Network Optimization and Visibility Power Freight and Inventory Management in Brazil

The retail, automotive, manufacturing and agricultural industries in Brazil are expanding, driving new demand for transportation and logistics services. However, new growth can also bring challenges, including tight capacity, longer lead times and complex tax laws, making it even more critical to optimize networks, increase real-time visibility and understand regulatory requirements to keep products moving.

The State of Infrastructure in Brazil

Paulo Sarti, managing director of South America for Penske Logistics, said Brazil has a significant internal market and exports to several regions, but infrastructure in some parts of the country hasn’t kept up with business growth.

“The infrastructure is concentrated in a few areas. You don’t have the road or port structure outside of these areas, so it creates a challenge when you move goods to other regions,” Sarti said, adding that moving products from North of the country to São Paulo can take 10 to 12 days. “As logistics providers, we understand this reality and offer solutions for the customers.”

Visibility Is Key

Knowing anticipated transit times and optimizing the entire network are some of the first steps in minimizing the risk of disruptions, ensuring inventory arrives on time while cutting costs. Additionally, having visibility into where inventory is located, what is in transit and what is needed helps businesses and their logistics providers manage inventory.

“We know products coming from certain areas are going to take time to receive, so you must be well organized and have good inventory control,” Sarti added.

The Ins and Outs of Taxation in Brazil

Penske offers guidance into where customers can position facilities based on infrastructure as well as labor availability and regulatory requirements, including taxation, which is complicated even for transportation within Brazil. “Our warehouses are located where it is beneficial for logistics but also in states that can give you tax benefits,” Sarti said.

Brazil’s taxation depends on each facility’s geographic location, and the paperwork to sell from one state to another is as complex as shipping to another country. “If you do business in Brazil or export, it is important to know all the taxation requirements,” Sarti said, noting that government incentives exist for building manufacturing facilities in specific parts of the country.

Navigating Fluctuations in Demand

In addition to navigating around infrastructure constraints, Penske helps customers manage seasonal and monthly fluctuations. “People still wait until the end of the month to make purchases, so there is a lot of cargo concentrated at the end of the month,” Sarti said.

The harvest season can have a significant impact on capacity, which affects all companies moving goods, even if they aren’t in the agriculture industry. “in some regions, carriers will shift their resources to agriculture,” Sarti said. “It is essential to work with a partner that can provide capacity even during peak agriculture season.”

Securing Warehouse and Trailer Space

As business in Brazil has increased, warehouse capacity has become more constrained, leaving many customers searching for flexible warehousing and multi-client facilities. “They want to use a warehouse for a specific period with a certain number of pallets at a variable cost,” Sarti said, explaining that most facilities serve single customers.

Transportation in Brazil can be expensive due to the high cost of fuel and equipment, so it is critical to optimize trailer space. Penske utilizes software and expertise to strategically plan loads and maximize space, which can take longer but saves transportation costs.

“We have the dimensions on everything we store in a warehouse, so we can build the load when we receive the order,” Sarti said, explaining that facilities in Brazil also handle a lot of loose cargo. “Instead of using a pallet, we load the cargo box by box to optimize the space.”

Penske works with customers to reduce their expenses while providing on-time delivery of freight and necessary load information through:

• Freight management
• Warehouse and distribution center management
• Lead logistics provider (4PL) services in Brazil
• Coordination of full-truckload and less-than-truckload loads

To learn more about Penske’s work in Brazil, contact us.