The truck crisis and the surprise of what seemed right

Scenario that led to this situation began to form in 2014

Even after decades of becoming accustomed to the unsustainable situation of cargo transportation in Brazil, the magnitude of the sector's crisis and its impact on the country's daily life still cause great surprise in the population.

To understand the current moment, it is important to go back to the pre-crisis period of 2014, when the economy was expanding and there was an increase in the demand for road transport, which was already too great.

Faced with the positive scenario of the national market and easy and cheap credit in the road sector, transporters and self-employed people invested like never before in new trucks.

However, in mid-2014, the economy began to cool down, and transport demand showed its first signs of weakness.

In desperation to contain inflation, the government, through Petrobras, froze fuel prices, although, in the international market, the price of a barrel of oil was rising.

Thus, Petrobras systematically purchased fuel abroad at a price higher than its selling price in Brazil; however, due to government interference, it was only allowed to raise prices after the elections.

At that moment, the readjustments in fuel prices had a major impact on the already fragile economy, further reducing the demand for transportation. Highly indebted for the purchase of new vehicles, transporters and self-employed people found themselves at a crossroads. With low demand for transport, they had little bargaining power with shippers and, consequently, were unable to pass on the increase in fuel costs.

It is important to point out that any variation in economic activity in Brazil ends up being amplified in road transport, due to the limited transport capacity of other modes. When the Brazilian GDP falls, the movement by truck falls in greater proportion; when the GDP rises, the movement skyrockets.

Due to the lack of investments in other modes, trucks handle the extra cargo movement when the economy is growing.

So, naturally, when the economy contracts, it is road transport that feels the crisis the most.

This scenario of falling demand for transport continued until mid-2017, when the sector began to recover. With carriers and self-employed people highly indebted, the purchase of vehicles was also reduced, with an impact on supply precisely at the moment when demand was recovering, allowing for a greater increase in bargaining on the part of transport companies.

At the end of the year, however, the accumulated result of this economic recovery was still low for contracting companies; carriers tried to force an increase in freight prices, but companies refused to accept it.

Then, a strong struggle began, with carriers trying to recover margins and shippers trying to avoid increases, as they were still emerging from the crisis and could not accommodate them in their budgets.

In the meantime, Petrobras started to adopt a policy of floating prices, which change according to the price of a barrel of oil in the international market and the value of the dollar. This policy is important to avoid the losses that occurred in the company during the period of frozen prices, but it is reasonable that these increases happen on a monthly basis, to allow greater predictability for carriers.

In this way, Petrobras entered into this arm wrestling that was already fought between shippers and transporters (and self-employed), along with the government, due to the high taxes that make up fuel prices.

The scenario was then set that led to the current truck drivers' strike, with an impact on all sectors and on the lives of all Brazilians, proving the fragility of our transport system.

Like every Brazilian, I anxiously await the end of the strike. At the same time, I hope Brazil has learned its lesson. It is essential to invest in infrastructure for the development of the country, so that Brazil can get out of the trap of being expensive for those who hire and cheap for those who are hired.

As antagonistic as this may seem, we need more and better railroads, waterways and pipelines (and even highways) for road transport to develop in what is its true vocation, remaining vital and essential to the country.

Mauricio Lima

Master in production engineering (Coppe-UFRJ) and managing partner of Ilos (Institute of Logistics and Supply Chain)