Ultracargo Expands Rail Logistics for Biofuels Between Brazil’s Midwest and Southeast

BRL 95 million investment strengthens ethanol transport corridor, cuts costs, and improves rail efficiency between MT and SP

Ultracargo has started operations of a new rail siding at its terminal in Rondonópolis, Mato Grosso, reinforcing one of Brazil’s most strategic logistics corridors for biofuels and petroleum products. The BRL 95 million investment strengthens integration between the Midwest and Southeast regions and significantly expands the company’s operational capacity.

The four-kilometer rail siding connects the terminal directly to the regional rail network and allows the operation of trains with up to 80 railcars. The project improves the flow of biofuels,  especially corn ethanol produced in Mato Grosso, toward major consumption and distribution hubs in São Paulo.

The new infrastructure enables a highly efficient return-freight model. Trains that deliver petroleum products to Mato Grosso now return to the Southeast loaded with biofuels, reducing empty runs and lowering overall logistics costs. The shift also supports the partial migration from road to rail transport, increasing reliability and efficiency over long distances.

With the project, Ultracargo’s Rondonópolis terminal now has an annual handling capacity of up to 3 million cubic meters. The investment also included the expansion of storage capacity by 15,000 cubic meters with two new ethanol tanks, as well as upgrades to rail and truck loading platforms. These improvements have reduced the logistics cycle between Mato Grosso and São Paulo by up to two days.

The rail expansion also brings environmental gains. By reducing long-haul trucking, Ultracargo estimates a reduction of approximately 51,000 tons of carbon emissions per year, around 35% lower emissions along the corridor.

The project gains further relevance through its connection with Ultracargo’s rail siding in Paulínia, São Paulo, completed in June 2025. The integration links Rondonópolis directly to the Opla terminal, a joint venture with BP, supporting the growing demand of Brazil’s sugar-energy sector and ensuring continuous fuel supply.

Ultracargo is Brazil’s largest independent liquid bulk storage company, operating integrated logistics solutions for fuels, biofuels, chemicals and vegetable oils across multiple transport modes nationwide.

Brazil Tax Revenue Hits Record R$2.88 Trillion in 2025: Growth Drivers and Infrastructure Boom

Brazil's federal government achieved an unprecedented tax collection total of R$ 2.886 trillion during the year 2025, which established a new record for tax revenue. The current value of this measurement shows a 3.65 percent growth when compared to the previous year. According to official data published this week, the increase in Brazil's tax revenue emerges from two main factors which include strong economic performance and changes made to tax rates.

The result confirms what recent indicators have been signaling: the Brazilian economy remains resilient, supported by strong domestic demand and an active labor market. The Brazilian fiscal situation presents a dual character because the country shows strong financial performance while infrastructure concessions have reached historic levels.

IOF Tax Surge: Key Driver of Brazil's Record Revenue

The record tax collection in Brazil shows its most important source of revenue generation through the Tax on Financial Transactions (IOF Tax). The IOF tax brought Brazil R$ 86.5 billion in revenue during 2025, which represents a 20.5% growth when compared to the previous year. The IOF tax experienced its most significant increase when the government raised tax rates during the last months of 2024.

IOF provided only a minor contribution to government revenue during its early years as a tax. The present shows a major difference because the R$ 80 billion in IOF revenue today compares to the approximately R$ 200 billion spent each year on the Bolsa Família social program. Economists describe this development as a demonstration of "different Brazil" which establishes social policies that drive consumption and result in increased tax revenues.

Keynesian Multiplier Effect: How Social Transfers Boost Brazil's Tax Collection

The revenue data provides a real world example of how the Keynesian multiplier effect operates. When the government provides income transfers to households, it leads to increased consumer spending which drives economic growth and results in higher tax revenue for Brazil.

Economists acknowledge the immediate economic benefits of the short-term increase yet they emphasize that Brazil's economic development requires long-term productivity improvements and innovative technological advancements and development of competitive businesses. The social programs in Brazil have maintained growth rates above 3% through the short to medium term while experts predict 2024 economic growth will range from 2% to 2.5%.

