Brazil on track for success

Latin America’s largest country is evolving into one of the world’s strongest economies

Brazil is renowned for its breathtaking beaches and its lush rainforests as well as for the unique mentality and zest for life of its people. But the largest country in Latin America has a lot more to offer besides spectacular scenery, samba and outstanding football. Last year, Brazil’s economy grew by a record 7.5 per cent, making it one of the largest countries in the world, and not only in terms of area. Although the economic boom has slowed down in 2011, promising growth rates beckon in the future.

Lufthansa Cargo gains access to this expanding economy via Viracopos Airport on the outskirts of São Paulo. Ten times a week a Lufthansa Cargo MD-11 lands at the airport, which has become South America’s largest cargo hub. Viracopos has also recorded rapid growth in terms of passenger traffic. Three or four years ago, it handled about ten flights a day. Today more than 100 flights - operated by different airlines - depart or arrive there daily. Unfortunately, however, there has been no improvement in infrastructure. The airport’s strong growth was fostered, amongst other things, by the new Brazilian low-cost carrier Azul, which has been based at Viracopos since 2008 and offers numerous connections. Over the next few years, the long-overdue expansion of the airport will go ahead. In view of the forthcoming major sporting events – the FIFA World Cup in 2014 and the Olympic Games in 2016 – a second runway and a new terminal are due to be built.

With a population of about 200 million and an area of 8.5 million km², Brazil is the fifth-largest country in the world and is also an increasingly strong industrial base for international companies. Brazil’s expanding automotive market is an important pillar of the Latin American economy. In the global rankings in this segment, the country is already in fourth place, and forecasters predict that Brazil will become the world’s third-largest car-manufacturing market within the next four years. By 2020 car sales are even expected to double. Manufacturers are currently investing in new production plants and are thus also attracting their suppliers into the country. Car components – imported mainly from Asia and Europe – are air freighted to Brazil by Lufthansa Cargo. The growth in the car market is due, amongst other things, to the tax breaks manufacturers can expect if they manufacture their vehicles in Brazil. Conversely, heavy taxes are imposed on imported vehicles. Besides car components, electronic components and pharmaceuticals are the mainstay of Lufthansa Cargo’s business.

Brazil’s foreign trade is also growing steadily and has quadrupled over the past ten years. Exports to China are particularly lucrative because Brazil delivers everything that is needed about 18,000 km further east. One third of the record influx of 48.5 billion US dollars in 2010 came from Chinese investors. But trade with Germany has doubled since 2001, and German companies have invested more than 30 billion US dollars in Brazil’s industry. The Brazilian currency, the real, is currently very strong, which favours imports, but at the same time makes exports relatively expensive. At present, Brazil imports about three times more goods than it exports. For Lufthansa Cargo this situation represents a logistical challenge. The imbalance is compensated for by Lufthansa Cargo’s well-conceived network in Latin America, which enables it to exploit the demand for exports in other markets on the continent. Only four of Lufthansa Cargo’s ten freighters per week fly direct from Viracopos to Europe loaded with export products. Four other aircraft are routed via Manaus or Curitiba to Quito and Bogotá, where the export of flowers is a mainstay of the economy. Another two freighters also serve the market in Buenos Aires.

“We are well positioned with our network in Latin America,” stresses Daniel Bleckmann, Regional Director for South America at Lufthansa Cargo. “The market still has a lot of growth potential but competition is increasing constantly, and so we have to grow to meet market demand." Since January 2011, Lufthansa Cargo has added the tropical city of Manaus to its network and is thus the first European airline to serve this growing market. “The market in Manaus is booming more strongly than ever before. Our new route to the Manaus Free Trade Zone is the only one on which cargo can be imported direct to Europe from Manaus. That sets us apart sharply from our competitors,” Bleckmann explains.

In a comparison of the world’s economies, Brazil is already ranked seventh. Market analysts predict that in the foreseeable future the country will move up to the top of the rankings. Lufthansa Cargo is already working on making further improvements to its network and providing outstanding quality in order to stand out even more from the competition and benefit from Brazil’s strength. “Our customers here particularly appreciate the many frequencies we offer and the quality of service they receive from Lufthansa Cargo,” Bleckmann says. “Our market share is currently about 15 per cent and we aim to increase that.”