Brazil Industrial, Logistic and Supply Chain
Overview
GIB presentation Research and Market Intelligence
Growing middle class forecast
1
49%
24%
9%
38%
54%
58%
13% 22%
33%
2003 2013 2023
High
Middle
Low
Classes according to per capita income, in Reais per month as of July 2013: low class (up to 320), middle class (320 to 1,120), high (more than 1,120)
Source: Serasa-Experian
+ 17 Million + 41 Million
176 Milllion 201 Milllion 216 Milllion Population
Classes as of percentage of total population
Northeast of Brazil and 2nd tier regions are growing
2
Percentage of consumption by region and by capital versus countryside
59 55 49
14 16 20
1991 2002 2014
From southeast to northeast
South Southeast Central-west Northeast North
54
37 32
46
63 68
1991 2002 2014
From capital to countryside
Capital cities Countryside
Source: IPC Marketing
12%
3%
9% 10%
9%
10%
15%
10%
12%
10%
12% 12%
11%
14%
11%
10% 10%
9%
6%
2%
0%
4%
1%
-2%
6%
2%
6%
7% 7% 6% 6%
7%
4% 4% 4%
2%
-0,50
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F
Ho
use
ho
ld c
on
sum
pti
on
(R
$ T
rilli
on
s)
Household consumption Nominal growth Real Growth
Internal Market is still main economic driver
3
Household consumption
Source: IBGE
2nd
half
* 3.3 Trillions estimated
E-commerce shows more than 20% growth per year
4
E-commerce revenues
10,6
14,8
18,7
22,5
28,8
34,6
2009 2010 2011 2012 2013 2014*
e-Commerce revenue R$ billion
2009-2014
CAGR 26,7%
USA
~6% of retail revenue
CAGR: ~15%
US$ 202 billion
*estimate Source: e-bit, Census US Department of commerce
1.4%
2.2%
% of retail
revenue
1.8%
1.9%
2.0%
34%
19%
19%
12%
16%
Asia* LATAM European Union - EU USA Other
64%
16%
9%
9% 2%
Raw materials and intermediates Consumer goodsFuels and lubricants Capital goodsother
Brazil exports commodities to Asia
5
Brazilian exports by destination and by product category
*China ~20%
Source: Ministry of Development, Industry and Foreign Trade, CEBC
US$ 238 Billion Total ~26% Soy beans and
iron ore
Brazilian logistics performance score
6
Logistics Performance Index (LPI 2014) – Brazil in 65th
Brazil: 2.94
U.S.: 3,92
Germany: 4,12
Hong Kong SAR ,
China: 3,83
India: 3,08
Russia: 2,69
South Africa 3,43
Source: Logistics Performance Index, World Bank, 2014
Singapore: 4,00
Mexico: 3,13
Logistics performance index
7
LPI Score 2014 - Brazil position
Source: Logistics Performance Index, World Bank, 2014
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 28th 34th 42nd 50th 54th 60th 65th 90th
In 2012: Brazil was 45th in LPI rank. Dropped 20 positions due a reduction in all partial scores, with significant
decreases in International shipping, Timeliness and Infrastructure.
Roads are the main mode, despite its costs
8
% TKM
Source: ILOS/CSCMP
67%
18%
11%
3% 1%
31%
37%
10%
21%
1%
Roads Rail Waterway Ducts Aerial
BR EUA
So
uth
east
S
ou
th
Cen
tral
N
ort
hea
st
No
rth
São Paulo
Rio de Janeiro
Minas Gerais
Espírito Santo
Paraná
Santa Catarina
Rio Grande do Sul
Mato Grosso do Sul
Mato Grosso
Goiás
Distrito Federal
Maranhão
Piauí
Ceará
Rio Grande do Norte
Paraíba
Pernambuco
Alagoas
Sergipe
Bahia
Rondônia
Acre
Amazonas
Roraima
Pará
Amapá
Tocantins
Good Very Good Regular Bad Very Bad
Periferic regions in need of better road conditions
9
Main roads conditions per state
Source: CNT, 2012
10%
27%
34%
20%
9%
Brazil
10
22,9
19,5
13,3
9,4 9 8,7
5,1 5 4,7
3,5
0
5
10
15
20
25
EUA Índia Argentina Chile China México Rússia Austrália Canadá Brasil
Source:: CNT, 2011
Freight railways transportation overview Density of railways (linear Km per 1,000 sq. km of land area)
1,4% 1,8% 2,0% 2,1%
1,3%
2,1% 1,9% 1,9%
4,8%
4,4% 4,6% 4,7%
7,5%
8,3% 8,5% 8,7%
2005 2009 2011 2013
Warehousing Stock Transportation
19% 22% 24% 24%
Transportation costs are 54% of logistics costs
11
% net revenues
Total
Source: ILOS
54% 54% 53%
22%
17%
22% 25%
64%
0
2
4
6
8
10
12
14
16
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Pu
blic
Inve
stm
ent
(R$
Bill
ion
s)
Roads Railways Waterways Aerial Total investment
Public Annual Investments has trippled...
