Making up for lost timePublic transportation inBrazil’s metropolitan areasA report from the Economist Intelligence Unit   ...
Making up for lost time    Public transport in Brazil’s metropolitan areas    Contents    Preface                         ...
Making up for lost time    Public transport in Brazil’s metropolitan areas    Preface    Making up for lost time: public t...
Making up for lost time                                    Public transport in Brazil’s metropolitan areas                ...
Making up for lost time    Public transport in Brazil’s metropolitan areas     Glossary     BRT—Bus Rapid Transit. BRTs us...
Making up for lost time                               Public transport in Brazil’s metropolitan areas                     ...
Making up for lost time                               Public transport in Brazil’s metropolitan areas                     ...
Making up for lost time    Public transport in Brazil’s metropolitan areas    Why cars can’t be the answer    P   ublic tr...
Making up for lost time                            Public transport in Brazil’s metropolitan areas                        ...
Making up for lost time    Public transport in Brazil’s metropolitan areas    Weighing up the options    I   nformed inves...
Making up for lost time                                     Public transport in Brazil’s metropolitan areas               ...
Making up for lost time                              Public transport in Brazil’s metropolitan areas A bus that looks like...
Making up for lost time                            Public transport in Brazil’s metropolitan areas                        ...
Making up for lost time     Public transport in Brazil’s metropolitan areas        São Paulo’s subway network is used so i...
Making up for lost time                              Public transport in Brazil’s metropolitan areas                      ...
Making up for lost time                              Public transport in Brazil’s metropolitan areas“Private              ...
Making up for lost time     Public transport in Brazil’s metropolitan areas     Conclusion     U     nless the use of pers...
Making up for lost time     Public transport in Brazil’s metropolitan areas     Reduce bureaucratic barriers and introduce...
Whilst every effort has been taken to verify the accuracyCover image: AFP/Getty Images                                of t...
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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.

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Making up for lost time: Public transportation in Brazil's metropolitan areas

  1. 1. Making up for lost timePublic transportation inBrazil’s metropolitan areasA report from the Economist Intelligence Unit Sponsored by
  2. 2. Making up for lost time Public transport in Brazil’s metropolitan areas Contents Preface 2 Introduction: congestion and its costs 3 Why cars can’t be the answer 7 Weighing up the options 9 Getting the right balance of private participation in public transport investment 14 Conclusion 161 © Economist Intelligence Unit Limited 2011
  3. 3. Making up for lost time Public transport in Brazil’s metropolitan areas Preface 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 20112 © Economist Intelligence Unit Limited 2011
  4. 4. Making up for lost time Public transport in Brazil’s metropolitan areas Introduction: congestion and its costsWasted time andfuel consumed in O n June 10th 2009, 293 km of traffic clogged the streets of São Paulo. Equivalent to almost one-half of the distance between Lisbon and Madrid, this congestion stopped traffic in over one-third of thetraffic congestion city’s monitored streets. This is merely the most extreme instance of the city’s familiar routine: in 2010cost the city of the average daily afternoon back-up totalled 108 km. That such information is available on a daily basis isSão Paulo nearly in itself telling: São Paulo’s traffic is chaotic and its economic impact profound.US$21bn (R34bn), Over the past decade, Brazil’s sustained economic growth and a rapidly emerging middle class haveor 10% of the city’s reinforced the country’s position as a leading emerging market. However, its infrastructure qualityeconomy, in 2008. ranks only 46th out of the world’s 82 largest countries in the Economist Intelligence Unit’s BusinessMarcos Cintra, Professor Environment Rankings.Fundação Getúlio Vargas 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, efficient 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 traffic 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.1. All figures in reais wereconverted into US dollars at an Urban public transport infrastructure development has lagged behind the economy’s growth forexchange rate of US$1=R1.60.The Real has suffered substantial decades. Subway networks serve relatively few; buses are often of poor quality, very crowded and competevolatility in the second half of for space with private traffic. Perforce, a rapidly expanding middle class has chosen cars and motorcycles2011, so the values should beconsidered in that light. as the preferred transport mode.3 © Economist Intelligence Unit Limited 2011
