Lumila Souza
Girioli Camargo
PECEGE, Brazil
E-mail: lumilagirioli@yahoo.com.br
Murilo Silva de
Oliveira
PECEGE, Brazil
E-mail: murilooliveira92@hotmail.com
Pedro Lopes
Garcia
University of
São Paulo (USP), Brazil
E-mail: plgarcia@usp.br
Adalberto Zorzo
Universidade Paulista (UNIP), Brazil
E-mail: adalberto.zorzo@docente.unip.br
Submission: 3/31/2021
Accept: 3/31/2021
ABSTRACT
The growing importance
of agriculture in the Brazilian economy makes it essential that agricultural
companies seek to increase their logistics competitiveness. This study aimed to
compare and analyze the impact of seasonality of grain harvest and specific
events, such as the 2018 Brazil truck drivers’ strike, on the prices of inbound
and outbound freight in a multinational company located in several Brazilian
states. It focused on the CIF (Cost, Insurance, and Freight) routes of the company
between 2015 and 2019 in Brazil, and the relationship between time of year and
cost of transportation. These data were analyzed in a descriptive level after
being treated by statistical analysis. This study showed that the costs of
outbound freight suffered greater increases compared to the inbound freight due
to the seasonality of grain harvest and the 2018 Brazil truck drivers’ strike.
Keywords:
logistics; fertilizers; Brazilian routes; strike
1.
INTRODUCTION
It is no longer a novelty to portray the importance of
agriculture in the Brazilian economy. Zafalon (2020)
reported that Brazil is among the leaders in the production of sugar, coffee,
soy and corn. Soares and Caixeta Filho (1997) observed that there is a
tremendous potential to increase the production of these products due to a
large number of cropland areas in Brazil, the continuous techniques of
production, and reduction of agricultural costs. The use of fertilizers in
agriculture is one of the techniques to increase agricultural productivity (Reetz, 2017). This author also reinforces the need for
fertilization in different agricultural crops, improving the product quality
and economic returns. The price of agricultural products is regulated by the
market and the oscillation price results in competitiveness (Globalfert, 2017).
Logistics is an essential way to improve the
competitiveness in the agricultural sector that involves the fertilizer market
(Silva, 2008). The location of fertilizer plants and units and the transport
modes are important to make a decision. Only 23% of the Brazilian fertilizer
demand is produced in Brazil (ANDA, 2018) and the transportation from the
harbor to the up-country provides a considerable cost. To illustrate this issue
it takes around 2000 km to transport the imported raw materials from the harbor
to the Mato Grosso state that is the main agriculture region in Brazil (Buhler,
2016). Although the economic and political moment is encouraging the railway
modal, the transport by trucks (road) is still predominant, and it represents
60% of the total for agricultural products in bulk such as fertilizer (Caixeta
Filho & Péra, 2018). According to Caixeta-Filho
and Gameiro (2001), the road should be used for transport only for distances
lower than 500 km, railroads would be the best option for distance between 500
km and 1200 km, and for distance higher than 1200 km the waterways is
recommended. Despite these recommendations, the main transport is by road in
Brazilian agriculture.
The costs for the transport by road is calculated by the
freight that is composed for (Péra et al. 2018):
a) Fixed
cost: depreciation, capital cost, IPVA (tax on property of motor vehicles),
insurance and labor;
b) Variable
cost: tires, oil, fuel and maintenance;
c) Costs
linked to the operational productivity: speed, loading / unloading time, queue
time, travel time.
This study will analyze the factors that influence the
costs of operational productivity. It can be affected in terms of number and
location by road competition (pulverized market), main freight / return,
seasonality of transport demand and freight rates. The freight rates do not
take account the particularities of each route with regard to operation
productivity (Péra et al., 2018). For this study the
company is a multinational in the NPK (nitrogen, phosphorus and potassium)
fertilizer segment with more than 80% of the transport taking place by road.
