Road freight transport (TRC) is responsible for more than 60% of the volume of goods moved in Brazil, with its cost representing about 6% of the country's Gross Domestic Product. For companies, moving cargo on national roads is equivalent to more than half of their net revenue, reaching more than 60% of revenue in the Agroindustry (62%) and among the food industries (65,5%). Nothing is more natural, therefore, than the growing interest of companies in new logistics solutions and in a more in-depth study of the sector in Brazil.
Following this trend, ILOS – Institute of Logistics and Supply Chain – presented, at the XVI International Logistics Forum, in September 2010, an unprecedented survey1 on the Brazilian road freight transport market. Through the study with the main road transporters in the country, we were able to analyze the market situation, as well as its supply restrictions, the pressure to increase prices and its search for the improvement of efficiency. In this article, we will talk a little about the research methodology, then discuss the secondary data used and, finally, present its main highlights, conclusions and trends.
RESEARCH AND OVERVIEW OF THE SECTOR
In order to create critical and statistically relevant mass, the ILOS Market Intelligence team heard from 61 of the main companies operating in the Brazilian road freight transport market. The sample was important to bring out the main issues from the point of view of Brazilian TRC suppliers and what are the main developments expected for the sector in the short term. Aiming at an evolutionary analysis, a comparison of the data obtained with those collected in a similar survey conducted by the Center for Studies in Logistics at Coppead/UFRJ in 2008 was also carried out. Some characteristics of the current sample2
• 61 road transport operators;
• Regional or national coverage, ensuring full coverage of the Brazilian scenario;
• Transport providers of the main business segments of the Brazilian GDP;
• Exclusion of any other activity not related to road freight transport.
Despite the qualitative nature of the research with the transporters, the methodology of this study was developed so that the information collected in the interviews with the representatives of the companies could be compiled and compared also in numerical form. It is important to emphasize that this work was not intended to be a quantitative research (statistically). As a complement to the qualitative interpretation, we used a quantitative assessment of some cases, allowing deeper comparisons. Finally, we included secondary data and other relevant sources of information that made it possible to frame the research and align its main conclusions.
Figure 1 shows the average billing size of road haulage companies in the Brazilian market (only in the road freight transport activity).
In addition to characterizing the research and the sector's panorama, secondary data were sought to illustrate the current macroeconomic scenario. This is a key factor for the correct understanding of the survey's conclusions, in addition to bringing the boundary conditions under which our respondents answered the questions and allowed subsidies for tracing trends in the sector.
The identified macroeconomic scenario is one of absolute recovery, after the international crisis at the end of 2008 and beginning of 2009. Data and information from different institutions were cross-referenced, aiming to outline the scenario that was reinforced in the results of the surveyed carriers' responses. To make the absorption of this scenario more comfortable for everyone, some of the indicators and their sources of information were explained. Much of this information is available for study on various websites of research institutions, as well as on the ILOS website (www.ilos.com.br). In this article, some of them were listed so as not to take up time and space with marginal graphics or just to support the findings of the research.
The main indicators of the complete economic recovery of the sector can be highlighted:
• Total sales of trucks in Brazil (Source: Anfavea);
• Increase in truck registrations in Brazil (Source: Fenabrave);
• Production of trucks at the limit of installed capacity (Source: Anfavea);
• Increased flow of heavy trucks on the roads (Source: ABCR);
• Increase in diesel sales in the domestic market (Source: ANP).
Based on this series of indicators and on the answers to the interviews with carriers, it was possible to conclude that the sector's macroeconomic scenario is one of absolute resumption of pre-crisis international movement patterns. In Figure 2, an overview of the sector can be observed.
In addition to the macroeconomic scenario, an attempt was made to understand qualitatively and directly with the transporters the real and current situation of the sector. In Figure 3, a comparison is presented between the current situation of these companies and the one experienced during the financial crisis.
ANALYSIS OF RESEARCH RESULTS
The great motto of the research is the balancing equation between supply and demand for road transport. Taking into account that the TRC represents something around 63% of the national cargo handling matrix, this analysis allows for very robust conclusions that may even bring macroeconomic impacts to Brazil.
Taking the reference between supply and demand, we can say that back then (in the 1990s) there was a vicious cycle in road freight transport. Supply was greater than demand, and entry barriers were low (low requirements from shippers). Freight rates had flat values, generating low capacity for investment and maintenance of the fleet, resulting in overweight and overtime work, reinforcing the high supply of transport and creating exit barriers, due to lack of option or condition on the part of the transporter, often self-employed driver or aggregate.
This scenario would change in the survey taken at the beginning of 2008. However, the international crisis had a great impact on all sectors of the economy and what appeared to be a positive curve and trend towards revitalization of the sector was abruptly interrupted by factors external to the TRC.
After the worst moments of the crisis, the 2010 study shows a very positive picture of the possibility of revitalizing the road freight transport sector. In order to better understand the framework outlined, the approach was divided into three major conclusion blocks: supply restriction, pressure to increase prices and the search for improved operational efficiency.
OFFER RESTRICTION
First, the research sought to understand how carriers are perceiving the market, how they are preparing to serve it and what kind of change may be happening on the part of shippers with regard to shipped volumes and intended services. Immediately, it was possible to perceive that there is a risk of lack of transport capacity, as can be seen in Figure 4.
