Trucking strike pre-empts Maersk’s push into inland transport in Brazil

Brazil’s trucking strike, which caused supply chain chaos in mid-2018, has pushed Maersk to develop its regional intermodal transport solutions segment ahead of schedule, growing by 10% in the third quarter of 2018.

Maersk Line’s ocean product merged with Damco’s supply chain services earlier this year and the pair will operate globally with one management, one sales force, one customer experience organisation and one product organisation as of January 1, 2019.

The carrier is now offering trucking services, customs house brokerage and insurance quotes in Brazil along with its ocean product, in an effort to deliver customers an ‘end-to-end solution’.

However, Antonio Dominguez, Maersk Line’s managing director for the East Coast of South America, told CM: “We have been forced by the customers to jump ahead of our global strategy of becoming the global integrator of container logistics.

“We were aiming to do this as of January next year so we had some time to understand what Damco was doing and to get procurement in place. But the truckers’ strike pretty much forced us to do it early.”

Customers can now receive one single end-to-end to quote rather than needing to secure solutions for different legs of cargo transit themselves.

Maersk has increased the size of its regional trucking service department from six people to 35 while its team handling inland quotes has risen from one person to six.

Dominguez stated: “We are trying to organise ourselves so that we can offer one single point of contact to our customers rather than them contacting separate departments for quotes, inland coordination and sales. We will have this by January 1, 2019.”

He expects exponential growth in the company’s intermodal solutions segment because only 1% of its customers in Brazil currently use these services.

In his view, customers can benefit from having Maersk procure vendors who offer dedicated space on rail and trucks instead of having to compete for that space with other companies.

Currently, Brazil’s trading environment is in the rare position of having an export surplus after imports tanked by 11% in September.

Although imports grew by 19% in Q1 and 10% in Q2 2018, a combination of the truckers’ strike, exchange rate fluctuations, political uncertainty and the impact of World Cup-fever wearing off has seen imports fall significantly.

The electronics production hub of Manaus in northern Brazil is “pretty much at a standstill these days” according to Dominguez, who noted that Maersk’s Asian customers expect imports to rise again in the first half of 2019.

The shortage of inbound containers means that Maersk does not have the space to fully accommodate demand for Brazilian exports in Asia. It has had to route containers from Brazil via Panama, Cartagena and Europe to serve the Asian market.

Dominguez noted: “There are a lot of exports in the first two quarters of next year that will need empty boxes. If imports don’t rise then we’ll have to bring empty equipment.

“It will be very costly to bring all those empty boxes into the country and that will actually have an impact on how competitive Brazil can be.”