Brazil needs to transform agribusiness logistics from a bottleneck into a competitive advantage

Brazilian agribusiness is experiencing an era of historic production achievements. We have broken successive grain production records and consolidated the country as a global powerhouse in food production. However, this success poses a major challenge: to distribute this production efficiently, competitively and sustainably.

Today, the biggest limiting factor for the sector’s growth is not the field, but logistics. If we apply Liebig’s old Law – which teaches us that the production of an agricultural crop is limited by its scarcest nutrient – ​​the logistics infrastructure is, without a doubt, the “scarcest nutrient” for Brazilian agribusiness. We have made important progress, but we are still stuck with an unbalanced transportation matrix, heavily dependent on road transport.

To give you an idea, 69% of Brazilian soybeans were transported by trucks in 2023, while railways accounted for 22% and waterways for 9%. It's a contradiction: we are using the least efficient mode for long distances, with a direct impact on the cost, predictability and environmental footprint of logistics.

Brazil needs to reverse this trend. The good news is that there are examples that show that this is possible. The Arco Norte corridor is an emblematic case. In 2010, it represented 12% of grain exports; in 2024, this number rose to 35%. This was only possible due to a combination of private investment and regulatory changes, such as the ports framework (Law No. 12.815/2013). When the legal framework encourages and provides legal certainty, investment appears. Another recent case is the railroad expansion project in Mato Grosso to the large grain production belt, which could have significant impacts on logistics in Mato Grosso.

Another significant bottleneck is storage. Brazil currently has the capacity to store around 60% to 70% of its grain production, which is insufficient. This creates the phenomenon of “stock on wheels”, with trucks stuck in queues, increasing logistics costs and system inefficiency. Studies by Esalq-log show that greater storage capacity, especially on farms, could significantly reduce the demand for trucks during peak harvest times. However, to achieve this, access to credit must be facilitated, investment costs must be reduced and existing financing lines must be widely publicized.

Another structural issue is the low productivity of the logistics system as a whole. We still have trucks waiting 30 hours to unload. This is not just a question of physical infrastructure, but of management. Electronic scheduling, process digitalization and integrated information systems can greatly increase operational efficiency.

We also cannot forget the recent climate impacts – droughts, floods, infrastructure failures – which reveal the vulnerability of our logistics. We need resilient infrastructures and contingency plans to deal with increasingly frequent climate extremes.

When we analyze Brazil's competitiveness in international trade, another structural factor emerges: domestic logistics costs. Although the distance between Mato Grosso and the ports is, on average, 1.500 to 2.000 kilometers, this stage represents around 70% of the total cost of exporting soybeans to China. In 2024, domestic transportation of Brazilian soybeans to the port cost, on average, US$12 per ton less than in the previous year — much more due to the crop failure and the currency devaluation than to structural gains. For example, the logistics cost of transporting soybeans from Mato Grosso to Shanghai (China) via Santos was US$ 126 per ton in 2023 and US$ 109 per ton in 2024. Brazil has logistics corridors that are quite competitive for the supply of soybeans globally, such as Rio Grande do Sul and Paraná, which presented total logistics costs to China of US$ 63 and US$ 61 per ton, respectively, positioning them as one of the most competitive corridors in the world.

We are at a decisive moment. Brazil needs to invest more – today we allocate only 0,5% of GDP to transportation infrastructure – and it needs to invest better, with planning, quality data, modern regulatory frameworks and multisectoral governance. Railways and waterways should be a priority, but without neglecting the roads that connect farms to logistics corridors.

Furthermore, we need to look at the human aspect. About 50% of our truck fleet is operated by self-employed drivers. We need policies that guarantee decent working conditions and encourage new generations to enter this profession, as is already being discussed in Europe and the United States.

Finally, the energy transition is a new challenge that is knocking on the door. Brazil will have to renew its fleet and invest in clean and efficient technologies. This may even open up new opportunities for investment and productivity.

Brazil has the potential to be a global leader not only in production but also in agribusiness logistics. We have the scale, the demand and the technical knowledge. What we need to do is transform bottlenecks into differentiators. And this can only be done through integration between the private sector, government and universities, long-term vision, well-founded decisions and investments.

About the author:
Thiago Guilherme Péra
Professor at the Department of Economics, Administration and Sociology at Esalq/USP and Coordinator of the ESALQ-LOG Group

*The text above is the responsibility of the author and does not necessarily reflect the opinion of Insper Agro Global.

Are you already following our official channels? Click and follow our whatsapp channel, follow us on LinkedIn and sign up to receive our biweekly Newsletter. Stay up to date with research and knowledge on global agribusiness issues.