  5. 5. Making up for lost time Public transport in Brazil’s metropolitan areas Glossary BRT—Bus Rapid Transit. BRTs use dedicated lanes to segregate buses from the rest of the traffic. They look like a rail system, although buses must still adhere to traffic 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 traffic 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 fleet 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. Brazil moves up in new vehicle registration ranks China * New vehicle registration in selected countries, 2001-2010 United States Japan Brazil ** 20,000 Germany India 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 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 20104 © Economist Intelligence Unit Limited 2011
  6. 6. Making up for lost time Public transport in Brazil’s metropolitan areas 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 first 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. São Paulo’s subway system: enough to serve 20 million? Existing system (km) 0 Populatiom, m Planned extension 2008-2011 (km) 17 700 600 8 13 500 20 400 5 15 300 5 19 21 12 Santiago 4 16 São Paulo 200 Mexico City Hong Kong Shanghai New York Moscow 100 London Beijing Madrid Berlin Paris 0 Source: Office of the UITP (International Association of Public Transport) in Brazil2. February 2010 report fromBNDES (the government-ownedNational Development Bank). Urban train infrastructure is also under acute strain. The CBTU (Brazilian Urban Train Company), aReports prepared by BNDES’s federal company, manages rail passenger transport in five urban centres: Recife, Belo Horizonte, JoãoArea of Economic Researchdo not necessarily reflect Pessoa, Natal and Maceió. Although the number of users of these systems increased by 37% between 2005the thinking of the bank’smanagement. and 2010, the system added a mere 9 km of track, from a total of 206 km in 2005 to 215 km in 2010.5 © Economist Intelligence Unit Limited 2011
  7. 7. Making up for lost time Public transport in Brazil’s metropolitan areas Distribution of transport in Brazil’s major cities, by mode 2003 2009 Local buses 22% 21% Metropolitan buses 5% 5% Rail 3% 4% Public transport (subtotal) 30% 29% Car 27% 27% Motorcycle 2% 3% Private transport (subtotal) 29% 30% Bicycle 2% 3% Walking 39% 38% Non motorised (subtotal) 41% 41% Total 100% 100% Source: Mobility system - ANTP/BNDES, with data from 438 cities over 60,000 inhabitants 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, traffic-snared buses have higher operating costs. Bus fare adjustments exceeded inflation 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. Shutterstock Gearing up for the football World Cup and selected to host the sporting event. In April 2011, 30% Olympic Games of the planned projects had still not been awarded. In the words of Claudio de Senna Frederico, an Preparations for the 2014 FIFA World Cup and the 2016 international consultant: “There won’t be time to Summer Olympic Games, which will attract hundreds finish everything.” of thousands of tourists, are strengthening public Nevertheless, local initiatives indirectly driven pressure for more efficient mass transit. Projects include by the World Cup have a positive outlook. São Paulo BRT (Bus Rapid Transit) lanes in nine of the 12 cities that is a prime example. “We are moving at Chinese speed,” will host World Cup matches, including Rio de Janeiro and Belo promises Jurandir Fernandes, São Paulo state’s secretary for Horizonte. In four cities, including São Paulo and Brasília, light rail metropolitan transport. Four rail lines are now being built in São systems such as monorails and trams will receive government loans. Paulo; by 2013, there will be 12 under construction. Mr Fernandes Progress has been slow. In 2010 the federal government launched predicts that by 2014 the 74-km underground subway network will a financing plan for transport projects related to the World Cup, but grow to 80 km. There will be 20 km of above-ground monorail, and the details were defined only more than two years after Brazil was another 90 km will be under construction.6 © Economist Intelligence Unit Limited 2011
