Making up for lost time public transportation in brazils metropolitan areas

Making up for lost time: public transport in Brazil’s metropolitan areas is an Economist Intelligence Unit research report, sponsored by Accenture do Brasil.. Considering Brazil’s very h

Brazil’s metropolitan areas

A report from the Economist Intelligence Unit

Sponsored by

Getting the right balance of private participation in public transport investment 14

Making up for lost time: public transport in Brazil’s metropolitan areas is an Economist Intelligence Unit

research report, sponsored by Accenture do Brasil The Economist Intelligence Unit conducted the research and analysis and wrote the report The author was Alencar Martins Izidoro and the editor was Katherine Dorr Abreu Mike Kenny was responsible for the design

The Economist Intelligence Unit would like to thank all those who contributed their time and insight to this project

November 2011

Preface

Introduction: congestion and its costs

On June 10th 2009, 293 km of traffi c clogged the streets of São Paulo Equivalent to almost one-half

of the distance between Lisbon and Madrid, this congestion stopped traffi c in over one-third of the city’s monitored streets This is merely the most extreme instance of the city’s familiar routine: in 2010 the average daily afternoon back-up totalled 108 km That such information is available on a daily basis is

in itself telling: São Paulo’s traffi c is chaotic and its economic impact profound

Over the past decade, Brazil’s sustained economic growth and a rapidly emerging middle class have reinforced the country’s position as a leading emerging market However, its infrastructure quality ranks only 46th out of the world’s 82 largest countries in the Economist Intelligence Unit’s Business Environment Rankings

Considering Brazil’s very high degree of urbanisation (84% of the population lives in urban areas, one of the highest rates in the world), its inadequate urban transport infrastructure constitutes a major hurdle to the country’s continued development Its public transport systems create gridlock, a costly physical barrier to economic and leisure activities In contrast, effi cient public transport systems improve cities’ liveability, enabling them to attract the talent and business investment needed to spur the entrepreneurship and innovation that underpin vibrant and sustainable economic growth

Marcos Cintra, economist and professor at FGV (Fundação Getúlio Vargas, a Brazilian higher education institute), calculates that wasted time and fuel consumed in traffi c congestion cost the city of São Paulo nearly US$21bn (R34bn),1 or 10% of the city’s economy, in 2008 Virtually all major Brazilian urban centres suffer severe transport bottlenecks, which are becoming an increasing weight on Brazil’s international competitiveness

Outgrowing the infrastructure

In 2010, Brazil’s gross domestic product (GDP) grew by 7.5% in real terms (its highest rate in 25 years) After slowing to around 3.6% in 2011, the Economist Intelligence Unit forecasts annual average growth of 4.5% in the medium term

Urban public transport infrastructure development has lagged behind the economy’s growth for decades Subway networks serve relatively few; buses are often of poor quality, very crowded and compete for space with private traffi c Perforce, a rapidly expanding middle class has chosen cars and motorcycles

as the preferred transport mode

Wasted time and

fuel consumed in

traffi c congestion

cost the city of

São Paulo nearly

US$21bn (R34bn),

or 10% of the city’s

economy, in 2008

Marcos Cintra, Professor

Fundação Getúlio Vargas

1 All figures in reais were

converted into US dollars at an

exchange rate of US$1=R1.60

The Real has suffered substantial

volatility in the second half of

2011, so the values should be

considered in that light.

BRT—Bus Rapid Transit BRTs use dedicated lanes to segregate buses from the rest of the traffi c They look like a rail system, although buses must still adhere to traffi c lights and pedestrian crossings

High-capacity transport mode—Able to carry large numbers of users per hour

Light rail systems—Rail systems with lower capacity than subways and urban railroads

Motorisation rate—Number of motor vehicles per 100 inhabitants

Ring road—Road that encircles a city and functions as a bypass for through traffi c and a connector for outer suburbs

Trip—Any journey made using any means of transport and for any reason, such as work, education and leisure

Transport infrastructure is inadequate throughout this continental-sized country In rural areas, railways for passenger and freight transport are scarce, while poorly maintained roads hamper movement The problem is especially acute in the largest cities A rapidly growing fl eet of cars has increased the rate of motorisation in major urban centres to levels approaching those in developed countries

In 2010, Brazil ranked fourth worldwide in terms of annual registration of new vehicles, up from ninth ten years ago Whereas Brazil’s population grew by 11% in that decade, its annual vehicle registration increased by 120% The Economist Intelligence Unit expects that vehicle penetration will increase by 41% between 2010 and 2015, further straining the road network Adding to the pressure is that the supply and the quality of every mode of public transport in Brazil’s major cities lags far behind developed-world standards

0 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000

China * United States Japan Brazil ** Germany India

Brazil moves up in new vehicle registration ranks

New vehicle registration in selected countries, 2001-2010

Note: The data comprise sales or registration of nationally manufactured and imported vehicles (*) Domestic sales (**) 2001 data refer to domestic wholesale.