The presence of harvest annually can affect the costs
linked to the operational productivity, providing oscillation in prices on
several road routes (Caixeta Filho & Soares, 1997). In addition, these
moments characterize an extremely competitive market since the cargo supply is
extensive and, therefore, offers to the transporters an opportunity to increase
their bargaining power. However, this is where productivity factors, such as
loading and unloading times, are essential to mitigate this pressure. There is
a cost for the stopped vehicle at times of queuing at the loading / unloading
due to queues and / or slow operations (Caixeta Filho and Soares, 1997).
There are other considerable factors, especially in
Brazil, that affect the prices of road freight. In 2017, only 13.5% of the
roads were paved, increasing the costs with diesel, maintenance and tires
(Caixeta Filho & Péra, 2018). In 2018, year that
occurred the 2018 Brazil truck drivers’ strike, the Resolution number 5820 (30
May 2018) by the ANTT (National Land Transportation Agency in Brazil)
stablished a minimum freight price according to the number of kilometers
traveled, number of axles and types of cargo.
In the same year, the ANTT changed the Resolution (5820)
with a new Resolution number 5821 (07 June 2018) that in specific situations
the “Freight Table” would not be mandatory. There was a concern about rising
road freight prices in the preliminary impacts (ANTT, 2018; Sifreca,
2018; Péra, 2018). The “Freight Table” increased 12%
the road freight prices (on average) in industries in general (CNI, 2018), and
an even more expressive increase was observed in two representative routes of
the fertilizer sector (Péra, 2018).
Although the “Freight Table” is still in analysis under
the responsibility of the Federal Supreme Court in Brazil (STF) (Pupo, 2020), such a tabulation of freight prices, in a
mandatory way, is an action against free competition in the market (Barros,
2018). Because of this event and the possible approval of the “Freight Table”,
the market currently lives an uncertainty, and companies can have an impact of
billions of Reais (R$ - Brazilian currency) by adopting prices that may
increase by another 20% (Péra, 2018).
Another hypothesis to be confirmed in this study is
whether the volume of freight in the routes can be a pressure factor in the
freight prices, increasing the bargaining power that suppliers have in the
freight offer. It can be associated with the five forces that Porter (2013)
mentions for the competitive advantage of a business. Carla (2013) observed
that the greater the customer’s participation in a market, the greater the
supply of suppliers, and the tendency is that their negotiation power is
considerable.
Understanding the oscillation costs and looking for
alternatives to increase competitiveness in the demand for contracting road
freight can mean a strategy to increase or maintain the market share in the
fertilizer market. As a way of facilitating decision making at competitiveness,
this research aims to analyze and compare the impact of seasonality of grain
harvest or specific events, such as the 2018 Brazil truck drivers’ strike, on
the prices of inbound and outbound freight in a multinational company located
in several Brazilian states. Some results expected in this work are indicators
and graphs that present the seasonality for inbound and outbound freight, as
well as their action in the company decisions and strategies.
2.
METHODOLOGY
The internalization flux of
the fertilizer originated by the import represents the transport from the
harbor to the fertilizer company and it is called inbound flux. The way of the
trucks with grain from the farm to the harbor is called outbound flux (Dos
Santos, 2017). The term harvest is usually associated to the planting period of
the main agricultural crops in Brazil (Baptistella,
2020) and occurs in the rainfall period (between September and October). However, for the context of our study, the
term harvest will be related to the period of the intensification of fertilizer
transport to the farm (between May and July) for planting.
Definitions of typologies for
the intended objectives, work procedures and problem approach were based on the
work of Raupp and Beren
(2006). Our research brings a descriptive approach focusing on the description
of occurrences related to the study, addressing the relationship between the
variables involved and always looking for analytical techniques for data
collection (Gil, 1999).
This research provides a more
detailed study of some objects visualizing their application in loco being in
the case study group (Gil, 1999). The research required some manipulations of
the available information (periods of the year and economic events) with a
study on the effects generated (Kerlinger, 1980). The qualitative typology was
used to analyze the cause and effect and the relationship of the variables.
The fertilizer company of
this study has more than a thousand routes possibilities from the harbor or
from the production units, and not all inbound and outbound freight are present
in this research. To filter the data collected the freights were classified in
CIF (Cost, Insurance and Freight) and FOB (Free On Board). These terms are used
to define who is responsible to hire the freight (Wolffenbüttel,
2006). For data availability reasons, only CIF data were considered in this
study.
