AN INTEGRATED, MULTI-STRATEGY APPROACH FOR LOGISTICS DECARBONIZATION BRAZIL TRANSPORT SECTOR NOTE June 2025 Global economies are highly dependent on efficient logistics to promote economic growth, yet the historical contribution of freight transport to environmental impacts poses an important challenge for the next decades. This study evaluates the cost- effectiveness of various strategies to tackle greenhouse gas emissions from freight transport while maintaining its role in overall development. (i) shifting traffic from higher to lower carbon-intensity modes; (ii) reducing empty loads; (iii) improving the energy efficiency of vehicles; and (iv) adopting alternative fuels. Results show that no single strategy implemented in isolation, will be able to significantly mitigate emissions from freight transport in Brazil. Therefore, an integrated, multi-strategy approach is needed for achieving sustainable emission reductions over time. Tais Fonseca and Joanna Moody Acknowledgments: This note is one of a series of analytic and advisory outputs of the Brazil Mobility and Logistics for Sustainability and Resilience project (P179908) conducted under the guidance of Bianca Bianchi Alves (Practice Manager, Transport, Latin America and the Caribbean) and Luis Alberto Andres (Program Leader, Infrastructure, Brazil). The team thanks colleagues Cecilia Briceno Garmendia (Lead Economist), Martha Lawrence (Senior Transport Specialist), and Michael Wilson (Energy Specialist) for their constructive peer review. This note summarizes analytic findings from World Bank Group. 2023. Brazil Country Climate and Development Report. CCDR Series. World Bank Group, Washington DC. http://hdl.handle.net/10986/39782 CONTEXT Logistics activities, primarily freight transport, play a vital role in Brazil’s economic development. Yet, they impose a high environmental price, particularly in terms of emissions of air pollutants and greenhouse gas (GHG) emissions like carbon dioxide (CO2). In Brazil, freight transport and logistics accounts for around 52 percent of total CO2 emissions from the transport sector. These high emissions stem from the over- reliance on road transport, the inefficiency and aging of the freight fleet, poor logistics practices resulting in many empty backhauls, and the limited adoption of low-carbon fuels. In 2019, of the 366 billion tonne-kilometers of freight transported in the country, 65 percent was transported by trucks, 20 percent by waterway, and 15 percent by rail. The dominance of road transport in Brazil is influenced by a historical pattern of investment prioritizing roads, combined with regulatory, geographic, and economic factors shaping freight demand and supply across regions. In 2017, transport infrastructure in Brazil comprised 1.5 million kilometers (km) of roads, 30,000 km of railways, and 22,000 km of navigable waterways. While the road network is significantly more extensive than the railway network, the adequacy of both networks depends on multiple factors, including the type of goods transported, distance traveled, and location of production and consumption hubs. Between 2010 and 2020, railway movements grew by 12.4 percent, while the volume of Brazilian exports rose by 34.2 percent. This is partly due to the lack of railways connecting the agricultural production hubs in the northwest to the large cities, industries, and ports in the south and southeast. This lack of rail connectivity for its most competitive market segment (i.e., long-haul, bulk freight) constrains potential multimodality, resulting in higher transport costs and emissions. Expanding the density of low-carbon infrastructure promotes the competitiveness of more sustainable modes, both in direct movements and in multimodal operations. For waterways, terminals are predominantly located in the country's northern region, complementing a road network that is of low quality. Less than 13 percent of roads are paved, resulting in frequent delays and constraining multimodality. The resilience of access roads to major ports is tested by heavy rainfall that commonly incurs stoppages and delays. Similarly, inland waterway operations are exposed to extreme weather conditions, such as low water levels, which can temporarily disrupt navigation. This affects time reliability and increases costs, despite the environmental advantages of water transport. The quality of ground transport and port infrastructure in Brazil (2.9 out of 7) currently falls behind the world average (3.7 out of 7). Despite these challenges, between 2010 and 2020, coastal shipping cargo handling grew by 54.0 percent and transport by inland waterways grew 46.5 percent. Quality and vulnerability challenges across modes lead to higher shipping costs and reduces the cost competitiveness of multimodal transport operations. These challenges highlight the need to strengthen the resilience of lower-carbon modes alongside efforts to expand their use. Overall, Brazil’s current modal split is not the most cost-efficient or low-carbon way to move goods, nor does it allow Brazil to take advantage of its relative competitive advantage in bulk commodities. Recognizing