  8. 8. Making up for lost time Public transport in Brazil’s metropolitan areas Why cars can’t be the answer P ublic 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 General traffic speeds fall on São Paulo’s arterial roads* 25 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Evening peak hours: 5pm-8pm Source: CET-SP (Traffic Engineering Company) Public transport loses ground in Brazil’s metro areas Estimated share of public transport trips % public transport % private transport 1960 85 15 1980 75 25 2000-2010 50 50 2025 35 65 * Evening peak hours: 5pm-8pm Source: CET-SP (Traffic Engineering Company)7 © Economist Intelligence Unit Limited 2011
  9. 9. Making up for lost time Public transport in Brazil’s metropolitan areas 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. Buses: safer, cheaper, cleaner Consumption of space, time and energy for car, bus and motorcycle* Bus Car Motorcycle 20 18 16 14 12 10 8 6 4 2 0 Road (space) Pollution (mass) Energy (quantity) Road accident (cost) *Relative impact on consumption per person-km in Brazilian cities (Bus transport = 1) Source: ANTP (National Association of Public Transport) 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 Traffic 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 traffic and even to raise money to improve public transport. Half-measures and those that do not effectively address broad systemic problems often have“In the limited efficacy, however. In 1997, São Paulo adopted the “rodízio municipal de veículos”, which, eachcompetition for day, bars 20% of the fleet from the central region during peak hours. Its success was short-lived: trafficspace, automobiles congestion today is already worse than before the restriction was imposed.must lose priority.” If building more roads is not a solution to car congestion (since often it merely increases demand), thisAilton Brasiliense Pires, does not mean that highway construction is always inappropriate. Road freight contributes significantlypresident ANTP to traffic 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 traffic, freight costs increase and urban congestion swells. Commerce and economic competitiveness are burdened. Ring roads that divert traffic 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 traffic congestion by 21%. But the eastern and northern portions are expected to be completed only in 2014, after years of delay.8 © Economist Intelligence Unit Limited 2011
  10. 10. Making up for lost time Public transport in Brazil’s metropolitan areas Weighing up the options I nformed 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 efficiency 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. Subway construction costs vary widely Subways designed, under construction or completed in the US and Canada City Status Extension (km) Cost per km Type (U$ million) New York Under construction 3.7 1,700 Underground Boston Proposal 0.6 478 Underground Toronto Proposal 6.8 353 Underground Los Angeles Proposal 20.0 311 Underground Toronto Under construction 8.6 302 Underground Vancouver Proposal 12.0 233 Underground Montreal Proposal 1.0 170 Underground Montreal Proposal 2.2 155 Underground Montreal Proposal 5.1 152 Underground Washington Under construction 18.6 148 Surface Toronto Completed 6.4 146 Underground Montreal Completed 5.2 143 Underground Chicago Proposal 3.6 126 Surface Vancouver Completed 19.1 108 Mixed Chicago Proposal 8.5 105 Surface Chicago Proposal 2.6 103 Surface Boston Proposal 7.2 85 Surface/High way Source: Fipe (Economic Research Institute Foundation)9 © Economist Intelligence Unit Limited 2011
  11. 11. Making up for lost time Public transport in Brazil’s metropolitan areas In addition, costs have risen significantly recently. While the international reference used for these projects was US$100m per km until the mid-2000s, spending varies dramatically depending on the characteristics of the system. Additional costs include land rights acquisition and environmental requirements. A study by Fipe (Economic Research Institute Foundation, University of São Paulo) found that the cost of building subways in the US and Canada varies from US$85m per km to an extreme and peculiar case of US$1.7bn per km (2nd Ave subway, in New York). In São Paulo, construction costs surpass US$200m per km. According to Jurandir Fernandes, São Paulo state’s secretary for metropolitan transport, several factors have raised the cost of building subways in recent years, including higher taxes, requirements for access, insurance and environmental compensation (including aid to poor communities“It is necessary that have to be relocated).to have anintegrated set of Light rail versus Bus Rapid Transittransport modes. “We should do away with the idea that there is a single solution, that building a subway is the only