The pricing and negotiation
of freight were the sole responsibility of the company of our study. The
fertilizer company does not have its own fleet of trucks and the freight is
hired with transporters. There are two denominations for the truck routes:
“closed-circuit route” and “viras route”. In the
first, the truck can go with a product and go back with another product. The
second has lower distance routes compared to the first, normally in the same
city or neighboring cities and the same truck can make several transportations
in the same day. The “viras routes” were not
evaluated in this study because their freight costs are stable during the year.
Although the “closed-circuit
route” has contracts, it includes clauses that allow the price changing
throughout the year and it was used in this study to compare distant routes.
The routes were chosen based on their representativeness in terms of volume and
data availability. Routes that showed no movement in some months of year were
excluded. As the volume is not one of the variables in this study, they were
converted to base 100, with the route with the least volume among the selected
routes being the reference.
The road freight data were
collected for a five-year history (from 2015 to 2019). These information were
generated for each cargo transported and recorded in the ERP (Enterprise
Resource Planning) system of the company. The essential information extracted
in the system was the transport cost in real per ton (R$ / t) for each month in
the period of the study. The data were separated in CIF and FOB freight, and in
inbound and outbound freight to analyze the relationship and statistic
inferences in CIF freights for both inbound and outbound. For the inbound
route, part of these freights is for the way back of the trucks that took
grains for exportation and, according to Péra (2018)
for not being the main freight; it has a price behavior below the main freight
(Sifreca, 2018).
Data preparation and
statistical analysis were performed to obtain the results. According to Raupp and Beuren (2006), this
approach seeks to deal with a more general behavior of the events portrayed and
it cannot always take place more deeply. It is necessary to understand the
context in which the analysis of freight values was inserted, to the history of
the collected data make sense. Some analyzes were performed for a general
understanding of the data (average, standard deviation, graph as function of
time).
Statistical analysis year by
year, added to the study of economic conjuncture factors (strikes) were
performed to analyze the impact in the strategy of the company. Statistical
analyzes of averages, maximums and minimums were also applied to the data in
order to understand the behavior of the freights when viewed in a set of years,
reducing the influence of Outliers in specific years. All this evaluation will
come from official information of the company, through its management system.
3.
RESULTS AND DISCUSSION
3.1.
Impact of seasonality on
the outbound freight
The routes with outbound flux
with higher volume are originated in Uberaba (Table 1), Minas Gerais state
(MG), that is located the highest producing unit of the company. It is also
located producing units in Araxá (MG) and Catalão, Goiás state (GO). The producing
units in Araxá, Catalão and
Uberaba have with destination the main market of the segment B2B (Business to
Business) of the company that is located in Rondonópolis,
state of Mato Grosso (MT), Rio Verde (GO) and Uberaba (MG).
Table 1: Volumes transported (%) on outbound routes in
2019.
Origen |
Destination |
2019 (Base volume 100) |
Uberaba/MG |
Rondonópolis/MT |
311 |
Uberaba/MG |
Rio Verde/GO |
311 |
Araxá/MG |
Rondonópolis/MT |
139 |
Catalão/GO |
Rio Verde/GO |
136 |
Araxá/MG |
Uberaba/MG |
100 |
Mato
Grosso state (MT) and Goiás have the highest market
of fertilizer for this company, justifying the higher volumes to these routes.
The flux from Araxá (MG) to Uberaba (MG), although
continuous during the year, covers a few low-volume products.
It is
evident that the freights had low intensity at the beginning and end of the
year (Figure 1). In these periods, the grain exportation is low reducing the
pressure for transport.
Figure 1: Monthly seasonality
(%) on outbound routes. Average of five years. Base volume 100. The number 1 to
12 represents the months January to December.
Uberaba, Araxá,
and Catalão are geographic locations that can be used
by the grain trucks in the way back to the Mato Grosso. It can justify the
higher seasonality in intense periods of harvest (from May to September) with
destination to Rondonópolis (MT).
