April 2 (Bloomberg) -- The Brazilian billionaire Gradin family is setting up a logistics unit to provide express train services for clients in a bet it can beat increasing cargo costs at the country’s most transited truck road.
MTO Logistica Multimodal SA, a unit of the Gradin family’s Gran Investimentos SA, is investing 330 million reais ($163 million) in an integrated logistics platform to move cargo between Sao Paulo and Rio de Janeiro, Brazil’s biggest cities, Miguel Gradin said. The unit, scheduled to start operations in early 2015, is building two terminals and warehouses on the outskirts of the cities and will provide door-to-door transport services combining express trains with trucks.
“MTO targets becoming the leading company in Brazil for multi-modal transportation,” Gradin, a partner at Gran Investimentos, said in e-mailed comments yesterday. “Investing in logistics is aligned with Brazil’s current needs, it is an area where Brazil has shortages.”
Brazil is facing higher costs in truck transportation, which accounts for about 58 percent of the country’s total cargo, because of tougher environmental and driving regulations and increasing fuel prices. The government is encouraging private investors to operate and build 7,500 kilometers (4,660 miles) of highways, 10,000 kilometers of railways and 159 ports as part of $235 billion in infrastructure investments to ease logistics bottlenecks.
Rio-based MTO, which has an agreement with train operator MRS Logistica SA to use its railway, will transport products including beverages, beauty products and electronics, Chief Executive Officer Andre Chiarini said in a separate interview last week.
“We are getting out with a much cheaper option, with lower robberies, lower accidents and with trains arriving straight to our terminal,” Chiarini, a former executive at Vale SA and TNT Express NV, said on March 27. “We are focusing on high value added cargo.”
The cost of transporting cargo by rail between Sao Paulo and Rio would be at least 10 percent lower because of reduced insurance premiums, Chiarini said. The company expects to transport 1 million metric tons of cargo a year between the two cities by train, or about 5 percent of the current freight volumes in the route, as early as 2018, he said.
The Gradin family, headed by Miguel’s father Victor, is worth at least $1 billion, according to the Bloomberg Billionaires Index, based on its 20.6 percent stake in Odebrecht SA, Brazil’s biggest construction firm, which had gross revenues of 71 billion reais in 2011.
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