Sources: Anfavea Yearbook 2010

The most important transport infrastructure investments in Brazil are expected to increase from US$34bn (R55bn) between 2006 and 2009 to US$80bn (R129bn) from 2011 to 2014.2 However, by some estimates this falls dramatically short of what will be needed to handle major international events such

as the 2014 FIFA World Cup and the 2016 Summer Olympic Games The CNT (National Confederation of Transport, which represents this sector’s businesses and workers) estimates that the priority projects (rail, road, airport and port) needed to prepare Brazil for these sporting events require US$250bn (R400bn) in investment

Urban rail—derailing growth?

São Paulo’s Metro, Brazil’s only system that meets high quality standards, has a mere 74 km of track to serve a metropolitan region of 20m inhabitants sprawled over 8,000 sq km Rio (population: 11.5m) has less than 50 km By comparison, Madrid has almost 300 km of track to serve a population of 5m inhabitants, and New York’s metro area (population: around 19m) has more than 400 km of subway track The discrepancy is only partly the result of a late start in building subway systems London’s metro system dates from 1863, whereas São Paulo’s fi rst line only opened in 1974 But Mexico City began building its rail system at about the same time as São Paulo and now has nearly three times more subway track

2 February 2010 report from

BNDES (the government-owned

National Development Bank)

Reports prepared by BNDES’s

Area of Economic Research

do not necessarily reflect

the thinking of the bank’s

management.

0 100 200 300 400 500 600 700

Existing system (km) Planned extension 2008-2011 (km)

Populatiom, m

São Paulo’s subway system: enough to serve 20 million?

Source: Office of the UITP (International Association of Public Transport) in Brazil

Santiago Berlin Hong Kong Mexico City Paris Madrid Moscow Beijing New York Shanghai London

13 20

17

0

8

Urban train infrastructure is also under acute strain The CBTU (Brazilian Urban Train Company), a federal company, manages rail passenger transport in fi ve urban centres: Recife, Belo Horizonte, João Pessoa, Natal and Maceió Although the number of users of these systems increased by 37% between 2005 and 2010, the system added a mere 9 km of track, from a total of 206 km in 2005 to 215 km in 2010

The bus system stuck in a jam

An inadequate rail system means that, by default, the main form of mass transit in Brazil’s urban centres

is buses These of course share the congested roads with cars A study by the NTU (Association of Urban Transport Companies) in 2008 found that 85% of municipalities with an urban population of over 100,000 inhabitants had no dedicated bus lanes Besides being slow, traffi c-snared buses have higher operating costs Bus fare adjustments exceeded infl ation between 2005 and 2009 in 77% of cities with more than 500,000 inhabitants, further reducing their appeal to users

Although buses are still the primary mode of transport in urban areas, they lost market share in the last decade as a result of rising car ownership and the limitations of the public transport system Passenger share is even being lost to motorcycles—including motorcycle taxis, or “mototaxis”—that carry a single passenger

Distribution of transport in Brazil’s major cities, by mode

Source: Mobility system - ANTP/BNDES, with data from 438 cities over 60,000 inhabitants

Gearing up for the football World Cup and

Olympic Games

Preparations for the 2014 FIFA World Cup and the 2016

Summer Olympic Games, which will attract hundreds

of thousands of tourists, are strengthening public

pressure for more effi cient mass transit Projects include

BRT (Bus Rapid Transit) lanes in nine of the 12 cities that

will host World Cup matches, including Rio de Janeiro and Belo

Horizonte In four cities, including São Paulo and Brasília, light rail

systems such as monorails and trams will receive government loans

Progress has been slow In 2010 the federal government launched

a fi nancing plan for transport projects related to the World Cup, but

the details were defi ned only more than two years after Brazil was

selected to host the sporting event In April 2011, 30%

of the planned projects had still not been awarded

In the words of Claudio de Senna Frederico, an international consultant: “There won’t be time to

fi nish everything.”