this constraint on future economic growth, Brazil’s National Logistics Plan (Plano Nacional de 1 Logística, PNL)1 presents the optimistic goal of increasing the modal share of railways to 43 percent. This requires substantial investments (public or private) destined for railways and waterways as an alternative to roads. Optimizing Brazil’s freight transport system requires infrastructure expansion planned with a deep understanding of how freight demand is structured and how it evolves. The country’s logistics patterns are strongly influenced by its position as a global exporter of bulk commodities, often transported over long distances from inland production zones to coastal ports. While expanding rail and waterway capacity is essential to enable a more balanced and sustainable modal split, addressing operational inefficiencies is equally critical. These include the high incidence of empty return trips, limited adoption of low-carbon fuels, and the continued reliance on an aging, diesel-based truck fleet. Improving the efficiency and environmental performance of freight transport will be key to enhancing Brazil’s competitiveness and supporting its climate goals. These challenges underpin the four integrated green freight strategies presented in this note. Potential Green Freight Strategies for Brazil Reducing GHG emissions from freight transport requires a multifaceted approach 2 that tackles the sector’s core inefficiencies. The most effective strategies are those that combine operational, technological, and structural measures to reduce carbon intensity while improving logistics performance. In Brazil’s context, four priority areas emerge as the most impactful and feasible: Shifting traffic from higher to lower carbon-intensity modes such as rail and waterways, to reduce the sector’s over-reliance on road freight; Reducing empty loads which remain a persistent inefficiency that drives up both operational costs and emissions; Improving the energy efficiency of vehicles especially for Brazil’s aging truck fleet, through vehicle upgrades and fleet renewal programs Adopting alternative, low-carbon fuels which offers the greatest potential for long-term decarbonization, particularly in road transport. 1Empresa de Planejamento e Logística (EPL). 2021. Plano Nacional de Logística – PNL 2035. Accessed December 2021. https://ontl.epl.gov.br/planejamento-pnl-2035/ 2 Bullock, R., M. Lawrence, and J. Moody. 2023. Unlocking Green Logistics for Development. Mobility and Transport Connectivity Series. Washington, DC: World Bank. http://hdl.handle.net/10986/40529 2 Together, these four strategies reflect both international best practices and the priorities set out in Brazil’s National Logistics Plan. They provide a practical framework to guide public and private investment decisions toward a more resilient, efficient, and sustainable freight transport system. Shifting traffic from higher to lower carbon-intensity modes Historically, Brazil has faced structural and regulatory challenges in expanding its railway network. Concessions granted during the 1990s created regional monopolies without clear rules on interoperability or right-of-way access. Additionally, intermodal terminals are often controlled by a limited number of operators, which reduces competition and limits network efficiency. These barriers, combined with legal uncertainty and low returns, have discouraged private investment. To address these bottlenecks, a new regulatory framework (Law 14,273/21 – Pró-Trilhos Program) was created to authorize the construction of railways by private initiatives. This model diverges from the exclusive concession model by allowing open access and fostering competitive entry. It has already attracted 106 proposals, of which 46 have been approved. Although concerns remain regarding stability of long-term concession rules and regulatory clarity as well as the effective competition of these projects, the new framework represents a structural shift toward a more flexible and investment-friendly model. Railways will see substantial investments of BRL 94 billion between 2024 and 2026, which include the completion of one corridor and advancements in other corridors. Encouraging coastal shipping and increasing the Brazilian fleet of freight vessels are the main objectives of recent regulatory measures for the waterways sector. Cost competitiveness and growth potential (especially in the general cargo segment) have demanded efforts to increase coastal shipping as a means of transport between Brazilian locations. In a recent regulatory framework ("BR do Mar" Program to Stimulate Transport by Cabotage), the main objectives are increasing supply and the sector's competition. The highlighted actions are: (i) the creation of new ways of chartering foreign vessels as a way of increasing the operating fleet; and (ii) encouraging the development of the naval industry to reduce the dependence of Brazilian Shipping Companies (EBNs) on foreign shipyards. While shifting freight to lower carbon transport modes is one of the strategies to decarbonize logistics, the emissions reductions that can be achieved through modal shift are constrained by the ability and capacity of railways and waterways to attract traffic from more energy-intensive modes. The potential for a large-scale modal shift in Brazil is limited by the nature of cargo and logistics demand. Railways and waterways are particularly suitable for transporting bulk commodities—such as iron ore, soybeans, and fertilizers over long distances—but they are often uneconomical for shorter hauls, general cargo, or time- sensitive shipments. As such, these modes are viable only in specific corridors, for specific commodities. This structural constraint narrows the window for modal shift and means that road transport is likely to continue dominating freight operations, especially for non-bulk goods and shorter distances. 