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Amazon Airports Seen Cutting Cargo-Haul Times to Hours From Days

Feb. 4 (Bloomberg) -- Brazil’s $3 billion plan to build remote airports to handle freight seeks to end dependence on cargo shipments along the Amazon River and potholed roads that contribute to transport costs twice the U.S. average.

Auctions will start as soon as April for the rights to operate 270 regional airports to boost air traffic for passengers and cargo, Aviation Minister Wellington Moreira Franco said. Brazil also may offer subsidies to construct airports and for airlines to add regional routes, providing a “big stimulus” for planemaker Embraer SA, he said.

The plan is part of the government’s bid to find $240 billion in private infrastructure investment, and follows last year’s sales to run major passenger hubs such as Sao Paulo. Exporters pay $2,215 for shipping containers in Brazil, more than double the rates in Europe and the U.S., as the country struggles with inadequate highways, railroads and ports, according to the World Bank.

“Many areas in Brazil have huge potential for growth in cargo and they need planes and flights -- as it is, transport takes forever,” Moreira Franco said last week in an interview in Brasilia. “In the Amazon, you measure travel time not in hours, but in days.”

At 8.5 million square kilometers (3.3 million square miles), Brazil accounts for almost half of South America’s land mass and is the world’s fifth-biggest country by area. What’s been lacking is aviation infrastructure reaching to the nation’s farthest corners.

Moreira Franco has asked Congress for subsidies for airfares, for the renovation of old airports and new construction, and for the creation of airlines and support of regional units at existing carriers, Moreira Franco said. He said the subsidies have yet to be defined and are being discussed by the Treasury Department.

“Some products that are of higher value or are perishable justify air transport,” Moreira Franco said. The government estimated that the regional plan would generate 7.3 billion reais in private investment, according to EPL, the government’s planning and logistics company.

One beneficiary of having a nearby cargo airport would be agricultural-equipment maker Agco Corp., which has a factory in Santa Rosa in Rio Grande do Sul state, Moreira Franco said. The city is almost 1,200 kilometers from Sao Paulo. Duluth, Georgia-based Agco declined to comment.

Banco do Brasil SA, Latin America’s largest bank by assets, is the financing agent and operating arm for the regional-airports project, Moreira Franco said.

To contact the reporters on this story: Christiana Sciaudone in Sao Paulo at csciaudone@bloomberg.net; Anna Edgerton in Brasilia at aedgerton@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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