12
Source: CNT, 2014
4 Billion
12 Billion
Annual public investment by transportation mode
Private investment tend to be ~60% of public investments
But there is a long path to be run...
13
28 years in current investment levels and
annual GDP growth
Suggested investments in main axis of transportation
Source: CNT - 2014, USP
747 Billions of suggested investment
More investments in Rail and Waterways proposed
14
% of total investment in transportation by mode
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Actual investment profile Proposed investment profile
Aerial
Waterways
Railways
Roads
Source: CNT, 2014
20% 56%
Market Overview / High-end industrial 1H 2014 – Brazil
15
Total
Stock
24.1 MM sqm
+ 3.6%*
New Stock
Delivered
1.1 MM sqm
-1.7% yoy
New Stock
Forecast
14.8 MM sqm
2H2014 - 2017
Vacancy
Rate
10.9%
+ 0.8 p.p.*
Asking
Rents
20.86
R$/sqm/month
- 1.1%*
Source: JLL *over last semester
High-end warehouse stock per state
No stock
0 ~ 26k sqm
26k ~ 58k sqm
58k ~ 129k sqm
129k ~ 325k sqm
325k ~ 489k sqm
489k ~ 1.3m sqm
> 1.3m sqm
Existing stock
Rental changes
Decreasing (-2 ~ 0 %)
Stable (0%)
Increasing (1 ~ 3 %)
Increasing (3 ~ 6 %)
Increasing (7 ~ 12 %)
Rent price
Rent average (R$/sqm) 18
SÃO PAULO
RIO DE JANEIRO
13% - 3.1 MM
55% - 13.4 MM
17
Availability rate
No availability
3 ~ 6%
7 ~ 8%
9 ~ 11%
12 ~ 13%
> 14%
Available area (k sqm)
No availability
8 ~ 13
14 ~ 30
31 ~ 42
43 ~ 182
> 182
37 30
13 13
1,800 159
182
8
41
114
41
24
116
42
High-end warehouse availability per state
Prime Industrial – Rental Clock, 1st half 2014 Mexico City
18
Sao Paulo / Rio de Janeiro
US positions relate to the overall market
Source: JLL, July 2014
Rental Value
growth slowing Rental Values
falling
Rental Values
bottoming
out
Warsaw
Americas EMEA Asia Pacific
Rental Value
growth
accelerating
Amsterdam, Paris, Madrid
Atlanta, Houston
Chicago, New York, San Francisco
Frankfurt
Tokyo, Philadelphia
London
Beijing, Hong Kong
Dallas, Shanghai
Singapore
Boston
Los Angeles
Sydney
19
New Supply – Rio de Janeiro increases relevance
Source: JLL
2013 H1 2014
SP 43%
RJ 29%
PR 9%
RS 5%
MG 5%
GO 5%
ES 2%
MA 2%
SP 66%
PE 10%
RJ 8%
PR 6% MG
5%
GO 2% BA
2% RS 1%
TT: 2.7 MM sq.m TT: 1.1 MM sq.m
Sao Paulo main industrial sectors (manufacturing + logistic)
20
21%
13%
10%
9% 7%
7%
6%
5%
5%
4%
3%
3% 3%
2%
1% 0,5%
0,2%
Tenant Occupation by Segment
Vehicles and parts Chemicals
Beverage & Food 3PL
Mining and Metalurgy Eletronics
Building Materials Pharma
Retail Textile
Hygine and Perfurms Package
Others Paper and pulp
Communication Oil & Gas
Internet
Note: segmentation has been calculated on number of companies, not on occupied area by tenant.
SOROCABA
JUNDIAÍ ITU
EMBU
CAJAMAR GUARULHOS
SÃO JOSÉ DOS CAMPOS
ABCDM
SÃO PAULO
SANTOS
ATIBAIA
CAMPINAS
ARAÇARIGUAMA
BARUERI
Top 3 segments by region
Ring road (Rodoanel) Planned 2nd Ring road
0 10 20 30 40 50 60 70 80 90 100
Traffic
Hiring drivers
Moviment restrictions
Parking difficulties
Environmental requirements
Leadtime
Optimizing vehicle cubature
Routing
Delivery window
New vehicles supply
percentage of answers in survey
Now
Future
Faster and cleaner in a more crowded and restrained environment
21
Main challenges in transportation in big cities
Source: ILOS
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