way toWe can’t wait 30 go,” says Carlos Henrique Ribeiro de Carvalho, researcher in urban transport at Ipea. “It is necessary toyears until the have an integrated set of transport modes. We can’t wait 30 years until the subway network is complete.”subway network is “Subways must be built only if the demand is really very high,” adds Mr Pires. “If not, it is a waste ofcomplete.” public money.” He argues, for example, that cities can be cost-effective in increasing the supply of railCarlos Henrique Ribeiro de transport by investing in suburban commuter trains, implementing technological improvements andCarvalho, researcher in urbantransport at Ipea reducing waiting time on the platform. In São Paulo, CPTM (the state’s public company of metropolitan trains) has 260 km of track, some of which is of good quality, that can be optimised. Other types of transport are being added to the mix. Trams (light-rail trains) and monorails are being implemented in connection with the 2014 football World Cup. Among their advantages is cost: São Paulo’s monorail Line 18 (an elevated train) cost an estimated US$100m per km, one-half the price of a subway in the city. Speed of deployment is another advantage. However, many experts are sceptical about the projected capacity of these options. Light rails can usually carry around 20,000 passengers per hour. In Brazil, plans call for some monorails to carry more than 40,000 per hour, although experts doubt the feasibility of such loads. BRTs, pioneered in Curitiba in the 1970s, are another option. They are faster and more comfortable than conventional buses. They require much less investment than rail systems (between US$10m and Curitiba’s BRT pays for itself Comparative operating costs of Brazil’s public transport systems Mode City Revenues Expenses Net Passengers/ Km/Year Cost/Km Cost/ Loss/ Year Passenger Surplus per passenger Subway São Paulo 923.7 1,241.2 -317.5 401.6 99.5 12.47 3.09 -0.79 Subway Porto Alegre 52.9 134.4 -81.5 30.2 11.5 11.69 4.45 -2.70 Subway Belo Horizonte 50.7 92.2 -41.5 28.2 2.3 40.09 3.27 -1.47 Subway Average 3.19 BRT Curitiba 244.8 77.3 167.5 111.0 10.3 7.48 0.69 1.51Source: Jaime Lerner, based on 2007 ANTP data.10 © Economist Intelligence Unit Limited 2011
  12. 12. Making up for lost time Public transport in Brazil’s metropolitan areas A bus that looks like a subway providing fast trips in a large metropolitan region. Average speed in the 84 km-long bus system was 27 kph in July 2011. São Paulo’s buses in exclusive lanes average a mere 15 kph. Inspired by the bus lanes implemented in Curitiba in the 1970s, other Implementation has not been seamless. Problems have included cities in Latin America have built BRTs (Bus Rapid Transit), including overcrowding and delays in the network’s expansion. Nevertheless, Bogotá, Mexico City and Santiago. Bogotá’s TransMilenio has become research conducted in May 2011 showed that 75-80% of users are a global reference point. It demonstrates that high-volume transport satisfied with the TransMilenio stations and buses. infrastructure need not be expensive or time-consuming to build and that a bus system can be as high-quality as a subway. TransMilenio passengers pay at stations before boarding articulated high-quality vehicles, the largest of which is 27 ft wide, has seven gates and capacity for 260 people. While buses must still adhere to traffic lights and pedestrian crossings, the BRT operates in dedicated lanes in the centre of the major wide arterial roads of Bogotá, segregated from the rest of the traffic. Two dedicated lanes on major truck routes create an express service. The project was part of a new concept for Bogotá that promotes bicycle schemes, pedestrian and public space improvements and restrictions on personal vehicles. The first phase was implemented in just three years (1999-2002) at a cost of around US$10m per km, one-tenth of the estimated cost of a subway line at that time. TransMilenio demonstrates that a bus system can accommodate extremely high volumes of passengers (up to 40,000 per hour), while US$50m per km), can be deployed rapidly and have a capacity similar to that of monorails. But for all the success of BRTs in Curitiba, Bogotá and Seoul (see sidebars), they may be difficult to implement in the already cramped streets of Brazil’s many older city centres.