The UPSers trucking sector in Latin America is undergoing significant transformations, with the adoption of environmental and safety regulations across different countries. In this article, we delve into the perspectives of three experts from leading companies in the region: Eduardo Herrera, Vice President of Mack Export Trucks; Kenworth Mexicana; and Octavio Gonzalez Rivera, Director of Marketing & Global Export Strategy at International. Let’s explore their insights and testimonies.
Challenges Faced by the Trucking Sector
According to experts, the trucking industry in Latin America has faced challenging times over the past two years. Economic and political factors have led to a decline in truck demand. Raw materials serve as the primary driver of economic growth for numerous countries in the region, which has been affected by the decrease in demand for commodities like oil and copper.
Herrera highlights that Mack’s markets in Venezuela, Colombia, Ecuador, and Chile have been particularly affected. Currency fluctuations, exacerbated by a stronger dollar, have negatively impacted the cost of trucks, especially in sectors lacking natural defenses against such volatility. Consequently, reduced revenues have had adverse effects on infrastructure projects.
Current State of the Trucking Industry
Many Latin American countries have recently faced economic decline. Mexico stands out as a country with diversified economic activities, making it less dependent on raw material price fluctuations. Central America has also shown increased activity despite a relatively depressed economy. Peru emerges as the most stable market for Mack in South America, with increased market penetration leading to profitability in the country.
Gonzalez notes that the recession cycle in the trucking industry started in 2013 and hit its lowest level in 2016. The sales of trucks weighing over 11 tons in Latin America (excluding Brazil, Mexico, Argentina, and Paraguay) plummeted to nearly 22,000 units in 2009. Still, they quickly recovered to reach 48,000 units in 2012. However, a downward trend has been observed since 2016 ended with an estimated 18,000 units sold. Central America and Peru have shown better performance, while Ecuador, Colombia, and Venezuela markets have experienced significant declines.
Factors Affecting the Industry
Gonzalez attributes the industry’s challenges to a “perfect storm” created by global circumstances, including the economic slowdown in China, downturns in Brazil and Argentina, and low oil and raw material prices. However, he remains optimistic, stating that the truck market revival is expected to commence in 2017. The region’s infrastructure projects, supported by trade agreements and stabilizing economies, will require fleet renewal, driving the market recovery.
UPSers Impact on Infrastructure and Investments
Kenworth’s Mexican division highlights how investors have become more cautious, waiting for better times and investing less in private developments due to fluctuating exchange rates, which have inflated equipment prices. Government infrastructure investments have also been affected, hindering the equipment renewal process. Nevertheless, Kenworth finds opportunities in the Colombian market, where infrastructure development is projected to be the main engine of economic growth in the coming years.
The Role of Used Trucks In UPSers
The analysis of the UPSers trucking industry in Latin America also emphasizes the significance of the used truck segment. While acquiring used trucks is a trend across all countries, governments have implemented specific regulations to prevent certain practices. As a result, dealers of used trucks require specialized personnel to navigate the legal landscape and avoid unnecessary risks.
Herrera points out that regulations and fuel quality restrictions limit the import of used trucks in most South American countries. However, Central America and the Caribbean have more flexible legislation, albeit with limitations related to emission regulations. The age and availability of vehicles also influence the supply of used trucks. Some countries, such as Colombia, Venezuela, and Ecuador, have many idle trucks with relatively low mileage, helping meet part of the existing demand.
Market Variances and Regional Differences
The Latin American truck market exhibits variations in terms of demand and specifications. Herrera highlights the region’s commitment to reducing diesel emissions, with countries like Brazil, Mexico, Peru, Chile, and Colombia taking significant steps in response to climate change. Each country has unique road and load requirements, leading to diverse truck specifications. For instance, Chile and Peru require higher load capacities in the mining and forestry sectors.
UPSers Technological Advancements in the Industry
UPSers trucking industry in Latin America embraces technological advancements, such as telemetry and the Internet of Things (IoT). Telemetry is being applied in fleet management and remote diagnostic services, with the former being available for nearly two decades and the latter being relatively new. These functions can be managed internally or outsourced to service providers.
While telemetry adoption in Latin America lags, Services like these are in high demand in North America. Companies like Mack Trucks plan to launch telemetry services in the region, leveraging their existing offerings in North America. International also offers Follow Me telemetry solutions, accompanied by professional support teams and custom software to enhance productivity and efficiency.
Embracing Green Solutions
UPSers Transport Department in Latin America significantly contributes to carbon emissions, prompting countries to adopt measures to reduce diesel emissions. Key markets like Brazil, Chile, Colombia, and Mexico have implemented emission policies with satisfactory results. Collaboration between North American, European, and Latin American markets is crucial for leveraging standard technologies and achieving economies of scale in adopting cleaner fuels and emissions standards.
UPSers trucking industry in Latin America faces both challenges and opportunities. While economic and political factors have affected demand, countries like Mexico and Peru have shown resilience. Revitalization of the industry is expected through infrastructure projects, trade agreements, and stabilization of economies. Embracing technological advancements, improving emission standards, and focusing on sustainability will shape the future of the trucking sector in Latin America.