Summary

Brazil has the largest logistics market in South America. The country has complex customs procedures for products going both ways, for exports and imports, thus, driving the outsourcing of customs clearance to the 3PL provider. Being one of the largest countries (in terms of geography and population), Brazil is an important market for consumer-packaged-goods (CPG) companies. The Brazilian 3PL sector is expected to register a CAGR of over 7.8% during the forecast period (2020-2025).

Key Market Trends

Transport Infrastructure Encouraging 3PL Service Providers to Adapt AI

Brazil has a network of more than 1.7 million km of federal roads, the fourth-largest system in the world after the United States, China, and India, and it relies on its highways and backroads for the transportation of 90% of its ton-mile cargo nationally, using rail for less than a tenth. Brazil is the world’s most dangerous country for drivers due to poor road standards. The poor maintenance of the roads is one of the major barriers for the operations and development of 3PL service providers in the country.

The logistics companies in Brazil are aggressively focusing on the integration of AI in their operations to facilitate on-demand delivery to the consumers. The smart-freight vehicles are equipped with sensors that collect data and feed it into a machine-learning application, which analyzes the data and facilitates real-time decision making. These sensors monitor the brake performance, motor temperature, and other conditions to predict the performance and maintenance of the vehicle. The system is more accurate, as it feeds on real-time data on the condition of the vehicles rather than set metrics as distance travelled.

Loggi, the Latin American unicorn, started with the challenge of solving logistics problems of continent-sized countries like Brazil. It is now operating with more than 100 million deliveries per day, covering about 35% of the Brazilian territory and big clients, like Mercado Libre, Carrefour, Burger King, and McDonald’s. It is also planning to go further, not only by delivering all over Brazil but also by focusing on getting it done in a very short period, giving a healthy competition to the 3PL companies operating in the market.

E-Commerce Growth Fueling the Logistics Sector

Brazil is the largest and most populated country in Latin America, with only 62% e-commerce penetration rate in 2019. The Brazilian e-commerce companies are expanding aggressively, in terms of warehousing space and collaborations with logistics companies for faster deliveries of goods. In March 2019, Mercado Libre, in partnership with DHL, invested BRL 3 billion in its new distribution center (CD), with an area of 111 thousand sq. m. and a capacity to store up to 10 million units. It is located in Cajamar, São Paulo, and it is used mainly for the acceleration of the speed of delivery of goods sold.

After the acquisition of Rapidão Cometa and TNT, the courier delivery services, FedEx is discussing partnerships not only with the biggest retailers of the country but also with the promising start-ups to help new tech-companies increase their audience reach rate.

Solistica announced the acquisition of AGV, a leader in value-added warehousing and distribution in Brazil, with more than 300,000 sq. m. of warehousing space concentrating on the fast-moving consumer goods, which fit well with Solistica’s existing competences and focus.

Competitive Landscape

The market is fragmented by a large number of players, including CH Robinson, Penske Logistics, DB Schenker, DHL Supply Chain, and Solistica. In Brazil, small and local vendors compete with international players based on the cost, as it is difficult for them to compete on quality and range of offerings. The players in the market are focused on investing and developing technologies to increase their operational efficiencies.

Among recent developments, BBM Logística, one of the leading logistics operators of road transport, announced the acquisition of Translovato, a leading player in LTL (less than truck-load) services. This acquisition may strengthen BBM's operations in the LTL segment, thus improving its capability to serve its customers at all stages of the logistics chain (from inbound factory supply to transport of finished products), with innovative and customized solutions.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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