Logistics is an all-encompassing and segmented activity which includes transportation, stocking and warehousing of inputs and products. In Brazil, logistics costs comprise approximately 13% of GDP, according to COPPEAD/UFRJ’S Research Center data. .This rate is relatively high in comparison to equivalent costs in developed countries, where they represent 8% to 10% of GDP. Such a difference can mainly be explained first, by the precarity of Brazil’s transportation infrastructure and second, by the high degree of sophistication of logistic procedures in developed countries, which significantly reduce costs.

Iron ore is considered a low specific value product (ratio of product to its weight), since the price obtained per kilogram of product is low, compared to the price per kilogram of other products such as electronic equipment and jewelry. Low specific value products typically have high transportation costs, since these rise relative to the product’s weight. In the mining market, the logistics of the transportation infrastructure chain account for a significant portion of the total cost of iron ore and to avoid such costs, it’s common for mining companies to invest in efficient transport systems for their loads. Competitiveness in this area is normally based on (a) rates set; (b) delivery times; (c) the quality; and (d) the reliability of the services provided.

The demand for logistics services in Brazil has risen significantly in recent years, due not only to the growth of Brazil’s population, but also to growth in international trade. The logistics market has grown significantly due to the fact that several companies that previously planned the transportation and warehousing of their products internally are now outsourcing such services to companies with more advanced technology and lower costs.