The logistics of Brazilian ethanol is poor. Most of the distribution for the domes­tic market is carried out by road transportation, which is not in good condition in some main key perimeters. For the overseas market, ethanol uses road transport associated to the duct mode, which connects the mills to the harbors. Although they are more efficient than road transport for long distances, the rail and water­ways are still little used for both the domestic market and to the external market (Milanez et al. 2010).

‘The costs of cutting, loading, and transporting account for 30 % of the total cost of production of sugarcane, and only the transport costs are equivalent to 12 % of that total’ (EMBRAPA 2013:1). The average cost of road freight for ethanol in Brazil was R$ 0.1557/m3/km in 2010, ranging between R$ 0.0568/m3/ km and R$ 0.9588/m3/Km (SIFRECA 2011). Therefore, efficient logistic system would result in lower production costs, providing Brazil more competitiveness both in the domestic as in the international market.

Milanez et al. (2010) argue that the logistics of the Brazilian ethanol prevents the supply in some states, especially in northern Brazil due to the lack of efficient infrastructure. Furthermore, most of the infrastructure associated with the trans­port of ethanol is in the Central-South region of the country, mainly in Sao Paulo.

Figure 3 shows the main transport corridors of sugar and ethanol in Brazil. It can be observed that the concentration of the infrastructure is in the state of Sao Paulo and adjacent areas, while the surrounding areas (including those not shown in the figure) have lower modal infrastructure, imposing additional difficulty in the product process of distribution.

The insufficient offer of more efficient transportation modes lead to road trans­port, in which ethanol is transported in fuel tank trucks similar to the way gasoline and diesel are transported. Other modes also lack expansion and modernization,

such as the rail systems, which are not usually used due to ‘the lack of tank wagons, the locomotive enhanced traction capacity, and the low capacity of the railways because of poor maintenance […]’ among other factors (Milanez et al. 2010:69). Moreover, according to the authors, the waterway mode is also not via­ble to transport this fuel since they are mostly in the Amazon Basin, which has no interconnection link to the Central-South modes.

Ducts are not feasible to transport ethanol, mainly due to the high invest­ment and low availability of infrastructure, but this reality might be changed with the completion of ducts that will connect the Midwest region to Santos-SP and Paranagua-PR harbors, crossing some of the largest consumer centers in Brazil, where they can interact with other modes, allowing the distribution to other regions (Milanez et al. 2010).