The month of January 2016 will go down in history due to the downturn in the transport sector. Compared to January 2015, the reduction in demand for freight was 16,7%, with emphasis on the Northeast and Midwest regions, which recorded drops in the range of 20%.
For carriers, this drop represents a major challenge. Affected not only by the reduction in the volume of their operations and, consequently, in revenue, carriers also face difficulties in correcting freight rates, due to the sharp increase in costs recorded in 2015, given the new relationship between supply and demand.
From the shippers' point of view, the situation is also complex, as the reduction in volume stems from the decrease in their own level of activity. Thus, the “advantage” of the freight price not having been readjusted in the same proportion as the cost increase can also be seen as a vulnerability of the supplier market, which struggles to generate at least enough cash to pay the installments of the vehicles purchased at the time of easy and cheap credit.
Of course, the 16,7% was registered only in a specific month, but one cannot ignore its consequences if the economic crisis in Brazil lasts longer. Remembering that transport activity is one of the best thermometers of the economy, if this number remains throughout the year, it would be accompanied by a GDP reduction of around 10%, which would be a huge disaster!
Maurício Lima
https://ilos.com.brMaurício Lima is Managing Partner of ILOS. He has experience as a teacher and consultant in the areas of demand and inventory planning, transport operations, logistics and supply chain management in large companies. He periodically develops research on Logistics Costs in Brazil and has several articles published in periodicals and specialized magazines. He is also one of the authors of the books: “Business Logistics: The Brazilian Perspective” and “Logistics and Supply Chain Management”.