3 Some studies show the cumulative impact of modal shift on GHG emissions can be relatively small, resulting in decreases of 10-15 percent at most.3 This is because implementation of modal shift is often capital-intensive and can only be done over a relatively long period of time. Moreover, investments alone are insufficient: modal shift depends on coordinated regulatory reforms, multimodal integration, and the reduction of institutional barriers that limit operational efficiency. Even when pursuing substantial modal shift, dependence on road transport in the short and medium-term are likely to continue. This necessitates parallel efforts to increase efficiency and promote energy transition, thereby improving the short-term impact on overall energy consumption associated with cargo movement. Reducing empty loads Empty vehicle movement is both economically inefficient and environmentally harmful, as vehicles traveling without cargo generate GHG emissions. However, operational inefficiencies, including both empty trips and idle vehicle time, are frequently observed in Brazil. In a survey of 292 road freight transport companies in the country, 82.5 percent indicated that their vehicles were without loads at some point in their operations, with 19.2 percent stating that their vehicles circulate empty for half of the kilometers traveled monthly.4 Reducing empty kilometers traveled increases transport productivity and reduces emissions per ton of transported goods. New shared business models leveraging information and communication technology can help mitigate the problem of empty backhauls in road freight transportation.5 Initiatives in high-income countries have found significant cost and emissions savings from sharing of palletized transportation among companies.6 In Brazil, a notable example is the ethanol logistics system that combines pipelines and trucks. Ethanol is transported via pipelines from production areas to major consumption hubs, while trucks are used to move the product to pipeline terminals and to handle final distribution. To avoid empty returns, these trucks often carry fertilizers back to the producing regions—a return cargo strategy that improves asset utilization and can cut emissions by up to 14 percent.7 3Lawrence, M., and R. Bullock. 2022. The Role of Rail in Decarbonizing Transport in Developing Countries. Mobility and Transport Connectivity Series. Washington, DC: World Bank. http://hdl.handle.net/10986/38214 4Confederação Nacional dos Transportes (CNT). 2015. CNT survey on energy efficiency in road freight transport. Brasilia: CNT. http://www.cnt.org.br/estudo/sondagem-eficiencia-energetica 5 Belk, R. 2014. You are what you can access: Sharing and collaborative consumption online. Journal of business research, 67(8), 1595-1600. 6The “European Collaborative Transport Program” involving more than 50 companies saved 2.9 million empty kilometers in 2012 and a reduction of 2,340 tCO2 emissions. In North America, similar initiatives saved 6.6 million empty kilometers and avoided 6,500 tCO2 emissions, in addition to generating savings of 8.7 million euros for its customers. Pinto, J.S., A.C. Oliveria, H.S. Costa, and J.P. Vilhena. 2015. Collaborative Transportation Management (CTM): its benefits and current practices. XXXV National Meeting on Production Engineering Global Perspectives for Production Engineering. Fortaleza, CE, Brazil, October 13-16, 2015. Brambles. 2018. Zero Waste World. Less resources, more value, together. Newcastle, Australia https://www.brambles.com/zero-waste-world/ 7 Branco, J.E.H., D.B. Bartholomeu, and A.C. Vettorazzi. 2020. Avaliação das emissões de CO2 na etapa de transporte do etanol: aplicação de um modelo de otimização. Transportes, 28(1), 63-80. 