Analyzing
the minimum seasonality monthly (Figure 2), can be observed higher oscillation
in the routes with destination to Mato Grosso. There was a delay in the
oscillation in route from Uberaba to Rondonópolis. In
the route with origin in Araxá the seasonality start
at the beginning of harvest (May).
Figure 2: Minimum monthly
seasonality (%) on outbound routes. Average of five years. Base volume 100. The
number 1 to 12 represents the months January to December.
The maximum seasonality
monthly (Figure 3) had a similar behavior observed in Figures 1 and 2,
characterizing higher costs after May and higher in the routes to Rondonópolis. It can also be observed that routes with
lower distances and higher potential to perform the “closed-circuit route”, although
there was an increase in the months in the middle of the year, the values
tended to be more stable and lower compared with routes to Rondonópolis
(MT). It was observed a high amplitude in the percentage (Figure 1, 2 and 3),
especially in the routes to Rondonópolis (MT).
Figure 3: Maximum monthly
seasonality (%) on outbound routes. Average of five years. Base volume 100. The
number 1 to 12 represents the months January to December.
The standard deviation
monthly (Table 2) or yearly (Table 3) showed that the destination (especially
Mato Grosso) and the period of harvest (May to June) are important factors that
can influence the freight prices. In routes at the same state to supply the
close mixing unit (Uberaba to Alfenas (MG); Araxá to Uberaba (MG); Catalão to
Rio Verde (GO)) showed lower oscillation. In these cases, the flux is constant
during the year, and it is easier to make contracts with transporters to
mitigate the seasonality of prices. In 2017 and 2018 can be found higher
standard deviation in the freights (Table 4), and there was the 2018 Brazil
truck drivers’ strike that can explain the variation in 2018.
Table 2: Monthly standard deviation (%) on outbound
routes.
Routes |
Monthly
standard deviation (%) |
|||||||||||
Jan |
Fev |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dez |
|
Araxá - Rondonópolis |
5 |
5 |
14 |
16 |
35 |
43 |
42 |
34 |
29 |
22 |
10 |
9 |
Uberaba - Rondonópolis |
19 |
19 |
13 |
18 |
25 |
41 |
47 |
41 |
45 |
34 |
15 |
28 |
Araxá - Uberaba |
1 |
1 |
5 |
4 |
11 |
13 |
9 |
9 |
9 |
10 |
8 |
9 |
Uberaba - Rio Verde |
6 |
6 |
5 |
9 |
11 |
21 |
23 |
24 |
24 |
22 |
19 |
18 |
Catalão - Rio Verde |
0 |
9 |
8 |
15 |
17 |
18 |
25 |
24 |
25 |
25 |
26 |
28 |
Average |
6 |
8 |
9 |
13 |
20 |
27 |
29 |
26 |
26 |
23 |
16 |
18 |
Table 3: Yearly standard
deviation (%) on routes outbound.
Routes |
Yearly standard deviation (%) |
||||
2015 |
2016 |
2017 |
2018 |
2019 |
|
Araxá - Rondonópolis |
9 |
7 |
31 |
40 |
25 |
Uberaba - Rondonópolis |
10 |
7 |
28 |
36 |
35 |
Araxá - Uberaba |
2 |
3 |
6 |
12 |
8 |
Uberaba - Rio Verde |
5 |
2 |
16 |
23 |
5 |
Catalão - Rio Verde |
9 |
4 |
12 |
27 |
7 |
Average |
7 |
4 |
19 |
28 |
16 |
In the route from Araxá to Rondonópolis (Figure 4)
the effects of seasonality provided an increase of freight in May and
decreasing between September and October. In 2017, 2018 and 2019 were higher
values compared to 2015 and 2016. The maximum seasonality among years (208 %)
occurred exactly after one month after the 2018 Brazil truck drivers’ strike.
Figure 4: Yearly and monthly
seasonality (%) on outbound routes from Araxá to Rondonópolis. Base volume 100. The number 1 to 12
represents the months January to December.
