With Lula’s China trip, Brazil seeks progress in key shipping projects

Amid escalating tensions between the U.S. and China, President Luiz Inácio Lula da Silva is preparing to visit Shanghai on May 12 and 13 to meet with Chinese leader Xi Jinping. The two leaders may have two additional meetings this year, according to a government source: at the BRICS summit on July 6 and 7 in Rio de Janeiro, and potentially at COP30 in November in Belém.

Behind the scenes, efforts are intense to announce progress in the strategic partnership established by the two presidents last November. A delegation from China’s state-owned railway company, the China State Railway Group Co, and the Ministry of Transport of China visited Brazil this week to assess logistics projects. Representatives from food-producing states, including Acre, Rondônia, Mato Grosso, and Goiás, attended one of the meetings.

One key area of focus is the Bioceanic Railway, a project that would enable the export of Brazilian grains through the port of Chancay in Peru. The port was financed by China and opened by Mr. Xi last November.

Access through the Pacific would shorten the transportation time for Brazilian exports to Asian markets. However, the railway connection to Chancay is viewed by the Brazilian government as a challenging and long-term endeavor.

Yesterday, the Chinese delegation visited Ilhéus (Bahia), which would serve as the Atlantic terminus of the Bioceanic Railway.

This railway has been a longstanding item on the Brazil-China bilateral agenda. The two countries completed a project in 2016 during the Dilma Rousseff administration, which will now be revamped.

The railway connecting Brazil to Chancay is also of interest to the Peruvian government. “It could be a co-financed project, as the impact could be significant and would bring substantial development for both parties,” said José Salardi, Peru’s minister of Economy and Finance.

Building the railway still requires an assessment to determine how it would be carried out, he noted. “The best mechanism would be a public-private partnership, but the project needs to be scoped out.” Similar to Brazil, the railway is not seen by the Peruvian minister as an immediate venture but rather something for “some point in the future.”

On this side of the border, the information is similar. The railway is in a “pre-analysis” stage regarding its economic viability, said a Brazilian government official.

An official familiar with the negotiations with China stated that it is necessary to intensify discussions with the Peruvians to advance the project. The major challenge, he acknowledged, is that to reach Chancay, the railway would need to cross the Andes. However, he believes that the Chinese have the capability to build the railway.

The Brazilian portion of the Bioceanic Railway is partially constructed. The West-East Integration Railway (Fiol) starts from the Port of Ilhéus, traversing Bahia and Goiás to connect with the North-South Railway in Mara Rosa (Goiás), covering a distance of 1,527 km. From the same point, the Central-West Integration Railway (Fico) extends to Água Boa and Lucas do Rio Verde (Mato Grosso), spanning an additional 888 km. From there to Chancay, no defined route exists.

The combined Fiol and Fico network might be offered to private investors. Studies are underway, with projected investments reaching R$25 billion.

The connection to Chancay is part of the South American Integration Routes program, managed by the Ministry of Planning and selected as one of the four pillars of the Brazil-China strategic partnership. The other three are the new Growth Acceleration Program (PAC), the New Brazil Industry (NIB), and the Ecological Transformation Plan.

The routes aim to facilitate, with PAC investments, exits for Brazilian goods through the Pacific.

Next week, Chilean President Gabriel Boric is expected to meet with Mr. Lula. One agenda item is the so-called Route 4, connecting the ports of Santos (São Paulo), Paranaguá (Paraná), São Francisco do Sul (Santa Catarina), and Itajaí (Santa Catarina) with the Chilean ports of Iquique and Antofagasta, through Paraguay and Argentina. In this case, the bioceanic connection is made via highways. Access roads to the binational bridge in Porto Murtinho (Mato Grosso do Sul) are still needed in Brazil and Paraguay. On the Brazilian side, the project is part of the PAC and is scheduled for completion by October 2026.

This year, during COP30, Route 2, referred to as the Amazon Route, is expected to be inaugurated. It will consist of waterways and highways, connecting Manaus to the ports of Chancay and Paita in Peru, Manta in Ecuador, and Tumaco in Colombia.

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