4 In addition to the ethanol-fertilizer model, other collaborative logistics practices are emerging in Brazil. In the beverage and food industry, shared transport flows between companies in the same supply chain, such as PepsiCo and CHEP, can provide significant economic returns and reduce CO₂ emissions.8 Digital freight platforms such as TMOV, Freight Brás, Quero Frete, and Veículofy have been developed to connect shippers and carriers in real time, reducing idle capacity and transaction costs, particularly in agricultural and industrial supply chains. There are still significantly more opportunities for return cargo operations from ports to production centers. For Brazilian agribusiness, the most common return loads are fertilizers. Crowd-shipping solutions are also gaining traction in urban logistics, enabling the use of available space in smaller vehicles for last-mile deliveries, often linked to e-commerce operations. Despite these promising developments, Brazil still lacks a structured and scalable system to deploy such collaborative and technology-based logistics solutions nationwide. Collaborative transport still represents a small share of logistics practices; in 2007, only 24 percent of companies engage in any form of joint operation, and just 16 percent report having formal agreements for return cargo.9 More recent research indicates that only 31 percent of companies, on average, work with some idle space sharing strategy in their transport assets.10 Scaling up will require coordinated efforts across the public and private sectors to ensure interoperability, promote participation, and reduce regional freight flow imbalances. In addition to the potential reduction in transport costs by shippers, this kind of transport operation makes better use of investments (in infrastructure and rolling assets). The larger-scale development of return cargo operations beyond road transport offers more significant incentives to make new investments in multimodal infrastructure projects. There is demand for this kind of solution, and improvements in port terminals are also required. Improving the energy efficiency of vehicles The fleet of vehicles serving Brazil’s freight transport sector is old and these older vehicles tend to emit higher levels of GHG per unit of transport produced. In Brazil, the average age of trucks has increased from 13.9 years in 2016 to 15.2 years in 2019. 11 According to the National Registry of Road Cargo Transporters 12 —a nationwide database maintained by the National Land Transport Agency (Agência 8SiiLA News 2023. PepsiCo and CHEP Brasil Collaborate for Sustainable Logistics: Reducing CO2 Emissions and Enhancing Efficiency. https://siila.com.br/news/pepsico-chebrasil-collaborate-sustainable-logistics-reducing-co2-emissions-enhancing-efficiency/6401/lang/en Doliani, R.D., A.R.T.T. Argoud, F. Santiago, J.B. de Camargo Junior, C.G. de Freitas, and M. S.P. Lobao. 2022. Impacts of Collaborative Logistics: A Brazilian Brewing Sector Case Study. International Journal of Industrial Engineering and Management, 13(2): 99-109. http://dx.doi.org/10.24867/IJIEM-2022-2-304 9 LIMA, RFC Management practices of road freight transport in companies - Part 2. 2007. https://www.ilos.com.br/web/praticas-da-gestao-do- transporte-rodoviario-de -loads-in-companies-part-2/ 10Finger, A., F. Marini, G.A. Bernadini, J.A.C. Junior, L.D.S. Motiin, and T.B. Cardoso. 2018. Digital platform for sharing idle space in cargo vehicles. Final Paper – Executive Program in Business Management, Fundação Dom Cabral; Instituto de Transporte e Logística, Porto Alegre. https://repositorio.itl.org.br/jspui/handle/123456789/84 11Confederação Nacional dos Transportes (CNT). 2019. Perfil dos Caminhoneiros: idade média da frota de caminhões passa dos 15 anos. https://www.cnt.org.br/agencia-cnt/idade-media-frota-caminhoes-passa-15-anos-cnt-perfil-caminhoneiros 12 Registro Nacional de Transportadores Rodoviários de Cargas (RNTRC). https://portal.antt.gov.br/en/rntrc 5 Nacional de Transportes Terrestres, ANTT) that records all authorized cargo carriers and their fleets— Brazil’s road freight system comprises over 2.7 million vehicles. A large share of these vehicles are operated by small companies or independent truck drivers, and a significant portion of the fleet is over 20 years old. This aging profile reflects structural barriers to fleet renewal, raising environmental concerns. In the rail sector, half of the wagons in operation are over 30 years old and reaching the end of their productive life cycle. 13 While locomotives, not wagons, are the primary determinant of energy consumption of railway transport, the condition of wagons still matters; older and heavier wagons require greater tractive effort, which increases fuel consumption and reduces overall efficiency. Similarly, the average age of coastal shipping vessels exceeded 18 years when examined in 2010, which is considered high for the sector.14 Regulations for heavy-duty vehicles in Brazil that address air quality and fuel efficiency can be used to accelerate the green transition in the transport sector. In Brazil, the average energy efficiency of new heavy trucks (km/l) increased 0.6 percent per year between 2003 and 2020.15 The phased introduction of regulations has stimulated the adoption of more efficient engines, but the pace of progress is slow and there are still relatively few specific policies aimed at leveraging vehicle technologies to reduce energy consumption and mitigate GHG emissions compared to other countries.16 And affordability, especially for self-employed drivers, remains a barrier to fleet improvement. Adopting alternative, low-carbon fuels The transition of Brazil’s heavy-duty vehicle fleet to alternative fuels is still unclear, with sources suggesting a variety of potential pathways. In the near-term, bioenergy and biomass are considered relevant ways to reducing national dependence on diesel. For example, if demand for biofuels reach a share of 35 percent of the market, emissions from the trucking subsector (amounting to as much as 15 million tCO2 annually) could reduce by 9 percent.17 Hydrogen fuel cells are still expensive to manufacture, but the cost is expected to fall by up to 64 percent by 2040.18 And while some forecasts for 2050 estimate that electricity will power only 2.5 percent of the trucking sector—in contrast with fleets of 28,000 electric 13Revista Ferroviária. 