In the route from Uberaba to Rondonópolis (Figure 5), the behavior of seasonality is
similar to the route from Araxá to Rondonópolis (Figure 4). It can be observed a more
accentuated oscillation in 2019 (Figure 5), the effects of harvest occurred
after June with maximum of 225% in September (2019) and it is higher than that
in 2018.
Figure 5: Yearly and monthly
seasonality (%) on outbound routes from Uberaba to Rondonópolis.
Base volume 100. The number 1 to 12 represents the months January to December.
In the
route from Araxá to Uberaba (Figure 6), there is a
“closed-circuit” with maximum of freights in the year and period of strike:
132% in June 2018. It is higher compare to the routes from Uberaba and Araxá to Rondonópolis. During the
years the values are stable in some cases and it can be justified by contracts
with transporters.
Figure 6: Yearly and monthly
seasonality (%) on outbound routes from Araxá to
Uberaba. Base volume 100. The number 1 to 12 represents the months January to
December.
In the route from Uberaba to Rio
Verde (Figure 7) although the maximum was in June of 2018 with high value
(153%) the stability of the values is more evident with oscillations just in
2017 and 2018.
Figure 7: Yearly and monthly
seasonality (%) on outbound routes from Uberaba to Rio Verde. Base volume 100.
The number 1 to 12 represents the months January to December.
In
the route from Catalão to Rio Verde (Figure 8), the
oscillation is lower during the years and just in the strike in 2018 was higher
than 140 % from June to December. The harvest did not increase the freight
price during the years as observed in the strike in 2018.
Figure 8: Yearly and monthly
seasonality (%) on outbound routes from Catalão to
Rio Verde. Base volume 100. The number 1 to 12 represents the months January to
December.
Despite
the influence of seasonality and the “Freight Table” have been confirmed in the
outbound flux, there is no evident behavior of increases due to the “Freight
Table” in the following year. In some of the routes, the year of 2019 provided
the second higher seasonality of freight rates compared to the other years as
observed in the routes from Araxá to Uberada and Uberaba to Rondonópolis.
However, in the Table 3 can be observed that in 2017 the standard deviation
values was higher compared to 2019 and there was no event in 2017 or before
that can justify that.
3.2.
Impact of seasonality on
the inbound freight
The routes with inbound
flux (Table 4) have origins in Paranaguá, Paraná
state (PR), and in Santos, São Paulo state (SP), that is located the main
harbors in Brazil. It represents the flux B2C (Business to Consumer) of the
company.
Table 4: Volumes transported (%) on inbound routes in
2019.
Origen |
Destination |
2019 (Base volume 100) |
Santos/SP |
Uberaba/MG |
210 |
Paranaguá/PR |
Rondonópolis/MT |
147 |
Santos/SP |
Alfenas/MG |
108 |
Paranaguá/PR |
Rio Verde/GO |
101 |
Paranaguá/PR |
Sorriso/MT |
100 |
In
all destinations (Table 4) is located the company’s fertilizer mixing units and
it is also located the producing unit in Uberaba (MG). Consequently, the flux
in Uberaba is the most intense (210%) and Santos is a cheaper option compared
to the other origins. The destination in Goiás and
Mato Grosso have an option of Santos and Paranaguá as
an origin and because of that, these fluxes have low intensity.
There are similarity in all
the routes evaluated (Figure 9) with low values in the middle of the year and
maximum in the last months of the year and there was no route that stood out.
Figure 9: Monthly seasonality
(%) on inbound routes. Average of five years. Base volume 100. The number 1 to
12 represents the months January to December.
The routes from Paranaguá to Rio Verde and Rondonópolis
provided percentage of seasonality a little higher during the year compared to
the other routes, but in the outbound flux, the difference among routes is more
evident. The maximum (176 %) that was observed in inbound routes (Figure 9) was
lower than that observed in outbound routes (Figure 1).
There is a similarity in the
minimum monthly seasonality during the year (Figure 10) with values between
100% and 105% in the months until August. In the end of the year the values
reached 114% (between October and November) of seasonality in the route from Paranaguá to Rondonópolis. The
outbound values reached 110% (Figure 2) in July.