In addition to the transporters' perception, we posed additional questions that allowed us to conclude that there is a tendency to restrict transport supply in the short term and that the idleness of the system has already begun to be exploited. However, this may not be enough to support the reheating of shipments, even with a significant resumption of investments in the sector in fleet, whether dedicated or for shared use.
It was also found that there is little slack to meet the investments needed to deliver additional transport capacity in the short term, and current demand may already be greater than the availability of assets for certain sectors and/or transport services.
Finally, there was a resumption of the practice of selecting clients. This practice had appeared in early 2008, having been extinguished as soon as the international crisis began.
It now reappears, bringing with it the perspective of leveraging the sector's revitalization and better segmentation and professionalization of operations by road transport operators. A specific question is very symbolic and helps to subsidize the proactive customer selection framework in transport, as can be seen in Figure 5.
PRESSURE TO INCREASE PRICES
There is also the perception of possible pressure on the part of carriers to increase prices, given the picture of recovery in demand on the part of shippers and the reduced possibility of short-term investments that can face the recovery of this demand. It is clear that this is a sensitive and controversial subject, in addition to depending on casual performances and negotiations.
In order not to be trapped only by the not always impartial opinions of the interviewees, an attempt was made to raise awareness of different dimensions in the responses obtained, which help to understand the real dimension of this block. A direct and simple opinion survey with carriers pointed to a mentioned scenario of margin compression and low freight rates. Despite being a predictable result, given the part interviewed, we sought to conduct other additional questions and secondary support data to allow this to be, at least partially, a realistic scenario.
With regard to transport costs, it is necessary to add to the accounts additional, or greater pressure, the ever-increasing regulatory components that help to professionalize the sector, but which inevitably bring new cost components. It is also possible to add environmental pressures, changes to “greener” and potentially more expensive engines and fuels, and the impacts of insufficient installed infrastructure, leading to accidents, non-quality costs, additional insurance and, why not mention also, the constant and recurrent restrictions on vehicular movement.
With regard to the sector's panorama, there is an ongoing process of professionalization and consolidation, with recurrent and recent cases of mergers and acquisitions that bring new actors to the negotiation agenda, with greater bargaining power and negotiation scale also for part of the carriers.
Therefore, regardless of the difficulties and efficiency challenges, there is already some pressure on prices on freight rates. This happens for reasons that vary from the greater concentration of transport actors, passing through the poor quality of infrastructure, greater regulation of the sector and going to the increase in circulation restrictions and the greater demand for service on the part of shippers, given that the increase in of demand has already been listed earlier.
SEARCH FOR EFFICIENCY IMPROVEMENT
The third and last block of conclusion of the research seeks to equalize the two previous blocks, given that there is no way to immediately resolve the need for additional supply of transport capacity and, much less, fully pass on eventual cost increases simply as a direct inflation of the sector.
It was possible to identify a very healthy behavior that generated subsidies for the commitment to revitalize the sector. This behavior occurs whenever there are cycles of increased demand without a supply counterpart in the same dimension. In other words, whenever this phenomenon occurs, the owner of the demand (in the case of our research, the shippers) becomes a partner of the owner of the supply (transporters) to seek the best solutions for this imbalance.
Whenever this occurs, the prospects for seeking operational efficiency and productivity are enhanced, as in addition to the internal productivity of transporters and their operations, shippers also participate in efficiency initiatives, increasing productive levers such as collaborative transport, asset sharing and shared and long-term investment. There is, in the details of the research, a series of information and answers that reinforce this reading, but there is nothing more representative than the direct opinion of the transporters to support the conclusion (Figure 6).
FINAL CONCLUSIONS
Throughout this article, we seek to characterize the methodology used in the road transport survey carried out by ILOS, provide secondary data relevant to its conclusions and illustrate the most important analyzes in interconnected blocks, however addressed in isolation.
In the beginning, it was to contextualize the research sample, its methodology and representativeness of responses. In parallel, a map of the macroeconomic scenario was drawn and how this scenario was related to the road transport sector. Additional data and several institutes were researched to offer robustness and representativeness to what would come from the conclusion of this work.
Based on this material, it was possible to separate three large blocks of conclusions, which were then detailed and presented, always within a qualitative context and led by the interviewees – the transporters – but also tested, with information and numbers, and concluded through an impartial and well-informed view. subsidized by the ILOS Institute. It is important to point out that the survey compiles qualitative responses and quantitative secondary data, and its delivery is as rich as the discussions they may allow.
It seems reasonable to us to conclude that the effects of the global crisis are behind us and that the Brazilian economy has already recovered in this sector. Carriers have resumed investments to seek to meet the increase in demand. Demand itself is higher, not just in volume but also in service features.
On the other hand, the transporter is becoming more and more professional and is also starting to select its customers. Operational efficiency is the sector's agenda and the two sides of the balance – demand and supply – are together and challenged to seek the best results, always at the lowest costs. And this is exactly what ILOS calls the revitalization of the Brazilian road transport sector.
1 National Road Transport Survey carried out by ILOS in 2010.
2 For reasons of confidentiality, information such as name, brands on the market, billing, etc. have been omitted. The mentioned segments are the main ones, as there are cases in which the company's transport lines belong to more than one segment.