2023. Metade da frota de vagões no Brasil tem mais de 30 anos. https://revistaferroviaria.com.br/2023/05/metade-da- frota-de-vagoes-no-brasil-tem-mais-de-30-anos/ 14Portal Naval. 2010. ANTAQ apresenta “raio x” da frota brasileira de cabotagem. https://portalnaval.com.br/noticia/antaq-apresenta-raio-x- da-frota-brasileira-de-cabotagem/ 15 International Energy Agency (IEA). 2021. Road Freight Transport in Brazil 2021. International Benchmarking. 16Araujo, C.S.C. 2021. Freight in Brazil: an assessment and outlook for improving environmental performance. The International Council on Clean Transportation (ICCT). https://theicct.org/publication/freight-in-brazil-an-assessment-and-outlook-for-improving-environmental-performance/ 17Associação Nacional dos Fabricantes de Veículos Automotores (ANFAVEA). 2021. O caminho da descarbonização do setor automotivo no Brasil. 18Mårtensson, L. 2020. Hydrogen fuel cells: All your questions answered. Volvo Trucks Global. Jun. 2020. https://www.volvotrucks.com/en- en/news-stories/insights/articles/2020/jun/hydrogen-fuel-cells-all-your-questions-answered.html Wood Mackenzie. 2020. Green hydrogen costs to fall by up to 64% by 2040. Aug. 2020. https://www.woodmac.com/press-releases/green- hydrogen-costs-to-fall-by-up-to-64-by-2040/ 6 trucks in China and projected 24,000 in the US19—if barriers to electrification such as the current price of vehicles and limited charging infrastructure can be addressed, electric trucks could play a significant role in the longer term. Cost-Effectiveness of Green Freight Strategies To evaluate the cost-effectiveness and GHG emissions reduction potential of these initiatives, four scenarios were simulated for the period between 2020 and 2050. These scenarios build on the country’s ambitious targets for modal shift while also acknowledging the complementary and important role of fuel transition for transport vehicles: 1. Business as usual (BAU). The business-as-usual scenario serves as a reference for comparison of other potential initiatives. This scenario models the stagnation of technological progress and infrastructure in the country. While the total amount of freight movement (in ton-kilometers) grows to 2050, modal shares remain similar to current levels: 65 percent road, 21.1 percent rail, 4 percent waterway, and nearly 9.9 percent other. 2. Modal shift (MS). The modal shift scenario focuses on the development of railway and waterway alternatives to road-based goods movement to meet the targets of the National Logistics Plan. The scenario assumes that new rail and waterway infrastructure opens for operation in 2030 and reaches full service by 2035 to support modal shares of 41.5 percent road, 43 percent rail, 4.5 percent waterway, and 11 percent other. 3. Feasible ambition (FS). The feasible ambition scenario combines modal shift with a gradual transition of vehicles from fossil fuel (diesel) powered to alternative fuel. Under this scenario, by 2050 the truck fleet is only 50 percent diesel, 20 percent electric, 5 percent hydrogen, and 25 percent biomethane and the train fleet is 60 percent diesel, 30 percent electric, and 10 percent hydrogen. 4. Carbon neutrality (CN). This scenario combines modal shift with complete electrification of the truck and train fleet by 2050. Simulation results of the MS scenario highlight that modal-shift has an important role to play in GHG emissions mitigation; however, sustaining these benefits would require continuous investments in rail and waterway infrastructure beyond current national plans to keep up with the country’s economic growth and associated increases in freight transport from 2035-2050 (see Figure 1). The MS scenario shows initial reductions in emissions from 2030 onwards, reaching the lowest emission level in 2035 when the entire new rail and waterway infrastructure in the country is in full operation. However, beyond 2035, the growth of the Brazilian economy shows emissions growing in the long-term at a similar rate to the BAU scenario. Relative to the BAU, the cumulative abatement of emissions with the MS strategy is estimated at 600 million tons of carbon dioxide (tCO2) with an associated cost of US$ 73 per tCO2 reduced. 19 Brusque, R. 2020. Venda de caminhões elétricos deve explodir até 2025. 