Business Model

Strategy and Growth

With railroad concessions that connect Brazil's traditional agricultural and industrial production hubs to its main ports, we have a growth strategy that is based on its competitive advantages and investment plans, as well as the logistic challenges facing Brazil. The core objective of the business is audacious: substantially increase the railroad transportation capacity of the business in the next ten years.

This plan is in consonance with the need to free up the country's logistic bottlenecks. Railroads, which correspond to no more than 20% of Brazil's transportation system, according to data from the National Transport Confederation (CNT), are capable of increasing the competitiveness of domestic industry and boosting the company's business. Increasing the use of railroads will also improve the alternatives for shipping the produce from agribusiness, which accounts for 30% of Brazil's Gross Domestic Product (GDP) and 37% of the jobs in Brazil, according to the National Supply Company (Conab).

Rumo strive to ensure the perpetuity of its business, combine its intermodal logistics projects with railroad transportation, and establish long-term relationships with its clients. The basic principles that guide our vision of the future for the business are:

Focus Growth Where We Have a Distinct Competitive Advantage

Our objective is to serve the railroad and intermodal corridors that increase its market share among clients who historically use trucks as their main mode of transport in Brazil. Thus, it is possible to demonstrate the advantages of railroad transport over road transport in segments such as industrial products. 

Maintain Strict Cost Controls as Our Volume and Revenues Grow

Our commitment to business perpetuity is based on disciplined execution, with the focus on low costs and on volume and revenue growth. Our priorities include control over fuel consumption and supplier management.

To honor our commitments to clients

Trust of clients is one of the most important factors for driving business results and for establishing long-term business relations. Among the current priorities are entering into partnerships to expand our logistics infrastructure.

Maximize Asset Utilization and Return on Invested Capital

Our strategy is to minimize equipment downtime by maximizing the utilization of the equipment we own through the use of various asset utilization programs that monitor equipment location and transit timing within our rail network, as well as investing to eliminate any bottlenecks, and tailoring our acquisitions of new equipment to demand through ongoing analysis of fleet levels versus projected backlog.

Investment Plan

To achieve this goals we plan to invest between R$7 billion and R$9 billion over the next five to ten years with a long-term focus and a clear proposition to reduce operating costs and increase the capacity, efficiency and service level of the organization. 

In response to the reduction in the average speed of railroads in recent years, which led to infraction notices from the National Ground Transportation Agency (ANTT) and customer complaints, a significant portion of the funds (between R$4 billion and R$5 billion) will be invested in recovering the network and in expanding and building new yards.  The goal is to improve access to strategic ports, such as Paranaguá (Paraná), Santos (São Paulo), São Francisco do Sul (Santa Catarina) and Rio Grande (Rio Grande do Sul). There are also plans for duplication, such as the Itirapina-Campinas stretch.

Another significant portion of investments (R$3 billion to R$4 billion) will go to the replacement and renovation of locomotives and freight cars. One of the focus areas is the expansion of the fleet of 100-ton freight cars, thereby increasing shipment capacity.

Business Units

We are organized in business units which represents the networks and the main market sectors we operate. Our  business units are North Operation composed by the North Network, Paulista Network and Port Operation in Santos, South Operation composed by West Network and South Network and Containers Operation comprised by our subsidiary Brado Logistica and other results of container operations.

North Operation

Through our North Operation business unit, we primarily transport agricultural commodities such as grains (soybean, soybean meal and corn), sugar, rice, wheat, as well as fertilizers. The strong presence of rail transport in this sector is due to the fact that our railway network permeates a large part of the agricultural production areas of Brazil (Mato Grosso and São Paulo states), as well as to the fact that the clients in this segment have the right characteristics for rail transport, such as high volume and regularity. We also transport industrial products such as fuels, wood and pulp and paper. In addition, through our terminals at the Port of Santos, we load agricultural commodities, mainly sugar and grains.

The North Operations business unit represented almost 73% of our net revenues in 2015. The volume transported in that period was approximately 28.7 million RTK, representing approximately 64%  of the total volume transported by us in that year. All of this transported freight volume was related to exports. The main customers in this business unit are grain traders and crushers including Bunge, Amaggi, Cargill, ADM and Louis Dreyfus, among others. Through our operations in the Port of Santos we elevated approximately 12 million tons of agricultural commodities in 2015.

South Operation

The South Operation business unit has a network that expands through the states of Mato Grosso do Sul, Paraná, Santa Catarina and Rio Grande do Sul. We primarily transport agricultural commodities such as grains (soybean, soybean meal and corn), sugar, rice, wheat, as well as fertilizers. We also transport industrial products such as fuels, wood and pulp and paper.

The South Operations business unit net revenues represented almost 23% of our total revenues in 2015. The volume transported in that year was approximately 14.1 million RTK representing approximately 31% of the total volume transported by us in that year and dedicated to exports. The main customers in this business unit are Santa Terezinha, Bunge and Petrobras, among others.

Containers Operation

The Containers Operation business unit net revenue represented almost 7% of our total revenues in 2015. Through this business unit, we transport agricultural products, as cotton and pulp, and industrial products like refrigerated cargo and ore. 

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