Based on that, Wilson Sons offers the services of a shipping agency for charterers and ship operators that aim to increase productivity and sales. It enables commodity trading operations, albeit with tight margins, ensuring advantage and competitive prices.

All of that makes the daily routines of your client and of your relationship with logistics run more smoothly.

Want to know the possibilities of cabotage in your business? Get in touch with the company.