Figure 10: Minimum monthly
seasonality (%) on inbound routes. Average of five years. Base volume 100. The
number 1 to 12 represents the months January to December.
The
Figure 11 confirmed again that routes that routes to Goiás
and Mato Grosso are the main points of concern in relation to seasonality. The
route from Paranaguá to Sorriso
reached a maximum of 175% in October, and it is lower than 225% observed in
September on the inbound route from Uberaba to Rondonópolis.
Despite
differing in the intensity of the oscillation during the year, Figures 9, 10
and 11 have a very evident behavior. The inbound freight increases from the
beginning of the harvest (from May to June), but unlike the outbound freight,
the values did not decrease at the end of the grain planting period. The prices
tended to remain high at the end of the following years and only in January
started to decrease to the lowest values.
Figure 11: Maximum monthly
seasonality (%) on inbound routes. Average of five years. Base volume 100. The
number 1 to 12 represents the months January to December.
The harvest factor is evident
in the seasonality that increased from June to October (Table 5) keeping a high
price level until January corroborating with our hypothesis. However, in the
second hypothesis, it is not possible guarantee that the seasonality are only
due to the influence of the 2018 Brazil truck drivers’ strike and “Freight
Table”. In 2016, a year with no similar event, the maximum of seasonality was
the most intense in five years, having obtained the highest values
in four routes of the five evaluated (Figure 6).
Table 5: Monthly standard
deviation (%) on inbound routes.
Routes |
Monthly standard deviation
(%) |
|||||||||||
Jan |
Fev |
Mar |
Ap |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
|
Paranaguá - Rio Verde |
27 |
18 |
11 |
9 |
4 |
10 |
14 |
21 |
25 |
28 |
24 |
24 |
Paranaguá - Rondonópolis |
27 |
13 |
10 |
5 |
1 |
12 |
17 |
27 |
28 |
26 |
23 |
25 |
Paranaguá - Sorriso |
16 |
10 |
11 |
4 |
2 |
8 |
14 |
23 |
22 |
28 |
20 |
17 |
Santos - Alfenas |
12 |
7 |
4 |
3 |
14 |
13 |
9 |
10 |
18 |
24 |
16 |
17 |
Santos - Uberaba |
20 |
13 |
7 |
5 |
6 |
10 |
11 |
13 |
19 |
16 |
16 |
20 |
Total |
20 |
12 |
9 |
5 |
5 |
11 |
13 |
19 |
22 |
24 |
20 |
21 |
Table 6: Yearly standard
deviation (%) on inbound routes.
Routes |
Yearly standard deviation (%) |
||||
2015 |
2016 |
2017 |
2018 |
2019 |
|
Paranaguá - Rio Verde |
9% |
26% |
3% |
19% |
23% |
Paranaguá - Rondonópolis |
8% |
25% |
7% |
24% |
20% |
Paranaguá - Sorriso |
7% |
22% |
6% |
22% |
15% |
Santos - Alfenas |
4% |
18% |
7% |
22% |
14% |
Santos - Uberaba |
9% |
20% |
8% |
15% |
17% |
Total |
8% |
20% |
7% |
19% |
16% |
The
inbound routes did not have an example of a “closed-circuit route” because of
long distance between the destinations. There is an expectation that the influence
of the harvest could be lower since the price increases are divided between the
grain and fertilizer freight.
In 2016, the route from Paranaguá
to Rio Verde (Figure 12) reached higher values than the other years including
the values influenced by the “Freight Table”. The “Freight Table” influenced
the values in 2019 with high values until May. The harvest pressure also
occurred and it extended to the beginning of next year’s instead of finishing
in September and October as in the outbound routes.
Figure 12: Yearly and monthly
seasonality (%) on inbound routes from Paranaguá to
Rio Verde. Base volume 100. The number 1 to 12 represents the months January to
December.
In 2016, the route from Paranaguá
to Rondonópolis (Figure 13) also increased from May
and had higher values in November and December compared to 2018 probably caused
by a lower supply of vehicles. In 2019, it started with high freight prices and
tended to normalize in February and March.
Figure 13: Yearly and monthly
seasonality (%) on inbound routes from Paranaguá to Rondonópolis. Base volume 100. The number 1 to 12
represents the months January to December.
