Cabotage Gains New Incentive With Cost Reduction

Cabotage is the transport of goods or passengers between two places in the same country. It originally applied to shipping along coastal routes, port to port, but now applies to aviation, railways, and road transport as well. Cabotage rights are the right of a company from one country to trade in another country.

The Federal Government reduced the import tax for vessels destined for cabotage operations in Brazil. With this, the expectation is to reduce by 40% the cost to import a specific vessel for this segment. The measure is part of “BR do Mar”, a plan that aims to boost maritime cargo transportation along the Brazilian coast.

Today, the import tax rate for vessels is 14%. But with the plans to encourage cabotage, which should be revealed with the disclosure of the BR do Mar, the issue has been analysed by the Foreign Trade Chamber, which approved the elimination of the tax.

The measure was announced and celebrated by the Minister of Infrastructure, Tarcísio Gomes de Freitas. For him, the Government’s decision is “a huge nod to those who are willing to invest in the sector, create jobs, move the entire production chain and contribute to expand the participation of the cabotage matrix in Brazil’s transport matrix”.

For port consultant Fabrizio Pierdomenico, the measure is also welcome.

On the other hand, the consultant points out the risk of the measure having side effects. The idea, according to Pierdomenico, is that the tax exemption lasts from 12 to 24 months.

Other Extreme Measures

Pierdomenico believes that BR do Mar has to resolve other issues to boost cabotage. One of them is the issue of bunker oil, the fuel of navigation, considered one of the obstacles to the development of the modal.

The BR do Mar may be published through a bill or a Provisional Measure.

The idea is that ships carrying cargo through cabotage will have a differentiated treatment, which can guarantee a reduction in bureaucracy and agility compared to long-haul shipping, which will not have a revision of standards and regulation.