An Analysis of the Effects on Rail Operational Efficiency Due to a Merger between Brazilian Rail Companies: The Case of RUMO-ALL

Francisco Gildemir  Ferreira da Silva; Renata Lúcia  Magalhães de Oliveira; Marin Marinov

doi:10.3390/su12124827

An Analysis of the Effects on Rail Operational Efficiency Due to a Merger between Brazilian Rail Companies: The Case of RUMO-ALL

Francisco Gildemir Ferreira da Silva, Renata Lúcia Magalhães de Oliveira, Marin Marinov

Research output: Contribution to journal › Article › peer-review

Abstract

Mergers between companies are motivated by synergy effects that can improve profitability. On February 11, 2015, the Administrative Council for Economic Defense (Cade) approved, the merger between America Latina Logística (ALL), the largest railroad transport company in Brazil and Rumo Logistics (RUMO), an operator with national impact with restrictions, and formed a new entity RUMO-ALL. The approval of this merger suggested that there could be an increase in operational efficiency without compromising the competition. In this work, the operational efficiency of RUMO-ALL is evaluated using Data Envelopment Analysis (DEA) models for the return of adequate scale. Statistical tests of structural break are performed in order to understand if there are an ex-post merger effects on the operational efficiency after the expansion of the service. The results indicate that the rail service after the merger is efficient, but with marginal reduction of production with an increase of input, which is expected according to neoclassical economic theory for monopolies.

Original language	English
Article number	4827
Journal	Sustainability
Volume	12
Issue number	12
DOIs	https://doi.org/10.3390/su12124827
Publication status	Published - 12 Jun 2020

Bibliographical note

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Keywords

Brazil
DEA
Mergers
Operational efficiency
Rail

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10.3390/su12124827Licence: CC BY 3.0

An Analysis of the Effects on Rail Operational Efficiency
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited
Final published version, 1.1 MBLicence: CC BY 3.0

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abstract = "Mergers between companies are motivated by synergy effects that can improve profitability. On February 11, 2015, the Administrative Council for Economic Defense (Cade) approved, the merger between America Latina Log{\'i}stica (ALL), the largest railroad transport company in Brazil and Rumo Logistics (RUMO), an operator with national impact with restrictions, and formed a new entity RUMO-ALL. The approval of this merger suggested that there could be an increase in operational efficiency without compromising the competition. In this work, the operational efficiency of RUMO-ALL is evaluated using Data Envelopment Analysis (DEA) models for the return of adequate scale. Statistical tests of structural break are performed in order to understand if there are an ex-post merger effects on the operational efficiency after the expansion of the service. The results indicate that the rail service after the merger is efficient, but with marginal reduction of production with an increase of input, which is expected according to neoclassical economic theory for monopolies.",

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AU - Marinov, Marin

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An Analysis of the Effects on Rail Operational Efficiency Due to a Merger between Brazilian Rail Companies: The Case of RUMO-ALL

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