Due to overloaded highways and an old fleet, Brazil loses 30% of its fuel
Logistics in Brazil needs urgent intervention in the next 15 years to avoid collapse. Even with the continental territory, 62% of the total cargo is transported on Brazilian highways, which has a strong impact on the economy and the environment. Today, the country wastes 30% of fuel due to overloading of highways and an old fleet of trucks. The national logistics cost amounts to 12.5% of GDP (gross domestic product), while in the United States it does not reach 8%.
“We have a key situation for the logistics sector. The losses today are already immeasurable in every respect, for nature, for the value of the product. If there is no planning and investment in the next 15 years, the segment will face serious difficulties,” says logistics expert and partner at Pathfind, Antônio Wrobleski. He says that the lack of investment in infrastructure is one of the main bottlenecks in Brazilian logistics and defends intermodality as an alternative to change this scenario.
The expert reminds that almost nothing was invested in the railway sector in Brazil, which is practically the same as 100 years ago. Brazil is three times bigger than Argentina, but the neighboring country has more kilometers of railways. Brazilian railways have a total of about 31,000 kilometers, and Argentine railways 34,000 kilometers. “You see the absurdity of this comparison,” comments Wrobleski.
This year, 62% of Brazilian cargo will be transported by truck, 20% by rail, 14% by cabotage (waterways), 0.3% by air and 3.6% by other systems. In order to be more competitive in logistics, according to the expert, it would be ideal for the country to reduce road load to 40%, increase rail load to 30%, and cabotage to 25% in 15 years. “This depends on a long investment plan, which needs to start now,” he says.
old fleet
Wrobleski says Brazil would stop throwing away “a minimum, in a well-bounded estimate” of 30% of its fuel if it had better intermodality. According to him, the fact that the Brazilian truck fleet is very old, with an average of 20 years, contributes greatly to the deterioration in the road transport segment. “We managed to reduce this average in the past, with the financing for trucks, but today this figure has aged again, it has reached 12, 13 years, it is 20 years. “The ideal age for a vehicle fleet is 8 years to a maximum of 10 years,” he claims.
According to the expert, infrastructure investments in Brazil should be around 3% to 4% of GDP, but not exceed 1%. “At its peak, China was investing in infrastructure in the double digits. The lack of investment in infrastructure is a very serious factor, a big obstacle that needs to be overcome in order for Brazil to reach the average of developed countries in the world”, he guarantees.
forward and backward
Brazilian logistics must keep pace with the development of economic sectors. The country is a world leader in agricultural production, which grew by 400% between 1975 and 2020, with increased productivity, according to the Institute for Applied Economic Research (Ipea). According to Embrapa, Brazilian agricultural production feeds 10% of the world’s population, about 800 million people.
“While Brazil is advancing in the agricultural sector, consolidating its leadership, it has no counterpart in the logistics sector or planning in terms of growth constraints. Improvements in working methods, infrastructure, access to money and automation are the key points of logistics in the next 15 years. The government comes and goes and nothing changes. Brazil lacks planning,” says Wrobleski.
The IBGE map “Transport logistics in Brazil” shows that the state of São Paulo stands out for the spatial distribution of transport logistics in Brazil, with the dominance of the highway modal. It is the only country with a transport infrastructure where the interior is connected to the capital by a vast network, including dual carriageways, railways and the Tietê waterway. Also in São Paulo are the country’s largest airport, in Guarulhos, and the busiest port, in Santos.
Warehouse logistics and automation
But transport is not the only point that deserves attention in the logistics sector. Storage and automation must keep pace with demand. E-commerce grew by about 26% during the pandemic in Brazil, according to studies, and remains on the rise even after in-person shopping has restarted. This increase, which occurred worldwide, required the improvement of storage systems.
Warehouse automation reduces total business costs and product delivery errors. However, according to research by DHL, only 5% of warehouses are automated in Brazil, 80% still operate manually without supporting automation, and the remaining 15% use conveyor belts, sorters and pick and place solutions, among other equipment that is not necessarily automated.
The global warehouse automation market is estimated to register a CAGR of 12.5% between 2021-2026. Wrobleski points out that automation should increasingly be a part of logistics warehouses. “The Internet of Things, machine learning and artificial intelligence end or begin inside the warehouse. The trend of automated logistics warehouses is very strong in seeking predictability and assertiveness. Automation is a great link between the inside and the outside, between the market and what comes out of the warehouse,” he says.
The expert reminds that the investment in robotization is large, the degree of return is long, so the better trained people are, the faster the return. “There are sorters, how they talk to TMS, how TMS plays for SAP, how it goes to the streets. The better it is understood, the better the results,” he claims. According to him, with the elections comes the time to review the country. “Time for less politics and more economics, or more politics with focus, direction, thinking about a better Brazil in the coming decades,” he points out.
