The Federal Government enacted the Cabotage Transport Stimulus Program, namely “BR do Mar”, intended to promote the availability and competitiveness of cabotage navigation in Brazil. New regulatory provisions were implemented.

The Federal Government sanctioned Law n.º 14.301/2022, establishing the Cabotage Transport Stimulus Program, namely “BR do Mar”, and enacting new regulatory provisions for transporting cargo through cabotage navigation (i.e., linking points of the territory through maritime waterways or interior and maritime waterways).  The law is designed to expand the supply and competitiveness of cabotage navigation as a means to decrease freight costs, hence improving Brazilian logistics and market competitiveness.

According to the Ministry of Infrastructure, the new program seeks to increase the participation of cabotage navigation in the Brazilian transportation matrix from the current 11% to 30%, by expanding the merchant fleet capacity by 40% in the next three years. As per containerized cargo, the 2035 National Logistics (see more in the 29th edition of the Regulatory Report) estimated that cabotage container transportation grew at a 10% CAGR from 2010 to 2019. According to the ministry, the new program aims at reaching 2 million TEUs (Twenty-foot Equivalent Units) in 2022, a 65% increase from the volume transported through cabotage navigation in 2019.

The main provision of the new law that aims at expanding cabotage navigation capacity concerns the flexibilization of conditions through which apt Brazilian Navigation Companies (EBN, in the Portuguese acronym) may charter foreign or domestic third-party vessels (article 5). The conditions are also designed to promote the expansion of the domestic merchant fleet. Additionally, the law determined the role of Brazilian Investment Companies in Navigation (“EBN-i”) as ship charterers for EBNs or foreign navigation companies.

Furthermore, the law updated the conditions through which the shipbuilding and ship repair industries may use the Merchant Marine Fund (FMM, in the Portuguese acronym), which is mainly financed by the AFRMM tax (Additional Freight for the Renewing of the Merchant Marine, in the Portuguese acronym). The stimulus program’s objectives, guidelines, and rules for participating companies are respectively provided in the first, second, and third articles of the new law.