The
route from Paranaguá to Sorriso
(Figure 14) has similar seasonality behavior compared to the route from Paranaguá to Rondonópolis (Figure
13), and can be observed higher maximum that can be explained by the lower
market of the company increasing the pressure to find transporters.
Figure 14: Yearly and monthly
seasonality (%) on inbound routes from Paranaguá to Sorriso. Base volume 100. The number 1 to 12 represents the
months January to December.
The
route from Santos to Alfenas (Figure 15) has smoother
oscillation with just one value higher than 150%. The seasonality in 2018 and
2016 is higher than the other years from the beginning of harvest.
Figure 15: Yearly and monthly
seasonality (%) on inbound routes from Santos to Alfenas.
Base volume 100. The number 1 to 12 represents the months January to December.
The route from Santos to Uberaba
(Figure 16), despite having the highest volume, it did not differ from previous
behaviors, maintaining a strong influence of the “Freight Table” until the
beginning of 2019, with the years 2018 and 2019 alternating with the highest
prices.
Figure 16: Yearly and monthly
seasonality (%) on inbound routes from Santos to Uberaba. Base volume 100. The
number 1 to 12 represents the months January to December.
The company is more exposed
with respect to the outbound routes compared to the inbound routes. Expanding
the use of return freight will be an important factor to reduce freight
oscillation. Another point is that the closer to the grain harvest, the more
inflated the freight. Therefore, if there are opportunities to advance inbound
volumes in less pressure times, the reflex will also tend to be positive.
For outbound routes, the use
of return freight is difficult to perform because the origins (Araxá, Catalão, and Uberaba) are
in the middle of the final destination (Mato Grosso) where trucks are loaded
with grains. A partnership to use return route would bring benefits, especially
during periods of pressure on freight. Another positive result for the company
in the study was the practice of “closed-circuit route” and with the
application of contracts can also mitigate part of the influence of
seasonality, as observed in the route from Uberaba to Araxá,
and can be used to reduce costs.
4.
FINAL CONSIDERATIONS
This study in the
fertilizer segment of Brazilian agribusiness represents very well the impact of
seasonality on the prices of road freight during years. The grain harvest is a
factor with high impact on the values, which can increase transport costs in
29% on average (Table 2). However, the impact of the grain harvest is more
intense in the outbound routes that are less guaranteed to combine grain
freight on the outward journey and fertilizers in the return as occurs in the
inbound routes that have origins in the harbors.
The “closed-circuit route” can also
mitigate part of the freight oscillation with a standard deviation maximum of
13% in the route from Uberaba to Araxá compared to
47% observed in the route from Uberaba to Rondonópolis.
This study is also an applied example of the influence of the 2018 Brazil truck
drivers’ strike and the implementation of the “Freight Table” on the price of
road transport.
These events increased the values in
May and June of 2018 by a maximum of 208% and maintaining this high standard
throughout the following months of the year in the outbound freight. It also
influenced the inbound freight with simpler oscillation by a maximum of 131% in
the route from Paranaguá to Rondonópolis.
Despite the notorious influence of these events on the freights in 2018, there
is no conclusive evidence that these effects were also reflected in 2019, since
there are no well-established high price standards in that year, in the inbound
flux.
Actions to mitigate the seasonality
on the freights should be focused on long-distance routes and on outbound
freight. Annual contracts and looking for new opportunities with return
freights are responses practiced by the company and the intensification would
reduce the freight oscillation that financially burdens the company. Aiming to
avoid the pressure in the freight prices during the grain harvest the
anticipation of the freight to Mato Grosso between February and May and
stocking the products close to the final destination would be an alternative.
Contracts are mechanisms that could
be signed with companies for volume guarantee throughout the year and it can be
a strategy for inbound and outbound freights depending on the success of
negotiation. Thinking of the potential complements to enrich this work, a
correlation of the results in this study with the duration of each grain
harvest could increase the capacity to predict the behavior of the curves. As
the focus of the work was in the fertilizer area, such volumes and dates for
grains were not available.
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