rivers in the middle of the Amazon jungle, has only one
road in and out—the poorly maintained Brazil Route 174,
which cannot accommodate heavy truck traffic. The near-est consumer market is 1,500 miles away, Flores says. But
tax incentives designed to promote manufacturing in
underdeveloped areas are so attractive that dozens of multinational companies—Sony, Phillips, Nokia, Samsung, and
Whirlpool, to name a few—bring raw materials and components in for assembly and ship out finished products,
mostly for domestic consumption.
The lack of highway access means manufacturers are
forced to use freighter aircraft, barges, and small ships to
move the goods in and out of the jungle. Heavier goods
travel four days up the Amazon River and the Rio Negro to
Manaus and four days back down the Amazon for export or
domestic consumption. Air freight is typically reserved for
high-value, lightweight items, such as cell phones.
It’s hard to imagine that the benefits of manufacturing in
Manaus outweigh the logistical drawbacks, but companies
that manage to qualify for the full range of tax breaks can
halve tax liabilities that would otherwise account for 45 percent of the goods’ value, according to Flores. That more
than compensates for the added logistics costs, he says.
Be realistic about transportation
The transportation challenges may be daunting, but they’re
not insurmountable. In Brazil, where there’s a will, there’s a
way—even in some very remote areas. Earlier this year, for
example, the global freight forwarder Damco and a local
barge company launched an all-water service from Porto
Velho on the Madeira River to Manaus. The service will help
businesses in the remote states of Rondonia, Acre, and Mato
Groso export cotton, leather, minerals, lumber, and beef.
Because Brazil is such a vast country, it’s important to be
realistic about what’s feasible when it comes to transporta-
tion, experts say. “The country’s economy is expanding
quickly, but the infrastructure, including ports, airports,
and roads, has not been able to keep up,” Scroggie says.
