Characteristics of Land Cargo Transport in Latin America

In a document entitled “Automotive Cargo Transport (TAC) in Latin America: Logistic Support for Production and Trade”, developed by José Barbero and Pablo Guerrero, and published by the Inter-American Development Bank (IDB) the characteristics of this sector, is outlined and its projections.

The report, in general, was carried out from various studies and includes 14 countries, revealing the enormous diversity of the sector. This is verified not only among the different countries, but also within each country in particular.

Cargo land transport companies are diverse.

Cargo land transport companies are diverse.

The document indicates that the sector’s legal framework is supported by sector-specific standards; traffic regulations, road safety regulations and other general regulations which are often of considerable importance (environmental and labor laws, among others) but that regulatory overlap is frequent.

It also concludes that the economic regulation of the sector is, in general, oriented towards free competition with risk of predatory competition. It is also noted that the existence of a harmonized regulatory framework between the different countries has contributed to the development of international services.

Regarding the structure and organization of the sector in Latin America, it is characterized by “an extremely diverse business organization, where there are highly professional companies and small operators with high levels of informality”.

The TAC fleet does not escape heterogeneity, presenting a great diversity of equipment (automotive haulers and trailers) and types of body, with a very dispersed property and with high rates of growth in recent years.

The productivity of the trucks, meanwhile, is characterized by a great variation from one country to another. In the cost structure of trucks, there is a high participation of fuels and personnel. In addition, a marked incidence of thefts (of merchandise and of trucks) that has been increasing.

It indicates that “the productivity that the operators achieve is very marked by the requirements of the suppliers of cargo”, that is to say, the customers, who to some extent model the carriers.

As for the greenhouse gas emissions generated by the TAC, it is indicated that “they are the result of a growing level of activity and the use of an old fleet, which is a worrying trend”. On the other hand, it is described that “the trucks are outstanding actors of the poor roads in the region, showing indicators that duplicate those of developed countries”.

Analysis by region

In Mexico some of the assessments indicate that its international transport is highly developed, with a high efficiency towards the northern border, but limited entering Central America. However, it is very relevant for the country’s industrial operation. Its fleet has very modern segments, and has circulation of bitterns, and is in a process of renovation.

The age of the truck fleets are high.

The age of the truck fleets are high.

In Central America, operating efficiency is medium to low, but it has been developed in international transport, despite some regulatory obstacles and at border crossings. In spite of this, it shows more relevance than in intranational transport. It has a high average age (over 20 years in some cases) and presents severe difficulties for the renovation.

In the Andean Countries, the operational efficiency is average, with about 60,000 kilometers per year. However, international transport presents restrictions on the circulation and extensive practice of border transshipment. There are few large operators, while small ones have great influence. Although the age of the fleet is high, a process of renewal can be verified.

In the Southern Cone, efficiency achieves an average to high level with an average 80,000 kilometers per year. Although international transport is developed and has high levels of efficiency, it is not relevant in comparison to the national TAC.

The sector has high-efficiency companies, coupled with numerous small operators, with a growing specialization. In the fleet, however, there are very modern segments and numerous old trucks, with many difficulties for small carriers to renew their fleets.

Perspectives

In the medium term, according to the report, there is expected to be “a scenario of sustained growth in demand, and the requirement for high-quality logistics.”

One of the drivers of this growth in demand “will surely be foreign trade, which involves a massive movement of raw materials and food, prompted by the increased demands of other regions of the world.”

It is also pointed out that the TAC “will continue to play a key role in the logistics chains, and will demand greater integration with other modes of transport”.

In addition, it is indicated that “the trends observed in the world indicate a progress towards seamless logistics chains that ensure the connectivity of networks, which will demand increasing levels of professionalism and quality of service, challenging the performance of a TAC whose main criterion of competition has been the price”.

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