Camila Fontana: Hello, everyone. Thank you for joining us. Argus Media offers podcasts about developments in the commodity and energy markets around the world. I am Camila Fontana, Deputy Bureau Chief at Argus, based in Sao Paulo. Today it will be my pleasure to chat with Bruno Castro, reporter of the Argus Brazil Grains and Fertilizers publication. He's here to discuss the expansion of logistics routes in the Southern Cone with the Capricorn Bi-oceanic Corridor.
So, Bruno, what is this corridor, and which sectors should benefit first?
Bruno Castro: Well, Camila, this is a new corridor that will connect Brazil, Paraguay, Argentina, and Chile, reducing the average time it takes to transport products to Asian markets. Currently, cargo leaving the Santos port — one of the main shipping hubs for agriculture products from Brazil — must cross the Panama Canal or the Cape of Good Hope to reach major ports in Asia taking around 55 days to complete the journey.
With this new route, the time should fall by 12 days to an average 42 days. That would reduce freight costs by around 20pc, according to the Mato Grosso do Sul state government. This 3,250 km road corridor will connect the Brazilian port of Santos, on the Atlantic Ocean, to the Chilean ports on the Pacific, crossing the Atacama Desert, the Andes Mountains, the Paraguayan Chaco until reaching the humid plains of central-western Brazil.
Initially, exports of regional agriculture products — such as meat, processed foods, and cellulose — should benefit. At the same time, the arrival of fertilizers and agricultural inputs should be boosted, according to the Agriculture and Livestock Federation of Multiple Resolution.
CF: So, how can this route strengthen trade ties between Mercosur and the Asian countries?
BC: Well, firstly, it's important to highlight that Asian countries are the destination of around 52pc of Mercosur’s exports, and they are also the origin of around 45pc of its imports.
In addition to China — which is Mercosur largest trading partner, followed by the US — the Association of Southeast Asian Nations, which includes countries like Cambodia, Singapore and the Philippines, are important destinations for South American commodities. Mercosur has sought to get closer to these countries since Southeast Asia has a lot in common with Latin American countries, whether in terms of international politics given its participation in the global economy as emerging markets.
Domestically, China was the destination for 35pc of all Brazilian agriculture exports in 2024, according to the Ministry of Agriculture and Livestock. In the first half of last year, Brazil's exports to Southeast Asia reached around $13.2 billion, an increase of almost 10pc compared to the same period last year, according to the Ministry of Foreign Trade. We can even see political mobilization in the Brazilian Congress to form a Brazil- Asean parliamentary front.
Its launch should be attended by ambassadors and diplomats from the Southeast Asian bloc, China, and Japan. Therefore, it is possible to see that there is political willingness on the Brazilian side for this greater integration. We should also note that on the Chilean side, the new route should facilitate the flow of exports to Atlantic markets such as the European Union and the east coast of the US.
CF: And what is the stage of construction? And do we have a date for operations to begin?
BC: Currently, the main obstacle to the construction is the binational bridge over the Paraguay River between the cities of Porto Murtinho, in Mato Grosso do Sul, and Carmelo Peralta, in Paraguay.
The construction of the 1.3km-long bridge has advanced about 65pc and is expected to be completed by the first quarter of 2026.
This project was financed by the administration of the binational Itaipu hydroelectric plant, which the two countries share. Also, over 200km of roads still need to be paved on the Paraguayan side. A second binational bridge over the Pilcomayo River — between Paraguay and Argentina — is under discussion, as is another 20km unpaved stretch on the Argentinian side.
CF: And what are the main challenges?
BC: One of the main challenges of this project is that Brazil and Paraguay are still not part of the TIR convention, an international agreement that aims to promote synergies for transport, simplifying port processes. Argentina, Chile, Uruguay and other 76 countries have already signed this agreement, and Brazil’s acceptance on the document has been under discussion in the national congress since September 2024.
The state government of Mato Grosso do Sul has mobilized deputies to consider the matter in Congress. The state, which is an important agricultural production hub, should be one of the main beneficiaries of the new route since over 65pc of Mato Grosso do Sul’s exports are destined for Asian countries.
While Brazil's entry depends only on congressional approval, Paraguay has not yet begun its joining process.
If both countries joined the TIR convention, the waiting period for import and export processes would be reduced by 90pc according to the state government of Mato Grosso do Sul. The expectation is that the waiting period, which can currently be up to 20 days, will be reduced to two days.
CF: All right. Thank you for joining us, Bruno. Thank you to our listeners.
Argus Media will be watching for news on this new logistics corridor in South America. Please stay tuned for more podcasts from Brazil. You can find this and other episodes at our website www.argusmedia.com.
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