“Integration is Multimodal transport systemsa way to avoid apublic transport Multimodal combinations can reduce travel times and ensure more efficient use of the roadway network.crisis, stimulate For example, creating parking lots and bicycle racks at metro stations and bus terminals can encouragerational car use the use of public transport.and relieve traffic “This integration is a way to avoid a public transport crisis, stimulate rational car use and relieve trafficin downtown in downtown areas,” says Jaime Waisman, professor of transport engineering at the University of Sãoareas.” Paulo (USP). Each mode plays a role. Buses and cars are most effective outside the city centre; trains andJaime Waisman, professor subways can access denser regions.of transport engineering atthe University of São Paulo Successful international multimodal efforts include “park and ride” programmes. Drivers park at a(USP). station or arrive by local bus, then continue the journey by subway or train. Although rare in Brazil, São Paulo is encouraging this system. The user purchases a card, pays a below-market price for parking (about U$6 for 12 hours, equivalent to one hour downtown) and receives a round-trip subway ticket. While high land prices near subway lines have to date limited adoption of this model, garages are planned for future11 © Economist Intelligence Unit Limited 2011
  13. 13. Making up for lost time Public transport in Brazil’s metropolitan areas rail stations near major highways, such as Bandeirantes, Regis Bittencourt and Dutra. A study conducted by the Polytechnic School of USP estimated that more than 17,000 people in São Paulo are already using “park and rides” to go to work. It suggests that there is an immediate potential to double this demand. Regardless of the mode of transport, intelligent systems can increase the speed and attractiveness of public transport. In 2010 buses in 71% of Brazilian cities with more than 100,000 inhabitants used smart cards, speeding up boarding and improving safety. Lack of agreement among bus companies and governments, however, limits the use of smart cards across modes of transport. Unless the interests of multiple stakeholders are aligned, urban transport will not reap the full benefits of innovative technologies. The role of technology in raising efficiency It is not enough to build a transport system: to make economic sense it must also be operated efficiently. Subways are usually more expensive to maintain, but costs vary widely. For each mode of transport, costs reflect an array of variables such as the number of passengers, the quality of service and station maintenance. Indirect costs, such as pollution, accidents and the need to maintain public roads, should also be factored in. Seoul: integrated transport strategies introduced by the government in 2004. While the 1988 Seoul Olympic Games and the 2002 Korea-Japan World Cup may have boosted investments, they were not the system’s primary drivers. Seoul’s metropolitan area is as crowded as São Paulo’s, with more Overall, the system has been a success. In the early 2000s, 77% of than 20m inhabitants. Both cities opened their first subway line in trips were made by subway or bus, representing an increase of 11% 1974. But the transport infrastructures of the two cities are now at on the previous decade, according to a report by Professor Kang-Won completely different stages. While the São Paulo subway extends a Lim of Seoul National University. total of 74 km, that in Seoul extends over 300 km. In Seoul, the subway is one part of an extensive and co-ordinated transport system comprised of BRT (Bus Rapid Transit), a reorganised bus system, an integrated fare structure for buses and subways, restrictions on personal vehicle use, encouragement of cycle, pedestrian and public transport use, and congestion pricing. To alleviate funding problems, the federal government decided to subsidise part of the construction. In 2009 the 25-km Line 9 was opened. Built in less than four years, it is the first privately operated subway in South Korea. Seoul is an international model because of its integrated transport strategy, implemented as a result of a wide range of improvements to public transport12 © Economist Intelligence Unit Limited 2011
  14. 14. Making up for lost time Public transport in Brazil’s metropolitan areas São Paulo’s subway network is used so intensively that operators have been able to keep fares slightly lower than those for buses (R2.90 per journey compared with R3 for a bus ride). Subways in São Paulo have the added advantage of better quality. As the network grows, however, operating costs per passenger may rise as intensity of use per kilometre falls. New technologies can reduce spending on salaries and energy, the main line items in a subway’s cost ledger. Automation, including driverless trains as implemented on São Paulo’s Line 4, can help to lower costs in the short term. Cities such as Rio de Janeiro, Belo Horizonte and São Paulo have already deployed or are testing intelligent systems on their bus fleets. GPS systems allow satellite monitoring that can identify bottlenecks, track the location of each vehicle and make it possible to keep passengers informed through the internet or electronic panels. Reliability remains an issue, however, as congestion and traffic lights interfere with travel time estimates.13 © Economist Intelligence Unit Limited 2011
