The competitiveness of rail transportation is restricted by elevated rail freight prices in Brazil.
According to ANONYMOUS 5 (2012) the rail freight rate increased significantly within the last years.
The ALLMN railroad is owned by the investment company GP INVESTIMENTOS and operated by ALL.
Because the company holds a monopoly, prices are adjusted accordingly (ANONYMOUS 5, 2012).
The monopolistic market position enables to settle the freight price above marginal cost without
losing all customers.
Because the rail market is rather closed, no exact data were revealed in the interviews. Experts
explained that the freight price is calculated by using the projected road freight as reference value
to which some amount is added (SPERANDIO ET AL., 2012). BIRKHAN (2012) estimated a 20% premium
of the rail freight rate relating to the truck freight price. FRANÇA (2012) and SPERANDIO ET AL.
(2012) instanced margins of four to seven percent. A different picture was drawn by ROGÉRIO
(2012). He stated that rail transportation within the state of São Paulo is decisively cheaper than
transportation by truck. Various rail networks converge in this state, i.e., the market and the rail
freight prices are more competitive. ROGÉRIO exemplified that rail freight would level approximately
40 % of the road freight price (e.g.: 38 R$/t railroad vs. 98 R$/t road).