Running rings: as grain exports grow in Argentina, so do calls for new investments in logistics.

In downtown Rosario, a port city near Buenos Aires, motorists can always count on something: The sight of automobiles scrambling to cross a railroad, often right before trains 70 cars long come barreling through. It's also not unusual to see highways clogged with trucks from February to June, sometimes forming 30-kilometer lines as they bring the country's harvest to the docks for export. For the Port of Rosario, bottlenecks are a way of life.

Yet transport congestion could fade into the past if a plan known as the Circunvalar becomes reality. The brainchild of the country's private ports chamber, the Rosario stock market and the Ferrocamara railroad association, Circunvalar would build a ring of highways and railroads in and around the city to better handle the transfer of cargoes between trucks and trains. It would also include three multimodal centers, logistics support and cargo service. Studies conducted by the Rosario Stock Exchange put the project's cost at US$300 million. Bidding on the Circunvalar's initial projects should take place during the middle of 2006. The project is estimated to take five years to complete.

Greater Rosario, which is the portal to ocean access for a large chunk of the country, has experienced more growth in land cargo traffic over the past decade than any other region in Argentina, reporting 7 million tons of railroad cargo and more than 60 million tons by truck, according to the Rosario Stock Exchange. Ports in the area ship 60% of the country's grains.

Hector Di Benedetti, head of institutional relations at the exchange, says there is a need to boost capacity to move private-sector goods, which currently total 120,000 tons a day. In one year alone, 1.3 million trucks will roll in and out of the facility.

Bottlenecks have been a problem for both farmers and shipping companies, says Paolo Colussi, director of operations at America Latina Logistica, which relies heavily on Rosario's port facilities. "This situation has global repercussions for logistics companies, whoever pays the dockage fees and for those who both produce and store grains," Colussi says. Forecasts indicate that grain harvests will have higher and higher yields in the long-term, which makes upgrades to Argentina's highways, railroads, access roads, ports and factories necessary to handle the increased flow of raw materials. "Production is growing and so are private-sector investments. What's missing is an appropriate level of support from the infrastructure side," says Pablo Ferres, head of private ports chamber.

Federico Dosztal, coordinator for the Argentine Association of Logistical Enterprises, says things could get tougher. "The magnitude of the problem will continue to grow because we expect that by the end of the decade, grain production could reach 100 million tons," he says.

Savings. Circunvalar should cut down on shipping costs once railroads haul more grain from the interior more quickly. In just a few years, railroads will move 20 million tons of grain a year compared with a current 9 million tons. Trucks will also haul more grain, eventually giving farmers room to grow more. With Circunvalar, railroad transportation will grow and will be able to cater to faraway places, although trucks will continue to be the mode of choice for anything within 150 kilometers, according to the ports council.

More trains will lower transportation costs by as much as $60 million over the first 10 years, according to the stock exchange. Railroads pay lower tariffs than do trucking companies--about half--and with more grain coming in on the tracks, the resulting savings will feed back into the system. Fuel costs, too, fall with increased rail traffic.

JUAN PEDRO TOMAS * BUENOS AIRES