03/09/2020 – Blog do Caminhoneiro. https://blogdocaminhoneiro.com/2020/09/venda-de-caminhoes-eletricos-deve-explodir-ate-2025/ 7 Figure 1. (a) Net investments and cost-effectiveness and (b) CO2 emissions abatement of different freight transport decarbonization strategies in Brazil, 2020-2050 (a) Net investments (US$ billion, 2024 net present value) and cost-effectiveness (US$/tCO2 abated) (b) CO2 emissions abatement Figure note: Exchange rate: BRL 4.50/USD; at 6.0 percent economic discount rate; Estimated from PNL 2035 (EPL, 2021) and ESALQ-LOG projections (2022); TTW (Tank-to-wheel) emissions. Simulation of the FS and CN scenarios highlight that the path for Brazil to achieve substantial, long-term emissions reductions in the freight transport sector involves the combination of modal shift and transition to alternative fuel vehicles. The FS scenario sustains a downward emissions trend driven by modal shift through 2035 and fleet transition to 2050. It presents an intermediate cost option, estimated at US$ 98 per tCO2 mitigated (with a total cost of US$ 85 billion). However, the FS scenario is far from achieving net- zero by 2050. Achieving net-zero emissions in the CN scenario comes at a high cost, with a total estimated investment of US$ 156 billion to abate 1.2 billion tCO2 (a cost of US$ 127 per tCO2 abated). Within this CN scenario, the electrification of the entire fleet of trucks and locomotives has an estimated cost of US$ 112 billion and achieves a reduction of 629 million tCO2 (a cost of US$ 178 per tCO2 abated). 8 While modal shift (MS) alone generates early gains, its long-term impact is limited by increasing freight demand. The feasible ambition (FS) and carbon neutrality (CN) scenarios demonstrate that combining strategies—especially modal shift with vehicle decarbonization—yields greater and more sustained emissions reductions. The FS scenario represents a cost-effective intermediate path, while the CN scenario achieves the largest abatement, albeit at higher costs. Among the four green freight strategies, only modal shift and fuel transition were included in the cost- effectiveness analysis. Strategies such as reducing empty backhauls, although critical, are highly dependent on behavioral changes, coordination between actors, and local logistical conditions, which are difficult to capture in national-level models. Nevertheless, their contribution is conceptually aligned with the modal shift and energy efficiency pathways and can further amplify gains when implemented jointly. Digital tools, collaborative logistics platforms, and data-sharing initiatives, although not explicitly modeled, are highlighted in the recommendations because they enable greater vehicle utilization and can catalyze reductions in empty kilometers traveled. WAY FORWARD Building on the cost-effectiveness analysis, the following recommendations identify actionable paths forward grounded in the four strategies assessed: modal shift, reduction of empty loads, vehicle efficiency, and fuel transition. Among these, the combination of modal shift with the transition to alternative fuels proved to be the most impactful. While modal shift alone yields moderate short-term reductions, sustained and deeper decarbonization requires pairing it with vehicle electrification and fuel substitution. Further recommendations related to horizontal collaboration and the use of digital tools to optimize vehicle utilization, complement core strategies by enhancing implementation and unlocking synergies across the freight system. These findings underscore the importance of coordinated investments in infrastructure and fleet modernization to optimize emissions mitigation. 1. Adopt an integrated, multi-strategy approach to achieve sustainable emission reductions over time . There are clear challenges for Brazil to catch up with other countries in its decarbonization paths, but many opportunities to reduce carbon emissions are available and there is a clear movement towards greening freight logistics. This study shows that a sustainable and effective decarbonization path is the result of a set of strategies that must be implemented in a complementary way. Modal shift or other strategies, implemented in isolation, will not be able to significantly mitigate (and perhaps even zero) emissions in freight transport in Brazil. Thus, logistics decarbonization measures must be thought of together so that the mitigation effects are real and sustainable over time. Besides the environmental benefits, the decarbonization will imply in a more competitive freight transport, reducing transport costs and increasing the competitiveness of Brazilian products. 