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Moving São Paulo Locally and Globally

with Joseph Parilla

Sitting again in São Paulo's deadly rush hour traffic this morning, one has to wonder: Where are all these people going?

Of course, they're off to work. The São Paulo metro area has an unemployment rate of 5.9 percent, two full percentage points below the U.S. average. Many of its residents work in the schools, hospitals, retailers, and restaurants that serve the city's 11 million people, the 20 million in the São Paulo metropolitan region, and the more than 30 million in the São Paulo "macro metropolis."

Many others, however, form the lifeblood of São Paulo's traded economy, and the key to its economic growth. The São Paulo macro-metro has several assets that buoy its undeniably global reach--a top five international stock exchange, the largest cargo airport in South America, and key offices of hundreds of global firms. But one must travel 60 miles southeast of the heart of São Paulo, to its neighboring metro area Baixada Santista, to find arguably its most important international connection point: the Port of Santos. 

One of Brazil’s original settlements--and home to international soccer star Pele--Santos has grown to become the largest port in South America. It handles 25 percent of Brazil’s foreign trade and accounts for 95 percent of exports from the state of São Paulo. Yet despite being the Southern Cone’s largest port, it is also one of the most congested. Demand has exceeded capacity to the point where it costs two and half times as much to move a shipping container through Santos as it does Rotterdam. When these costs are passed onto firms, the São Paulo region runs the risk of losing investment to locations with better freight and logistics infrastructure.

In this way, the trading capability and economic potential of Brazil’s most significant region hinges on how quickly and cost effectively the Port of Santos can move the region’s goods to market.

Understanding that imperative, representatives from the Port of Santos, CODESP (federal agency that operates the port), the city of Santos, and the Commercial Association of Santos shared with U.S. metro leaders their efforts to both expand and improve terminals at the port itself, as well as improving the surrounding road and rail infrastructure to facilitate more efficient goods movement from ship to destination. These multi-billion dollar projects require collaboration across local, state, and federal levels and between the public and private sectors.  In turn, the officials from Santos heard from PortMiami Director Bill Johnson, who has stewarded parallel large-scale collaborative investments to prepare his metro for the super-sized post-Panamax container ships. 

These port-related initiatives aim to address one important element of the broader "Brazil cost" (Custo Brasil) that still inhibits the country's fuller integration into the global economy. Taxes, regulations, and transparency all constitute barriers to further inward investment and trade nationwide. As Bruce Katz discussed at today's Global Cities Initiative forum, local leaders like the Port of Santos can innovate locally to become more competitive, and network globally with other leaders like PortMiami to establish new partnerships that can increase trade. But ultimately, they must also advocate nationally to push needed policy changes at the federal and state levels that matter immensely for local growth. 

In the end, those changes and the growth they spur provide the fiscal latitude to support the massive infrastructure, skills, and other investments needed to sustain growth and increase local living standards. And make São Paulo rush hour a little more bearable.