Infrastructure Concessions: A Historic Record for Brazil

Brazil is experiencing multiple major infrastructure developments which accompany its increasing revenue. The current term will end with President Lula's administration completing more infrastructure concessions than any previous government. The current volume of 50 auctions which includes highways, ports, and airports shows a major trend toward private companies taking part in these projects.

Sandro Cabral, who holds the position of Professor of Strategy and Public Management at Insper, states that the current record demonstrates strong investor interest which includes foreign capital investment. "Brazil is a country of immense opportunities," Cabral explains. "While our infrastructure deficiencies are significant, they represent a 'half-full glass' for investors looking to diversify their portfolios in an interesting market."

Generating Public Value Beyond Fiscal Relief

The auctions provide a financial solution which enables funding for major projects without impacting the federal budget. Experts believe that government programs exist to deliver public benefits, which remain their main purpose. The value of this system operates through its established relationship between benefits and costs, which delivers better public services through private sector partnerships that receive government and multilateral organization support.

Subway system expansions which create better transportation routes lead to two main benefits for society. The state agenda which exists in this context unites different political parties through its support of public-private partnership initiatives which both Finance Minister Fernando Haddad and Chief of Staff Rui Costa have worked on for many years.

Formal Employment Boom: Record Social Security Revenue in Brazil

The government budget received essential financial support from the high rate of job creation. Social security contributions reached a record R$ 737 billion last year, driven by rising formal employment. Data from Brazil's labor registry (CAGED) show record levels of workers with formal contracts, which directly translates into higher contributions to the national pension system.

The system continues to operate with existing structural deficiencies. The country has 102 million working citizens but only 45 million of them work in formal employment. The large informal sector poses a major long-term risk because these workers will probably depend on non-contributory benefits like the BPC minimum wage guarantee when they become elderly, which will result in more severe pension system imbalances.

Brazil's Fiscal Picture: Primary Balance vs. R$1 Trillion Interest Burden

Higher taxes are not popular among citizens yet the increased revenue has enabled better control of public budgets. Brazil's primary fiscal result will achieve near budget balance which matches the target set by Finance Minister Fernando Haddad.

The interest burden represents the actual pressure point for the situation. Brazil needs to pay more than R$ 900 billion in annual interest costs because its public debt surpasses R$ 8 trillion while interest rates range from 12% to 13%. Analysts believe this situation represents Brazil's most significant fiscal weakness.

Future Outlook: Strategic Sectors and Looming Challenges

The government plans to boost concession operations, which the Ministry of Ports and Airports plans to expand through 40 upcoming projects. The main sectors that show high growth possibilities include the following areas:

• The railways system serves as a vital resource for big freight companies that operate in mining and agricultural sectors through projects such as the Ferrogrão initiative.

• The national objectives face major difficulties in sanitation, which draws attention from people who support different political views.

• Social infrastructure encompasses public lighting systems and hospital facilities and sports venues.

Although Brazil shows progress in its current fiscal situation, this improvement does not solve the nation's fundamental economic problems that exist beyond the present time. The country needs deep changes to its fiscal system and debt management and productivity development to achieve sustainable growth and attain both record revenue and private investment.

Brazil–China Mega Rail Deal and Expanding Chinese Influence in Brazil’s Infrastructure, Ports, and Energy

Brazil and China have taken a major step toward deepening their strategic partnership with the signing of a new agreement to restart studies for a transcontinental railway linking the Atlantic and Pacific Oceans. The project, often called the Brazil–Peru Bioceanic Railway, would begin on Brazil’s northeastern coast, in Bahia, cross several states, enter Peru, and reach the Port of Chancay, which is a mega–terminal recently inaugurated by Chinese president Xi Jinping and financed through China’s global Belt and Road Initiative.