Nevertheless, local initiatives indirectly driven

by the World Cup have a positive outlook São Paulo

is a prime example “We are moving at Chinese speed,” promises Jurandir Fernandes, São Paulo state’s secretary for metropolitan transport Four rail lines are now being built in São Paulo; by 2013, there will be 12 under construction Mr Fernandes predicts that by 2014 the 74-km underground subway network will grow to 80 km There will be 20 km of above-ground monorail, and another 90 km will be under construction

Public transport is rapidly losing ground to private vehicles in Brazil, according to a 2011 study by Ipea (Institute for Applied Economic Research) While about 75% of trips in metropolitan areas in the 1970s and 1980s were by public transport, by the 2000s that share had shrunk to 50% Ipea estimates that public transport will account for between just 18% and 39% of trips by 2025

Problems of mobility will only escalate with increasing personal vehicle use São Paulo’s experience is one example: the average speed of cars on arterial roads during afternoon peak hours is just 16 kph, 24% slower than in 2000 In 2010, ANTP (National Association of Public Transport) examined the relative costs

Why cars can’t be the answer

0 5 10 15 20 25

General traffic speeds fall on São Paulo’s arterial roads*

* Evening peak hours: 5pm-8pm Source: CET-SP (Traffic Engineering Company)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1960 1980 2000-2010 2025

% public transport % private transport

Public transport loses ground in Brazil’s metro areas

Estimated share of public transport trips

* Evening peak hours: 5pm-8pm Source: CET-SP (Traffic Engineering Company)

85 15

75 25

of different forms of transport in Brazilian cities with populations over 500,000 inhabitants Adjusting for the number of passengers, cars occupy 7.8 times the road space of buses, consume 4.5 times more energy (fuel), emit 11.5 times more pollutants and generate 2.7 times greater accident-related costs

Prerequisites for modifying transport modality use patterns

“Everyone can have a car But it is not sustainable for cars to be the only way to get around comfortably and quickly In the competition for space, automobiles must lose priority,” says Ailton Brasiliense Pires, president of the ANTP and former president of Denatran (National Traffi c Department, a federal agency) For Joubert Fortes Filho, president of ANPTrilhos and director of Rio Metro, restricting access “is a trend for this decade, but not possible today First we have to increase the capacity of public transport systems and only then implement restrictions on private transport.”

A consensus is building for restricting car use in large Brazilian cities Measures such as those adopted

in London—including congestion pricing—aim to reduce traffi c and even to raise money to improve public transport Half-measures and those that do not effectively address broad systemic problems often have limited effi cacy, however In 1997, São Paulo adopted the “rodízio municipal de veículos”, which, each day, bars 20% of the fl eet from the central region during peak hours Its success was short-lived: traffi c congestion today is already worse than before the restriction was imposed

If building more roads is not a solution to car congestion (since often it merely increases demand), this does not mean that highway construction is always inappropriate Road freight contributes signifi cantly

to traffi c congestion, and is both victim and villain The scarcity and poor quality of cargo rail systems and under-utilisation of waterways mean that trucks carry more than 60% of Brazil’s freight Not only are highways inadequate (25% of Brazil’s highways were considered poor or very poor in 2010 by the National Confederation of Transport), there is little infrastructure to cross or bypass urban centres Trucks waste hours in traffi c, freight costs increase and urban congestion swells Commerce and economic competitiveness are burdened

Ring roads that divert traffi c from urban areas are a powerful solution São Paulo’s western and southern portions of the Rodoanel were built in the past decade Completion of the southern section in

2010 helped to reduce afternoon peak traffi c congestion by 21% But the eastern and northern portions are expected to be completed only in 2014, after years of delay

“In the

competition for

space, automobiles

must lose priority.”

Ailton Brasiliense Pires,

president ANTP

0 2 4 6 8 10 12 14 16 18 20

Road (space) Pollution (mass) Energy (quantity) Road accident (cost)

Bus Car Motorcycle

Buses: safer, cheaper, cleaner

Consumption of space, time and energy for car, bus and motorcycle*

*Relative impact on consumption per person-km in Brazilian cities (Bus transport = 1) Source: ANTP (National Association of Public Transport)

Informed investment decisions are needed now to prepare for the future Among the many options for public transport, the top three solutions for medium- or high-capacity urban systems are BRT, light rail/monorail and subway Each of these has advantages and disadvantages Success in implementing such infrastructure requires a balance of strategies for the short, medium and long term that consider the cost of both building and operating the systems

Subways: are they worth the cost?

From an effi ciency perspective, the underground subway is the most desirable system With capacity

to transport more than 60,000 users per hour, it is not disrupted by deteriorating urban road transit,

it is “clean” (or less-polluting) and its positive image can attract new users But subways are also the most time-consuming and expensive system to build After design completion and permit approval, an underground line in Brazil takes at least four years to build

Weighing up the options

Subway construction costs vary widely

Subways designed, under construction or completed in the US and Canada

(U$ million)

Type

Source: Fipe (Economic Research Institute Foundation)