Invoicing of carriers downhill

The year isn't over yet, but he's already committed. At least, for Brazilian carriers. This week, the National Transport Confederation (CNT) released a study showing that there was a 61% drop in carrier revenues this year, while 72% of companies had an increase in their operating costs.

The news is quite worrying, considering that the scenario has been bad for some time, in a sector that works with very tight margins. Still in 2014, an IPEA survey pointed out that 25% of national carriers had closed that year with a loss, while 25% had a net profit between 0% and 2% and another 25% closed with a net profit between 2% and 5%. The fact is that only 20% achieved a net profit between 5% and 10% in that period, and only 5% had a profit greater than 10%.

Certainly, the bad moment for Brazilian carriers is yet another sad reflection of the financial crisis that has been affecting Brazil in recent years. The numbers prove the size of the problem for carriers. Until August 2016, the demand for road freight transport had fallen by 4,6% compared to 2015, practically repeating the previous year, which had already dropped by 4,7%.

As I mentioned in a previous post, there is a direct relationship between Brazil's GDP and the demand for road transport. When the GDP drops, truck handling drops at a greater rate, and when it rises, handling soars. In other words, the road works as a kind of transport buffer in the country. 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.

Despite the poor result in 2016, carrier executives are optimistic for 2017. More than half of respondents believe that the number of trips will increase in 2017, reflecting an expectation of an increase in GDP compared to 2016, although the vast majority guarantee that will not invest in new vehicles for next year. In view of the recent figures presented by the Federal Government itself, this seems like a good policy. With the latest reductions in GDP forecasts for 2017 (from 1,21% four weeks ago to the current 0,98%), the moment is one of caution.