The memorandum signed between Infra S.A. and the Chinese institute China Railway projects a reduction in transport time between the Atlantic and Pacific, but exposes the monumental financing and implementation challenges that hinder railway expansion in the country.

The National Secretary of Railway Transport of Brazil, Leonardo Ribeiro, defined with surgical precision the spirit of the memorandum of understanding signed between the state-owned Infra S.A. and the China Railway Economic and Planning Research Institute in early July. “It is the first step of a technical and diplomatic journey to bring continents closer, reduce distances, and strengthen the long-term relationship,” Ribeiro stated during the virtual ceremony that sealed the partnership for the planning of the Interoceanic Railway.

The project, which envisions 5,311 kilometers of tracks connecting Bahia to the mega-port of Chancay in Peru, represents Brazil’s most ambitious attempt to create a bioceanic logistics corridor since the South American integration plans of the early 2000s. The route will cross Goiás, Mato Grosso, Rondônia, and Acre until reaching the Peruvian terminal, a central piece of the New Silk Road in the region.

Financial math, however, imposes a reality check on any excessive enthusiasm about the announcement. Each kilometer of railway in Brazil costs, on average, R$27 million, more than three times the cost of a highway, which comes to about R$8 million per kilometer, according to an infrastructure market survey.

With a projected extension of over 5 thousand kilometers, the investment estimate reaches levels that will require an unprecedented combination of public, private, and international capital. Planning and Budget Minister Simone Tebet has already signaled that the National Bank for Economic and Social Development (BNDES) is studying credit lines with extended repayment terms of up to 60 years to make such projects viable, but the financial gap still needs to be filled.

While the Interoceanic faces the embryonic phase of feasibility studies, other railway projects are beginning to test in practice the new business models designed to unlock the sector. Chilean company Arauco started in February the works for the country’s first railway under the authorization regime, a 54-kilometer branch line in Mato Grosso do Sul that will connect its mega pulp mill in Inocência to the port of Santos, with an investment of R$2.4 billion.

Arauco’s project is symbolic because it breaks a five-year drought since the federal government launched with great fanfare Provisional Measure 1,065 that created the railway authorization regime. The model allows private companies to build and operate their own networks without the need for a concession auction, simply requiring approval from the National Land Transport Agency (ANTT), but so far only 42 applications have survived the regulatory bureaucracy.

Transport Minister Renan Filho has already made it clear that the ministry’s priority remains the concession route, with eight auctions scheduled for the coming months totaling 9,000 kilometers of extension and requiring R$140 billion in investments. The director-general of ANTT, Guilherme Sampaio, acknowledged that the authorization model is beginning to “work out” as another option on the railway menu, but not with the vigor imagined in 2021.

At the heart of the new concessions portfolio is the Ferrogrão, designed to connect Sinop (MT) to Itaituba (PA) and create a grain transportation corridor through the Northern Arc. The project was shelved for nearly a decade amid environmental and legal disputes, until the Federal Supreme Court (STF) suspended the works in May 2025 (ADPF 1179).

There is also the East-West Corridor, planned to connect the Fico and Fiol railways over 1.7 thousand kilometers, consolidating a railway axis between producing areas of the Center-West and Bahian ports. The government is also negotiating the Extension of the North-South Railway to Barcarena, in Pará, where the Port of Vila do Conde is located, seeking intermodality with Amazonian waterways using broad gauge compatible with the main national trunks.

For all these tracks to leave the drawing board, Chinese financing emerges as an unavoidable variable in the Brazilian logistics equation. The executive secretary of the Ministry of Transport, George Santoro, revealed that five Chinese companies are studying railway and highway projects in Brazil, but have not yet formalized concrete proposals for the upcoming auctions.

Beijing’s interest is strategic and can be explained in black and white: 70% of the soybeans and corn imported by the Chinese market come from Brazil, which turns Brazilian logistics efficiency into a matter of food security for Xi Jinping’s government. State-owned Cofco, one of the largest exporters of Brazilian soybeans, operates directly at the buying end and would be a direct beneficiary of cheaper and more predictable freight costs.

Among the Chinese giants eyeing the national market, CRRC stands out as the most tangible name with the most consolidated presence on the ground. The world’s largest rolling stock manufacturer is already a partner of Grupo Comporte in the concession of the Intercity Train (TIC) that will connect São Paulo to Campinas, a project budgeted at R$14 billion and which represents the most important passenger rail transport project in the country.

In addition to the TIC operation, CRRC is building a factory in Araraquara, in the interior of São Paulo, with an initial investment of R$50 million and a forecast to start producing trains for the São Paulo Metro and for the line to Campinas itself starting in 2026. The industrial unit projects the technology transfer that Brazil has been pursuing for decades and which could make future compositions for regional passenger corridors cheaper.

The state-owned China State Railway, in turn, led the largest railway expansion in world history over the last two decades and is now focusing on Brazilian logistical bottlenecks, even though the country has not formally joined the Belt and Road initiative. The Lula government assesses that the depth of the bilateral trade relationship — the trade flow exceeded US$150 billion in 2024 — and the presence in forums such as BRICS dispense with rhetorical formalities.

The planning of the Interoceanic revives studies that had been conducted between 2015 and 2016, but which foundered because Brazil “was in a different context,” according to Secretary Leonardo Ribeiro. Now, Infra S.A. is working on the hypothesis of using existing railways within Brazilian territory to compose part of the route, reducing the volume of new works and the socio-environmental impact of the undertaking.

Peruvian government projections indicate that the new route will shorten the transit of cargo between the Atlantic and Pacific oceans from 40 to 28 days, eliminating dependence on the Panama Canal and offering an important logistical alternative for Brazilian exports heading to Asia. The Port of Chancay, inaugurated in November 2023 by Peruvian President Dina Boluarte, is the terminal piece that transforms the project into a geopolitical reality and not merely a cartographic exercise.

The obstacles, however, go far beyond financial engineering and the bureaucratic mesh that historically suffocates infrastructure projects on the continent. In Venezuela, China Railway Engineering Corp. saw the works of a 467-kilometer high-speed train halted due to lack of funds from the local government, while in Mexico a Chinese consortium had a high-speed train contract valued at US$4.3 billion abruptly canceled.

The construction of a 5,311-kilometer railway cutting through the Andes Mountain Range represents a technical and logistical challenge of magnitude comparable to the Devil’s Railroad, the Madeira-Mamoré railway that left thousands dead at the beginning of the 20th century in the Amazon. The difference is that, this time, the partner has engineering, capital, and long-term strategic interest — provided that Brazil can, at last, combine with the Chinese and with itself.

While the big plans mature, the country advances little by little with initiatives like the Intercity Train, the CRRC factory in Araraquara, and the first tracks of Arauco scratching the cerrado of Mato Grosso do Sul. These are concrete steps that test, on the hard ground of reality, whether Brazil’s railway ambition can overcome the chronic paralysis that has turned the national network into a synonym for stagnation over decades.

The next test will come with the concession auctions scheduled for the second half of the year and with the advancement of the Interoceanic feasibility studies, whose memorandum has an initial term of five years, extendable. Until then, each kilometer of track laid and each train leaving the Araraquara factory starting in 2026 will represent the materialization — or not — of a state policy that Brazil has pursued with more speeches than works for generations.