Although the accord does not authorize construction yet, it revives a plan first studied in 2015 and shelved afterward. Officials from both countries emphasized that updated studies are essential to move the project forward. The railway could cut export transit times from Brazil to Asia from 40 days to about 28, significantly boosting competitiveness for agricultural and mineral shipments.

The initiative aligns with China’s broader strategy in Latin America: using infrastructure investment to expand commercial, logistical, and diplomatic influence. Even though Brazil is not formally part of the Belt and Road Initiative, Chinese capital is already deeply embedded across the country’s key economic sectors.

China’s Expanding Footprint in Brazil

Agriculture:

China has quietly become a dominant player in Brazil’s grain trade. COFCO, China’s state-owned agribusiness giant, is now Brazil’s largest agricultural exporter, handling 17 million tons of soy, corn, and sugar last year. Nearly 80% of Brazilian soy goes to China, and 9% of all soy sacks exported pass through COFCO-operated terminals.

In the Port of Santos, COFCO is boosting its capacity from 4 to 14 million tons per year with its new STS11 terminal, set to become its largest facility outside China.

Ports and Logistics:

China also controls major container and oil logistics hubs:

• CMPorts, China’s biggest port operator, controls the TCP terminal in Paranaguá, responsible for 11% of Brazil’s container movement. The company recently committed R$ 1.5 billion to expand operations.

• CMPorts is set to acquire 70% of the Açu oil terminal, which handles 30% of Brazil’s crude exports and potentially grant China influence over one-fifth of Brazil’s oil outflow.

Rail and Passenger Transport:

Chinese influence has expanded into passenger mobility as well.

The São Paulo–Campinas Intercity Train, auctioned in 2024, is being built by a consortium in which CRRC, China’s state rail manufacturer, holds a 40% stake. The project requires R$ 14 billion and is slated to open in 2031.

CRRC also secured a R$ 3.1 billion contract in 2025 to supply 44 new trains to the São Paulo Metro.

Energy and Industrial Ecosystem:

China’s infrastructure network in Brazil is supported by Chinese-owned energy giants:

• State Grid, controlling CPFL, manages 15% of Brazilian electricity distribution.

• CTG (China Three Gorges) produces 3.5% of Brazil’s energy.

These companies rely heavily on Chinese-made solar panels, which represent 80% of global production.

Meanwhile, part of the oil passing through Açu comes from Chinese offshore operators CNOOC, CNPC, and Sinopec, reinforcing an integrated investment chain.

A Global Strategy That Works

Experts say China’s approach — creating interconnected investments across rail, energy, ports, and agriculture — mirrors what some Brazilian entrepreneurs once dreamed of, but with far greater financial and political backing. Unlike failed private attempts at building integrated industrial ecosystems, China’s state-supported model has succeeded across continents.

What Comes Next?

The revived bioceanic railway studies signal a new phase in Brazil–China relations. If the project moves ahead, it will reshape South American logistics, accelerate trade with Asia, and deepen China’s already significant influence in Brazil’s most strategic sectors — from grains to oil, from electricity to railways.

And although Brazil has not officially joined the Belt and Road Initiative, the scale and depth of Chinese investments suggest that, in practice, the partnership is already well underway.

China, for example, avoided the rise of slums through long-term urban planning that decentralized economic development and controlled internal migration through the hukou system. By creating economic hubs across the country, it reduced the need for mass movement to major cities.

Brazil took the opposite path: jobs concentrated in Rio de Janeiro and São Paulo, triggering disorganized urban growth, the expansion of favelas, and the strengthening of criminal networks, fueled in part by the country’s role as a major drug route.

Experts argue that recurring police operations have failed to address the structural causes of urban disorder. Lasting solutions will require coordinated, long-term public policies that move beyond political polarization and primarily target large infrastructure projects, which are essential because they make domestic production more competitive and attract new businesses. At the same time, they generate direct and indirect jobs, increasing people’s purchasing power and further boosting the economy.