  15. 15. Making up for lost time Public transport in Brazil’s metropolitan areas Getting the right balance of private participation in public transport investment R egardless of the solution chosen, resolving congested urban transport is costly, and public transport is just one of the many priorities clamouring for scarce public resources. Private participation is emerging as an alternative means of financing Brazil’s rapid mass transit development. The implementation in 2004 of the “PPP Law” created the legal framework for promoting public-private partnership investments in infrastructure. The first PPP project in Brazil was signed in 2006 and operates Line 4 of the São Paulo Metro. ViaQuatro, concessionaire of the CCR Group (in which construction giants Camargo Corrêa and Andrade Gutierrez, are shareholders) financed the trains and signalling systems (28% of the total cost) in exchange for operating the subway line for 30 years. The government financed the remaining 72%. The São Paulo state government now plans to expand this model to other subway lines. Besides raising“We are inundated funds for PPP projects, in mid-2011 the government for the first time allowed companies to submitby the private proposals for PPPs rather than waiting for projects to be developed by the public sector.sector interested in “We are inundated by the private sector interested in funding projects,” says Mr Fernandes. Hefunding projects.” estimates that private capital may be willing to provide up to 80% of the total investment in a subwayJurandir Fernandes, São line. This is possible because “there is now a consolidated regulatory framework [and] contracts are beingPaulo state’s secretary formetropolitan transport respected”, according to Luis Valença, president of ViaQuatro. The institutional credibility of the PPP model is important to attract potential investors. “Besides providing additional resources to build subways, private sector efficiency means gains in speed of construction,” notes Mr Fernandes. The private sector also has the advantage of greater flexibility, according to Mr Valença. He believes that projects carried out by the state will always cost more and take longer, not least because of additional oversight requirements involving expenditure of public resources. Private participation can also enable innovative technologies not available in strictly public projects. Driverless subways, which were first adopted in Brazil with Line 4, are an example. “The private sector’s profit depends on efficiency and the risks it takes on. The adoption of new technologies is an efficiency gain,” explains Mr Valença.14 © Economist Intelligence Unit Limited 2011
  16. 16. Making up for lost time Public transport in Brazil’s metropolitan areas“Private Preserving the public interestinvestment is Bottlenecks are not the purview only of public projects. Political interference, lengthy environmentalimportant to licensing processes, expropriation of property and the bidding process for a PPP, which is usually thecomplement target of protests and court battles, can affect any project.public funding but “Private investment is important to complement public funding but cannot be seen as the onlycannot be seen as solution. Plans cannot be dictated by private interests, but by the public well-being. You cannot simplythe only solution. prioritise the more expensive and more profitable investments,” says Claudio de Senna Frederico, anPlans cannot be international consultant and the Brazilian representative in the UITP (International Association of Publicdictated by private Transport), which analysed the outlook for global public transport to 2020. He adds that public transportinterests, but by is a social priority and therefore requires direct subsidies from governments, including for operatingthe public well- systems.being.”Claudio de Senna Frederico, Mr de Carvalho, from Ipea, has a similar point of view. “The risk of leaving all costs and controls to theinternational consultant private sector is that it will create a system that is so expensive it will encumber user fares,” he says. An Ipea study of public transport in European cities found that to maintain socially appropriate fares, governments subsidise much of the operational costs. In London, the subsidy represents 49% of the total cost, in Madrid 57%, and in Paris 61%. In Brazil, with few exceptions, all costs tend to be included directly in the fare. Public transport is subsidised in Europe Annual costs Revenues Subsidies Subsidies (US$m) (US$m) (US$m) as % of cost Amsterdam 454 174 281 62 Barcelona 979 547 432 44 Berlin 1,775 931 841 47 Brussels 566 174 392 69 Budapest 636 234 403 63 London 4,433 2,252 2,181 49 Madrid 1,742 745 998 57 Paris 7,000 2,763 4,237 61 Vienna 62 24 39 62 Source: European Metropolitan Transport Authorities (EMTA) 2009.15 © Economist Intelligence Unit Limited 2011
