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B razil's truck pare, at 800,000 vehicles, is roughly double that

30th June 1994, Page 40
30th June 1994
Page 40
Page 41
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Page 40, 30th June 1994 — B razil's truck pare, at 800,000 vehicles, is roughly double that
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Which of the following most accurately describes the problem?

of the UK. But, as industry watcher Roberto Quairoz explains, the two countries' haulage industries have little else in common: "Here there's absolutely nothing, no controls at all," he says. "Most drivers don't need a truck licence unless they're going to drive a special vehicle like a petrol tanker or chemical truck.

Some places require you to take a test of general and mechanical knowledge, but it depends on the city or area. If you go to Sao Paolo it's one thing, if you go to another city you could get one by telephone.

"In Brazil drivers never spend less than eight hours behind the wheel in a day; some drive 1445 hours with pills to stay awake. It shouldn't be like that—but that's life."

With little or no control or enforcement, safety has been hit hard. "Even the level of bad accidents doesn't change," says Quairoz. "Some roads in Brazil are known as 'killing roads' there are so many accidents."

The legislation that is in place tends to be on a general company basis: "You need a licence to run any kind of business," he says, "not just a truck company. Depending on the kind of business you pay a different level of tax, but everybody is already complaining about the high level of taxes." With inflation running at 40% a month it's vital to stay on top of your accounts, particularly with regard to credit control. All bills have to be settled by the end of the month or the value of the invoice tumbles. It also means that once a month rates have to be renegotiated based on constantly rising fuel prices and wages.

In bid to beat massive currency fluctuations most Brazilian hauliers pay for their trucks in hard cash.

"Between 70 and 80% pay cash because of the inflation—they run away from banks as if they're the devil," says Quairoz.

The runaway inflation has given birth to an unusual method of truck acquisition where a group of hauliers pay money at regular intervals into a road haulage equivalent of a christmas club. Each month the club holds a lottery and the winner gets to spend the money on a new truck.

For the lucky operators whose name comes Out of the hat first there's the chance to start earning money with the new wagon before you finish paying for it. The unlucky ones may have to wait until they are the last name to come out of the hat before they get their vehicle. But at least by then they own it outright The system, known as Concorcio, is well supported by the truck manufacturers—not least as it helps them plan for forward mks. Some 20% of Scania's Brazilian truck sales are done through the Concorcio method. However, leasing is also starting to take off as more professional operators look at different ways to use their money.

The spiralling cost of living, in relation to low earnings, means that dealers are hardpressed to retain servicing work after a new truck warranty expires.

"If you're a big operator and your truck's out of warranty you don't show up at the dealer after that—unless you need a genuine part," says Quairoz.

The majority of truck servicing is ultimately carried out by non-franchised

service centres where conditions can be extremely primitive.So how do Brazilian operators cope in an economy out of control? CM recently visited two very different hauliers to find out.

Gafor Transport of Sao Paolo was started by Italian immigrant Sergio Maggi 43 years ago with one truck. Today the company is controlled by his sons and has grown to 150 trucks and 250 trailers, operating out of 10 depots. While there was never any doubt Trucks travel to Manaus by road, then ferry. that Maggi's sons would follow their father into the business many rivals doubted their ability to keep it going. After trying to keep up with the the boom in the Brazilian economy in the seventies Gafor had fallen behind the times.

It was too reliant on spot-hire work and in danger of being overtaken by more innovative rivals as its founder approached retirement. Sergio Maggi Jnr explains: "In 1986 my father came to me and said 'There are people out there who are saying you and your brothers will break the company in one year—I don't believe it, but I'm going to Europe'."

The next generation has turned Gafor around to the point where in 1994 it's predicting a turnover of US$15m with 15% ■

41 of that figure converted to profit—a return on revenue that would please any UK haulier. In a country where just getting goods delivered can be a major problem, Roberto Maggi and his brothers decided that the company needed to raise its standards.

"When the second generation assumed responsibility we really cared about quality. Seven years ago we started to get the results of that investment in quality while most of our competitors have none. They didn't look to the future and they're in a very difficult situation now" As well as being the Brazilian agent for Hoyer, the international bulk tank carrier, Gafor has developed partnerships with bluechip clients such as Unilever, Hoechst and BASF on dedicated logistics contracts.

The move out of general haulage was vital, admits Maggi: "If we had continued in spot hire we'd have been bankrupt by now. We wanted to change. Our secret was we knew our competitors and we had a few good customers. We started to talk to them and more and more we've been doing logistics for them and their transport."

In a joint venture with Unilever, Gafor recently set up a $550,000 silo project which has 10 trucks and trailers dedicated to the contract. Under Sergio and Roberto Maggi Gafor has reduced its dependence on the petrochemical industry. In the seventies it accounted for 95% of the haulier's business. Today Gafor has reduced its vulnerability by diversifying into other areas including refuse disposal and foodstuffs with 60% of its fleet now under firm contract work.

However; Sergio Maggi says the company's early association with the petrochemical industry has had a lasting effect "It pushed us into quality."

Not all of Gafor's customers have kept up with their progress. "We want to sell not only transport, but the company," says Maggi. "Productivity doesn't only belong to us."

Maggi is determined not to rely solely on the family for Gafor's development. "Most of the companies in Brazil are family businesses—but we believe in putting in professionals into the company as well."

One of the profesiiionals Gafor brought in was Vatter Pereira from the Federal Bank of Brazil. After more than 20 years with the bank Pereira was ready for a new challenge: "I'd made a lot of changes during years. The bank was perfectly arranged so I had nothing to do. I like a culture of change. I liked Gafor's plans, I thought it was a good challenge."

Pereira's financial experience has been useful when dealing with 40% monthly inflation rises. "In this matter Valter has helped us a lot," says Maggi.

Gafor's fleet is split between Volvo and Scania: "Both trucks are very good, it's a commercial decision," says Maggi. All new trucks are leased, with the company owning them after three years.

Prospective Gafor drivers go through a strict selection process, including psychometric testing before they are hired: few make it through to the finish. "Out of 60 applicants sometimes only one or two are chosen," says Maggi.

Compared with other companies Gafor is a good employer, providing free health

insurance, clothing and even food due to inflation many Brazilian companies buy their employees food and groceries.

Gafor drivers earn around US$4-500 a month—L340. By British standards hardly a king's ransom, but as Pereira says: "Any salary is good in Brazil."

Li by Brian Weatherley


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