The representation of large logistics operators in Transport

The recent National Policy on Minimum Floors for Cargo Road Transport has led many companies to review their transport contracting strategy. One of the steps in the contracting strategy analysis is precisely to know the transport market to find out what it can offer.

In its latest edition, Tecnologística magazine brings a overview of the logistics operators market in Brazil. The analysis covers 201 logistics operators that, in 2017, had a total revenue of almost R$70 billion. This revenue has been growing at an average rate of 22% per year since 2000, having reached its peak in 2017 after retracting in 2015 and practically stagnating in 2016.

Figure 1 - Evolution of net revenue from logistics operators and number of logistics operators

Source – Tecnologística Magazine

In the analysis of transport services offered by large logistics operators in Brazil, it is identified that around 60% offer Cross-docking, Transfer, Transport Management, Just in Time, Door to Door and Milk Run services. In terms of technology, more than 80% of companies have a transport management system.

These analyzes, however, are only a fraction of the cargo transport market in Brazil. According to the National Land Transport Agency (ANTT), there are almost 153 transport companies in the country and more than 524 self-employed transporters that generate revenue of approximately R$ 400 billion according to the IBGE (Transport, auxiliary services and mail sector) . That is, the large logistics operators represent less than 20% of the national market, which shows how this market is pulverized. So fragmented that the net revenue of the main national logistics operator, JSL, represents only 1% of the sector's revenue.

Figure 2 – Transport market in Brazil

Source - ILOS

This fragmentation of the transport market leads to fierce competition that ends up driving down road freight prices and expanding the range of services. In this sense, it is the shipper who benefits, who must pay attention, however, to the financial health of his carrier. After all, there is no point in paying a low freight price if the carrier suffers a loss, which can affect the quality of the service, or even threaten the continuity of the operation, in case the logistics operator fails. Thus, the best thing is for there to be a partnership relationship between shipper and carrier so that both win and strengthen each other. But that is a topic for another post!