BRAZIL: Following its merger with América Latina Logística, Rumo Logística has briefed analysts on investment plans for the ALL freight network up to 2019, when it is planning to spend a total of R$7∙4bn on new projects.
Under the first phase running until the end of 2016 when total expenditure of R$2∙8bn is planned, the focus will be on improving efficiency and reducing operating costs. Locomotives and wagons are to be replaced, with spending also targeted at infrastructure with the aim of cutting transit times. Rumo is expecting annual EBITDA to increase by R$500m, reaching a level of between R$1∙6bn and R$2bn by 2016.
An additional R$4∙6bn would be spent in 2017-19, subject to federal transport regulator ANTT renewing the three ALL concessions expiring between 2026 and 2029. Rumo’s long-term projections see ALL grain traffic increasing from 22 million tonnes in 2014 to 39 million tonnes in 2025, and sugar rising from 6∙4 million tonnes to 20 million tonnes over the same period.
‘We see major opportunity for growth in the sugar market, which is only going to happen if the capacity of the railway is increased’, said ALL CEO Júlio Fontana. ‘We are working to increase capacity, remove constraints and bottlenecks’, he added, particularly those impeding access to the port of Santos.
