Short Lines and Authorizations Does the U.S. model fit Brazil?

Brazil's railway system is out of step with its own potential. On one hand, the country has built competitive export corridors and consolidated a world-class heavy-haul operation in iron ore and grain. On the other, it still moves only a modest share of its freight by rail. Today, rail accounts for roughly 15% of the transport matrix, with a low-density network, heavy concentration in a handful of operators and limited capillarity, pushing onto the roads freight that could move more efficiently and at lower cost.

At the same time, a new framework is beginning to take shape. The authorization regime created by Law 14,273/2021, the Railway Legal Framework, opened the door to new operators and to the exploitation of segments that the large concessionaires do not prioritize. The National Logistics Plan projects that rail could climb to around 31% of the freight matrix by 2050, but getting there depends on unlocking investment, interoperability and a market of smaller-scale operators that, in Brazil, has yet to mature.

This is where the experience of the United States becomes relevant. There, decades of operation under a private, vertically integrated model produced a layered system, in which long-haul Class I carriers coexist with regional railroads and with hundreds of short lines that ensure first-mile and last-mile connectivity. Interchange between operators, economic regulation by the Surface Transportation Board and the commercial freedom inherited from the deregulation of the 1980s sustain a market that is dynamic, capillary and less dependent on the public budget.

The entry of independent operators, the use of low-density segments, the logic of network access and the financing arrangements of a short line point to a possible path for Brazil as well, provided that regulation, contracts and incentives work together. Understanding how this model functions in practice is what can turn the new authorization regime into an actual market.

Against this backdrop, the GRI Institute session brings central questions for the future of the sector to the table:

• Is the U.S. short line model replicable within Brazil's authorization framework?
• How can independent operators be made economically viable on lower-density lines?
• What is the role of regulation and the Federal Government in building a more capillary and predictable market?