Rail Spike.

Brazil's America Latina Logistics runs tracks around truckers.

TRUCKERS CONTROL THE MEAT OF the cargo movement in the South American trade bloc Mercosur, about 75%, while ports and ships settle for whatever side dishes they can grab. As for railways, forget it. They're lucky if they can scrounge a scrap.

But one company is setting its table for a full meal. America Latina Logistics (ALL), a Brazilian transport company with a regional reach, has launched the first Mercosur door-to-door service combining rails and roads.

ALL operates a railway that stretches more than 1,000 miles from southeastern Brazil to Buenos Aires, then west toward the Chilean border. It uses a trailer that can be moved either by truck or train, and the company's even solved one of the biggest problems for developing a rail trade between the two countries--America Latina Logistics can run its trailer cars on either side of the Argentina-Brazil border, in spite of the different rail track gauges used in each country.

The company is making runs twice a week between Sa Paulo and the southern city of Porto Alegre. The company collects goods from clients in and around Sao Paulo, trucks the cargo to the company's train terminal at Tatui and then ships it by rail to Porto Alegre. "From there we deliver [the cargo] to its final destination," says Joao Carlos Rosas, head of the intermodal unit at America Latina Logistics, promising to deliver the goods in four days.

Boogie rights. The transport company uses a large trailer that can be adjusted to either truck or rail through an adaptor called a "boogie." The shift from truck to train takes only 10 minutes, less than half the normal time to move a container from a ship to a truck. The transfer system also avoids the most common pitfalls for moving cargo from one mode of transport to the other--mishandled, damaged or "lost" goods. "[The boogie] does make the transition between truck and train much easier," notes Frederico Karg, a railway consultant in Sao Paulo.

"You don't have to handle cargo until the final destination," says Roberto Vamos, manager of Road Railer Mercosul, a U.S.--Brazilian joint venture that will manufacture the bimodal trailers, worth about US$100,000 each, in the state of Parana by the end of the year. The first fleet of 160 bimodal cars was imported from U.S.-based Wabash National Corporation.

ALL has established a relay system of rail terminals, one near the border at Uruguaiana, Brazil, and another farther south in Zarate, Argentina, enabling it to offer door-to-door deliveries from Sao Paulo to Buenos Aires within 10 days. "When they say 10 days, they'd better mean it," says cargo consultant Karg. "They will have to stick to that religiously if they want to conquer the market."

To take some burden off volume generation, America Latina Logistics is focusing on high-value cargo. Its current clients include U.S. personal-care products giant Colgate-Palmolive and local brewers Brahma and Schincariol.

The carrier claims its Mercosur run will cost about $1,200 per 20-foot container, a third cheaper than a trucker's bill and about a seventh of the cost of a sea shipment. But at least one multinational shipper that has negotiated with the carrier says the prices offered were actually about 15% more than the trucking rates.

On the right tracks. The prospect of freeing the regional transport industry from its truck dependency is an appealing one. Each of the recent Brazilian trucking strikes has crippled trade and cargo throughout the region.

Rails currently carry 21% of Brazilian cargo, but 14% of that cargo belongs to mining giant Companhia Vale do Rio Doce, which moves its own goods on its own rails with its own equipment.

However, America Latina Logistics' network hopes to change the status quo. The company surfaced as part of the country's rail privatization efforts about three years ago, when a group of private investors led by the private equity fund Garantia, now GP Investimentos, took over the management of the railway Ferrovia Sul Atlantica in southern Brazil. In 1998, the new company acquired Argentine railways Ferrocarril Mesopotamico General Urquiza and Buenos Aires al Pacifico.

America Latina Logistics has already invested more than $120 million in infrastructure and equipment.

If the company can develop a good track record quickly, shippers and analysts agree the service will be more than welcome. Says Paulo Sobrera, director of consultancy for The Kingsley Group in Rio de Janeiro: "America Latina Logistics is on the right tracks."