  17. 17. Making up for lost time Public transport in Brazil’s metropolitan areas Conclusion U nless the use of personal vehicles is restricted in Brazil’s mega-cities, urban centres and their business, commercial and industrial districts will become increasingly gridlocked. Urban traffic congestion is reaching levels that introduce significant barriers to the long-term growth of urban areas. Such barriers are a considerable burden on national, regional and local competitiveness, and the quality of life of all that are subject to it. Multiple private and public stakeholders often present hurdles to adoption of seamless integration systems, from ticketing to scheduling. Meeting these challenges will require a comprehensive approach that incorporates an understanding of current needs, likely future trends and flexibility to adapt as future technological, economic and social opportunities and needs arise. Success depends on building a consensus among the many interests that are affected by a decision to reduce substantially the economic costs of existing transport systems. Initiatives should: Sharply increase investments in a diverse transport infrastructure. Between 2006 and 2009, Brazil invested 2.1% of GDP per year in infrastructure (including transport), according to a report from BNDES. A World Bank study estimated that Brazil should invest more than 4% of GDP per year. To approach the standards of industrialised countries of Asia, up to 9% is needed. Commitments on such a scale require national vision and action to avoid waste and slippage. Move to restrict car use. A new focus on congestion requires new priorities for public transport in order to improve efficiency and reduce costs. To succeed, governments must be willing to discuss unpopular measures to stimulate more rational personal vehicle use, including restrictions such as congestion pricing, high parking costs in city centres and dedicated bus lanes. Focus on multi-faceted approaches. There is no single solution for urban transport problems. Success in tilting the scale towards public transport solutions requires a balance of strategies that address the short-, medium- and long-term needs of both the public and the government and ensure an ongoing maintenance plan. Nationally, the challenge is to enable development and building of projects that are most appropriate for each region and time.16 © Economist Intelligence Unit Limited 2011
  18. 18. Making up for lost time Public transport in Brazil’s metropolitan areas Reduce bureaucratic barriers and introduce fast-track approval of environmentally sustainable projects. Current slow bidding processes, dispute resolution and long licensing periods increase costs and the time required to transform transport patterns in major cities. Possible solutions include encouraging expedited dispute resolution and improved regulations that enable projects considered sustainable (less polluting and for mass transport) to be given priority in environmental permitting. Balance public and private funding. PPPs are playing an important role in funding infrastructure projects, and state governments have stepped up their contributions as well. In São Paulo, rail system construction is expected to accelerate from the recent average of 2 km per year to 7 km. However, experts believe that the challenge will be to maintain the current levels of investment at the state level without direct funding from the federal government. Such measures to improve Brazil’s public transportation systems provide exciting opportunities at both the national and company level. Investments in infrastructure projects will create jobs and help sustain economic growth in a time of worldwide uncertainty. The elimination of one of the major bottlenecks to economic activity in Brazil’s mega-cities will only strengthen the country’s global competitive position.17 © Economist Intelligence Unit Limited 2011
  19. 19. Whilst every effort has been taken to verify the accuracyCover image: AFP/Getty Images of this information, neither The Economist Intelligence Unit Ltd. nor the sponsors of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper. 18
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