9 2. Address regulatory and market structure constraints limiting the competitiveness of rail and waterway freight. A significant change in the transport modal split could lead to a more environmentally friendly transport operation. Despite the importance of policies involving modal-shift, such a policy contributes only with a temporary abatement. As production and consumption increase over time, even a cleaner and more balanced transport matrix will suffer the consequences of higher demand and, consequently, higher emissions. Thus, policies that promote energy efficiency and the use of alternative and cleaner fuels are fundamental to assist Brazil in its ambition to achieve zero emissions in transport. Investment in sustainable infrastructure (railways and waterways) is an essential step to all scenarios analyzed. These investments are already reflected in Brazil’s National Logistics Plan, which prioritizes BRL 94 billion in railway investments between 2024 and 2026. However, regulatory and market structure constraints also limit the competitiveness of these low-carbon modes. Concentrated markets and pricing structures that depend on (and are proportional to) road freight contribute to the gap between the current and the potential competitiveness of rail and water transport in Brazil. The high degree of concentration of the railway network by concessionaires distorts the formation of freight values for transport by train, giving market advantages to the logistics provider when pricing services. Instead of using the real cost as a base for pricing transport, road freight is adopted as a benchmark for the prices charged for rail and water transport operations. In periods when truck movements are at high prices, higher prices tend to be observed in rail and waterway markets. While the regulator, ANTT, establishes ceiling tariffs for rail transport, an equivalent mechanism is not adopted by the regulator of water transport (Agência Nacional de Transportes Aquaviários, ANTAQ). The assessment highlights the opportunity to strengthen the competitiveness of low-carbon freight modes through more strategic tariff structures. While market-based pricing remains essential, benchmarking rail tariffs too closely to road transport—particularly in concentrated markets—can limit the modal shift potential. Expanding the capillarity of the rail network and encouraging greater participation of service providers are key to fostering a more competitive logistics environment. These measures can help unlock the efficiency and sustainability benefits of rail and other low-carbon alternatives, positioning them as viable options in a more balanced and integrated freight transport system. 3. Innovate with horizontal logistical collaboration to reduce empty kilometers traveled and mitigate environmental impacts of freight transport. The use of applications and platforms emerge as important tools for collaborative logistics in which competitors cooperate at a strategic level in the joint planning and use of distribution centers and other logistics facilities. Digital tools with the aim of integrating players have been recently developed. The main objective of these tools is to promote the full use of transport assets, showing carriers a solution for sharing loads, in order to avoid empty spaces in their vehicles and generate financial compensation in transport operations. In addition to the objective of reducing costs, there is the advantage of establishing networks with greater capillarity, which can be leveraged by the presence of hubs, since the loads of different shippers are consolidated and allocated to specific carriers. 10 4. Strengthen heavy-duty vehicle emissions standards and carefully study substitution of fuels and fleet replacement from a well -to-wheel perspective. For a country where freight needs to travel long distances, fuel efficiency improvements are critical. Brazil’s regulations could do more to incentivize more efficient engines, fleet renewal, and emissions standards, which can all promote significant reductions in carbon emissions. In parallel, while there is significant interest in Brazil in biofuels, the country also needs to prepare for the development and gradual adoption of alternative technologies such as electric and hydrogen vehicles. These technologies are widely under development and will likely be needed to achieve large-scale decarbonization in the long term. However, when assessing the cost-effectiveness of emissions reductions through these alternative fuels and vehicle technologies, it is important to remember that results can change significantly depending on the approach considered (well to wheel, well to tank, or tank to wheel). In addition, different fuels can change vehicle performance and consumption. Although large-scale fleet replacement scenarios are still far from the reality of cargo transport in Brazil, public policies aimed at introducing and incentivizing the use of electric vehicles should be considered as part of a long-term strategy. Electrified trucks and locomotives are crucial for achieving a zero-emission scenario by 2050. In contrast to other large countries such as China and the United States, Brazil still has a very limited fleet of battery electric freight vehicles. Advancing in this area will require improved access to financing and the expansion of charging infrastructure to support the rollout of electrification in the dominant road freight sector. Icon Credit: 1. Logistics by Nizar AnT. https://thenounproject.com/icon/logistics-7043513/ 2. Cargo Container by icon 5. https://thenounproject.com/icon/cargo-container-7877305/ 3. Logistics by Mia Elysia. https://thenounproject.com/icon/logistics-7861538/ 4. Energy Efficiency by Nung Sbagung. https://thenounproject.com/icon/energy-efficiency-7770013/ 5. 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