In a country where all types of goods depend on road transport to reach consumers, rising fuel prices increase the risks of higher and more widespread inflation. According to the Brazilian Association of Logistic Operators (Abol), diesel is the most used input in cargo transport operations, reaching more than 40% of the entire operating cost of the companies that offer the service.
Since last Saturday, with the announcement of yet another adjustment by Petrobras (PETR3;PETR4), the average sale price of diesel for distributors has increased from R$4.91 to R$5.61 per liter, representing an increase of 14 ,two%.
“Unlike Petrobras, which has a monopoly, logistics companies are not able to pass on price increases immediately, which can take a month or two to happen, and negotiation often does not take place in the entirety of the increase,” he said. Abol in a positioning note, after the last adjustment announced by the oil company.
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To InfoMoneyMarcella Cunha, executive director of Abol, explained that companies are losing their ability to absorb increases in fuel prices, as they are no longer able to do so without significantly compromising their profit margins.
“It’s something that companies have been doing in the last two years, mainly. Currently, very few will be able to do it, perhaps some large ones. The inevitable option is to pass this cost on, therefore, there is an increase in the freight that the consumer will pay, regardless of the merchandise, in addition to causing a general increase in the supply chain and logistics of the companies”, explains Marcella.
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According to her, these effects tend to be noticed in different types of transport that depend on diesel – either in fractional loads, which occupy part of the truck, or in closed loads, when the vehicle is used to transport goods from just one customer.
“This will inevitably affect the cost of Brazil, in terms of logistics, and will, as a consequence, worsen the country’s inflationary scenario, which is already high”, says the director of Abol.
Marcella explains that, by sharing the fuel increase in part or in full with the customer, carriers run the risk of losing important contracts with large companies, which do not accept the pass-through of the cost.
“What some logistics service providers have been doing is including clauses in new contracts, providing for price revisions agreed every two months. There are companies predicting monthly readjustments”, says the executive. The sector’s challenge is not to lose business and Abol believes that smaller companies tend to be the most affected, running the risk of bankruptcy, as they have less ability to pass on costs.
“We were completely hostage to the policies adopted by Petrobras. We are treated as if we are not an important link in the supply chain and the increase in fuel is something completely absorbable by companies, which is not true”, concludes Marcella.
More expensive fuel x ICMS
The reduction of the Tax on the Circulation of Goods and Services (ICMS), intended by the government, also loses strength when Petrobras raises the price of fuels, economists explain.
“The ICMS cut continues to count to lower the price at the pump. But the problem is that there is no guarantee that the price of oil will remain as it is”, explains Paulo Azevedo, professor of Corporate Finance at Ibmec-SP. For him, if the international price of raw material remains at current levels, Petrobras would be able to keep in line with foreign prices without making new adjustments and the reduction in ICMS would maintain its real discount. “But these measures depend on scenarios that we do not control”, he explains.
Basic food basket inflation should be the first to accelerate with the most expensive fuel. This is because many foods that arrive at distribution centers, especially fruit and vegetables, are produced by medium and small producers and transporters by logistics operators of similar size.
“A part of transport inflation is, yes, pushed forward, but in the case of food, it takes a couple of weeks”, says the professor.
Impact for concessionaires
Renato Hallgren, transport and logistics analyst, believes that further increases in fuel prices could impact the flow on highways, especially light vehicles, fueled by gasoline. Last Saturday, the average price of fuel to distributors went from R$ 3.86 to R$ 4.06 per liter, an increase of 5.18%.
“It’s not something we’ve observed yet. For now, the flow of these vehicles has been approaching pre-pandemic levels,” explains Hallgren. But the continuity of this movement will depend on how long drivers will be able to absorb the rise in fuel prices.
Light vehicles account for about half of the revenues of concessionaires such as CCR (CCRO3) and EcoRodovias (ECOR3) and their flows are more elastic – demand is more sensitive to price changes. In Hallgren’s opinion, the rise in fuel prices could be close to causing a stranglehold on demand.
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