Regional Market Outlook on Truck Equipment Market
Southeast region of Brazil is the automotive industry hub in the country, all the manufactures have plants and dealer outlets in this region. Sao Paulo is the state which is having most number of OEMs presence
Overall production of small medium heavy trucks 2018 (Up to Sep 2018) in Brazil
- Heavy and semi heavy trucks sale has increased throughout the year in Brazil. Most of the beverages companies are depended on semi and heavy types of trucks for their long distance shipments
- Overall production of commercial vehicles by the end of 2018 is expected to increase at least by ~5 present.
- Carriers in Brazil used to extend /renew their fleet size on an average of every 3 -5 years
Tyre market in Brazil
The tyre market in Brazil is projected to cross USD 6.7 Billion by 2022. Passenger cars segment dominated Brazil tyre market in 2017, and is expected to continue its dominance during the forecast period as well, on the back of expanding passenger car fleet size and increasing passenger car sales. Moreover, growing demand for two-wheelers and commercial vehicles, on account of their widespread use in transportation, infrastructure developments and construction sectors, is expected to drive growth in demand for tyres in the country during 2017-2022.
Tyre market share in Brazil
Pirelli is the leader in Brazilian tyre industry with ~33 present market share, mainly because of the tie ups with OEMs and exports with neighboring countries. Michelin and Goodyear is close competitor of each other with overall ~25 present and 20 present market share respectively. In Brazilian tyre industry, Bridgestone is also having a demand in the market.
Truck Driver Analysis
It is important to note that transportation companies and the major brands of trucks sponsor already running some drivers' schools as a way of growing and improving these professionals in Brazil
In Brazil there is a deficiency of around 100,000 qualified drivers and now, Brazilian transporters are enlisting drivers from Colombia to enhance the driver base
- Drivers wages have been increasing at an average rate of ~5% since 2014 and are revised annually. However, with the outcome of the recent drivers strike the wages are expected to rise by another 5% for 2018-19
- Transportation service providers have to pay more to retain qualified drivers, which will increase their operating costs by ~5% and companies planning to hire drivers in near future may have additional cost due to the same
- Lack of proper resting infrastructure on the highways has increased the variable pay of the truck drivers , variable pay is also a key factor to attract new drivers
- Company truck drivers in Brazil always been an important point, recent driver strike caused critically on the Brazil industries. Only with company drivers some of the industries handled their daily shipments
- Currently Brazil economy is weak, ~13,000,000 unemployed population present in the country. Obviously, there is a lot of skilled manpower available to be used, but in the last 12 months truck sales have been growing and industries already in need of truck drivers, this varies from region to region.
Best Practices for Sourcing or Leasing of Trucks/Trailers in Brazil
Best practice on the beverages industry is to engage with a carrier company for transportation in Brazil because of the the quality of vehicles and the operational coverage provided by carrier companies
Transportation with own assets may cause additional cost, periodic maintenance is also required to keep up the efficiency of the vehicles Which apparently generate additional efforts than operations difficulties for the company
Most Preferred Engagement/Sourcing Model
- Companies used to engage with one or more carriers for their transportation purpose because of the vehicle quality and the operational coverage provided in Brazil
- Fleet of autonomous carriers performed well below than the fleet of carrier companies. For that reason, autonomous road carriers offer a less reliable service and hence do not have conditions to compete with carrier companies for contracts.
- Sourcing trucks may cause additional cost to the company in terms of equipment cost and maintenance cost
- Periodic maintenance and fleet renewal creates additional efforts for the company in additions to the normal operations.
Frequency of Fleet Renewal
The fleet of carrier companies is newer and more modern than that of autonomous auto carriers. They renew their fleet more frequently than autonomous carriers. Carrier companies that act on the route Sao Paulo – Rio de Janeiro renew their fleet, on average, every five years, while the frequency of fleet renewal by autonomous road carries that acts on the same route is, on average, every 16 years.
Average Fleet Age
The fleet of carrier companies acting on the route Sao Paulo-Rio de Janeiro is, on average, 5 years old, while the fleet of autonomous carriers acting on the same route is, on average, 19 years old. 52% of the vehicles that belong to autonomous carriers present an average fleet age between 15 and 24 years.
Market Share of Vehicles
- Independent transporters make up for ~53 percent of the market size in terms of vehicle shares while companies own ~46 percent leaving cooperatives with only 1 percent of the market
- While the independent transporters constitute ~46 percent of the market size, the market share based on the quantity of vehicles is almost equally divided between the independent transporters and asset based small trucking companies