Not sold in stores: Brazil's railroads save money by taking their software needs in-house.

As exports ramp up toward a projected US$100 billion by 2006, Brazil's railroads are a scarce transportation item. Train companies are laying down more tracks. But in the meantime, they are spending on technology to operate as efficiently as possible until the country's logistics bottleneck eases.

Three Brazilian heavyweight logistics companies say they are developing their own information technology (IT) infrastructure at a fraction of what it would cost to bring in technology from abroad. U.S. railroad company Norfolk Southern, for example, expects to spend US$42 million on software and technology in 2004 alone. All Brazilian railroad companies combined should spend $30 million on technology during the 2005-2008 period, according the Associacao Nacional dos Transportadores, the country's railroad association.

"The entire domestic IT structure tends to be way cheaper and easier to build and gets results out of it because those involved with the project are more dedicated and they know the specifics of what needs to be done on any given rail project," says Rodrigo Vilaca, the rail association's executive director. "Our rail engineers are top notch and bring a 'good and cheap' Brazilian-made tech solution to our specific rail needs." Homegrown technology also helps domestic train companies deal with problems that are unique to Brazil. "They are all questions of geography, of maintenance, freight cars and types of land, plus training, equipment costs, climate of course and, more specifically, traffic on the same line," says Vilaca.

MRS Logistica, a logistics company out of Minas Gerais state, is spending just $68,000 to develop an in-house, graphic train-scheduling system that simplifies dealing with trains sharing single-line railroads, says Deco Tomas Aquinas de Oliveira, the IT specialist at MRS Logistica. Most of the company's tracks are single line, which makes getting trains to pass one another without accidents a manual--and slow--affair.

"The trains will know when to slow down ahead of time and can thus save energy and transit time," de Oliveira says. In 2002, MRS developed a Web-based, client-services program that allows customers to track their shipments. "It's not as big as what companies like UPS or DHL have because our data bank is smaller, but before [the program] was built we were just hammered with phone calls from clients," says de Oliveira. "Now, nobody needs to call us anymore. This is all very recent."

MRS also built an $862,000 program that manages equipment planning, transportation and budgeting. "We looked for other companies to develop systems software for us. We looked in the U.S., but their products didn't mesh well with our reality," says de Oliveira.

Other railroad companies have jumped on the do-it-yourself bandwagon, and some are selling their applications to others. Ferrovia Centro-Atlantico, a unit of industrial conglomerate Companhia Vale do Rio Doce, bought a program made by another Brazilian railroad, America Latina Logistica (ALL), a few years ago. The program tracks shipments in real-time.

"Not too long ago, we had to import all of our IT needs from other countries and that became very expensive and the product takes too long to arrive," says Guilherme Cabrera, operational security and control manager at Ferrovia Centro-Atlantico, which connects the southeast, northeast and center of Brazil with 7,000 kilometers of tracks. "You'll see more Brazilian logistics companies developing their own tech in-house, or outsourcing it to others like we do here."

U.S. tech consultants such as IBM and Accenture say the logistics industry still needs their services. Rail companies often throw ideas at Accenture or request engineering help or assistance with designing programs developed in-house, says Stacey Jones, a spokeswoman for Accenture in New York. "It's become a trend in the rail industry," she says.

Going abroad. ALL's software development unit tests railroad products designed to improve productivity and manage costs and safety. Started in December 2003, the unit sold a version of its on-board computer tracking system to Spoornet, the largest railroad operator in South Africa. That system, made in conjunction with Daiken Indfustria Eletronica of Curitiba, Brazil, monitors train velocity to better administer delivery time and security.

ALL's newest program, SOL, integrates railroad activities with highway, customs, stock and storage operations in one interface. "Instead of looking for isolated bits of info about stock or freight transit, it will be possible to have all that information in one piece of software," says Ana Claudia Torinho, ALL's client service representative.

The tech experts say that their top concerns are keeping costs low and clients happy to use a rail transport system constantly under the gun because of infrastructure woes. "The new system allows the company to be more agile in getting information on things like train circulation and delivery time at a cheaper cost," says Carlos Monteiro de Barros, SOL project manager.