Circling the Ships.

Position:Brief Article - Statistical Data Included

Brazil's CVRD carries cargo on coastal routes to fend off foreign competitors.

WITH COMPETITION GETTING VERY FIERCE ON INTERNATIONal shipping routes, what's a Brazilian shipping line to do? Companhia Vale do Rio Doce, the private mining giant, has found an open lane for its ships: coastal shipping, known in the trade as cabotage. Business is so good behind the high walls of protection that the maritime division, called Docenave, is even reaching into Argentina.

Transportation now accounts for about 20% of the company's US$13.4 billion in annual sales. Customers say it's the company's finely tuned transportation network--honed for moving its own cargo--that makes it so efficient and attractive. "They have a fine rail service. They have the ports. Now they're transferring it to the sea," says Renato Pavan, chief executive of Translogistica, which uses the service to move rice, grain and other crops.

It was a natural progression for the company. As it acquired the rails, ships and ports to better move its own goods, it developed a somewhat seamless transportation scheme that would prove quite profitable if tapped for other shippers.

In May, Docenave signed a deal to use Frota Oceanica ships as part of a partnership with another transportation company, Transroll Navegacao, to serve the major Brazilian ports up and down the coast. Some of cargo includes fruit, chicken and other refrigerated goods meant for domestic consumers, while other goods are being moved from the outlying ports to Santos for transshipment. The company expects to make about $30 million and move about 40,000 boxes a year in the trade serving most of the major ports along the coast: Rio Grande, Sao Francisco do Sul, Santos, Recife, Fortaleza, Cabedelo, Maceio and Salvador.

"We are concentrating on the Brazilian coastal market now," says Liz Molter, a Rio Doce spokesperson.

And for good reason--it's a protected trade with a lot of cargo opportunity. No foreign ships are allowed to serve the trade--not only along the Brazilian coast, but in the booming trade with Argentina as well. And shippers are looking for alternatives to move their goods. Depending on the source, somewhere between 60% and 80% of all the cargo in the national and regional trade moves by truck.

Trucking companies know they have a monopoly and charge accordingly. It can cost about the same to move a box from Santos to New York by ship as it does to move that same box from...

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