HOW BRAZIL ROAD FREIGHT MARKET EVOLVED?
Brazil transports ~ % of the cargo by road due to its strategic location. Around ~ % of the cargo is transported by road if materials such as iron ore and oil are excluded from the product list. The country has structural issues such as logistics infrastructure and cumbersome custom procedures resulting in long queues at the seaports.
The preference for road transport has logistical reasons, such as the possibility of splitting the cargo to be distributed in smaller lots, more suited to the practice of just in time (JIT). The growing health and pharmaceutical industry, e commerce and express market are contributing the increasing share of Road Freight in Brazil. Also, other means such as rail are concentrated in south east part of the country. Brazil Road Freight market was evaluated to grow from USD ~ million in 2013 to USD ~ million in the year 2018 at a compounded annual growth rate (CAGR) of ~% during the period. In 2014-2016, Brazil was hit by recession due to the excessive public spending and bad harvest. The country was hit back by a strike in 2018 by the truck drivers because the fuel prices rose from BRL ~ to BRL ~ per litter.
The sector is facing logistical challenges such as road accidents and theft, damaged roads in north-eastern part of Brazil, high logistics cost with low margins. Electronic freight payment, toll vouchers, Minimum freight Charges based on vehicle type and distance travelled are regulating the Road Freight in Brazil.
BRAZIL ROAD FREIGHT MARKET SEGMENTATION
By Domestic and International Road Freight:
The domestic shipment includes local transportation of goods within Brazil. Almost about ~% of the cargo is transported by road domestically in the country.
By Domestic Flow Corridors
Sau Paulo-Rio De Janeiro is the largest contributor in terms of revenue in Road Freight. Others include regions such as Rio de Janeiro, Mato Grosso, Rio Grande Do Sul, Parana and many more.
By International Flow Corridors
Trade with Argentina, Paraguay, Uruguay and other South American countries is easily done by road due to the free trade agreements and MERCOSUR agreement with the countries.
Brazil trades the most with Argentina by Road.
By End Users
The major end users of freight forwarding services in Brazil include the Food and Beverage industry followed by rising automotive sector. Consumer retail is rising due to e commerce and retail stores.
By Contract and Integrated:
Contract Logistics in Brazil has been thriving with a share of ~% in overall market revenue. The companies outsource the work to self employed truckers.
BRAZIL ROAD FREIGHT FUTURE OUTLOOK AND PROJECTIONS
Brazil Road Freight Market is projected to grow at a CAGR of ~% during the forecast period 2018-2023 due to concessioning the highway development projects to private companies.
The revenue from freight forwarding market by road is anticipated to grow from USD ~ Million in 2018 to USD ~ Million by the year ending 2023.
The key growth drivers for the market include the rising m commerce market due to flourishing E commerce websites and ease in payment process, rising retail stores and supermarket products for healthier products, improvements in automotive sector and healthcare industry that will drive the Road Freight market in future.
The International road freight is expected to increase due to the free trade agreements with Chile, Inclusion of Bolivia in MERCOSUR and highway developments to connect nearby countries by road. Upcoming rail projects in the region are expected to reduce the domestic freight movement as railways are cheaper means to transport bulk goods over long distances. Electronic freight payments, toll vouchers and minimum freight charges by the government will make the market more regulated.
COMPETITIVE SCENARIO IN BRAZIL ROAD FREIGHT MARKET
The industry is quite fragmented with more than ~ carrier companies registered under National Register of Freight Haulers. The industry is dominated by local domestic players including JSL S.A, Ritmo logistics, Braspress Logistics, Nepomucena Express and many more that outsource their work to self employed truck drivers. International players such as DHL Global forwarding, Kuehne +Nagel and CEVA logistics also partner with local companies for their fleet and contacts.
The Industry is dominated by self-employed truck drivers that are either contacted by the companies directly or connect with companies based on their ratings on aggregator type platforms such as Truckpad and CargoX for better fares.
The Industry is at a growth stage in terms of parameters such as technology, efficiency and service portfolio but the logistics cost is very high with low margins in the market.
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