Covid-19 sparks digital transformation in Brazilian logistics

Social isolation helped to boost e-commerce in Brazil at the speed of light. However, the same transformation is yet to be seen in logistics. This segment is lagging in technological terms but will have to reinvent itself, according to one sector executive heard by The Brazilian Report.  

Evolution. The country’s largest retailers have adopted express deliveries in the past few years, which means consumers can receive their goods on the same day as ordering. Five years ago, the national average waiting time for deliveries was 13 days. However, late deliveries are still frequent.

Customer experience. For Carlos Mira, CEO and founder of platform TruckPad, Brazilian companies that work with last-mile delivery will have to invest in technology to meet consumers’ expectations. “Last-mile (operators) must adapt. Consumers are demanding more predictability. If you call an Uber, you know exactly how long the ride will take.  Why can’t we have the same quality level for deliveries? Because the sector is lagging in tech,” he told The Brazilian Report. “Currently, startups provide the best customer experience, so more traditional companies will have to keep up or risk being replaced.”

New habits. Judging by TruckPad’s performance, companies are making up for the lost time in technology adoption. The platform, which connects independent truck drivers and transport companies, saw demand grow by 66 percent per month during the pandemic, and demand for truck drivers rose by 40 percent each month. According to Mr. Mira, that happened because hires often happened at truck stops or companies’ headquarters, which is no longer possible due to the pandemic.

What to expect? According to a study by logistic consultancy ILOS, freight hiring apps were seen by 56 percent of company executives as a main trend for urban deliveries in the next two years. In-car deliveries were quoted by 26 percent, while electric vehicles were considered by 25 percent.

 

 

 

 

 

 

 

Economic crisis. Despite cargo transport being an essential service, the economic disruption has taken its toll on the sector, as demand was 34 percent below pre-pandemic levels by the end of June, according to NTC&Logística.

Impact. The data also shows that 91 percent of companies reported a drop in revenues. For Mr. Mira, this shows that the sector will have to reinvent itself. “The economy is shifting, but that doesn’t mean growth. If we delivered goods to bars and supermarkets before, now the bars are closed and we deliver directly to customers. There are new consumer habits now and therefore, new business models will have to arise, such as delivery from stores.”

Can the Fake News bill impact digital marketing in Brazil?

Only one month after being introduced in the Senate, the so-called Fake News bill was approved and now moves on to the House of Representatives. While the controversial proposal is set to be altered by the lower house — and can be vetoed by President Jair Bolsonaro — some of its provisions raise concerns regarding the impact on digital marketing companies.

What changes for advertising? If the bill is approved in its current form, social media platforms and messaging apps will be forced to:

  • Identify all sponsored content with the contact info of the profile responsible for the ad;
  • Publish quarterly reports about compliance measures, including data such as unidentified bots;
  • Allow authorities to remotely access their database if requested by courts.

Pain points. According to lawyer Luis Fernando Prado Chaves, a partner in charge of Digital Law at Daniel Advogados, the most controversial points of the bill are its possible restrictions to freedom of speech, as well the excessive amount of data provided to social media companies, which impacts both users and advertisers.

“Currently, social media companies are only forced to remove content under court orders. Transferring this mediation of content to them may harm freedom of speech, because companies may choose to erase content immediately with fear of being penalized,” he said, adding that this may cause stricter controls and longer times to approve advertising.

Social media companies already flag sponsored content and this shouldn’t be an extra burden for companies, he says. However, providing more data, such as advertisers’ tax IDs, is a risk. “One of the criticisms towards the bill is the amount of information they force companies to disclose. Identifying advertising documents is risky because they may be targeted by fraudsters.”

Proxy effects. Tougher treatment of Covid-19-related content has shown agencies a proxy reality of a world where platforms need to make broader verifications. According to Carolina Fabri, content coordinator at digital marketing agency Goobec Brasil, Covid-19 content is already experiencing longer approval times than Facebook’s standard 24-hour turnover. “Every day we need to sponsor posts related to Covid-19 for a client in the health sector, sometimes they are not approved or they are approved behind schedule.”

Self-regulation. The bill proposes that social media companies should assemble a self-regulation entity, if they wish. This would be similar to Conar, the council that self-regulates the Brazilian advertising industry. Mr. Chaves explains that not only is it abnormal to have a self-regulating structure arising from new legislation, but it could add to a series of organisms that already regulate the sector, such as the Managing Committee of the Internet (CGI.br) and the future National Data Protection Agency.

On the other hand… An organization of self-regulation might help provide industry-wide guidelines at a time social networks from other countries are becoming more popular in Brazil. “The goal (of self-regulating) is to harmonize interests within social media. We are seeing Chinese apps getting popular in Brazil, with another level of understanding towards freedom of expression, different criteria from American companies, which are more liberal,” he says.

Take note

  • 5G. Claro has pre-launched Brazil’s first commercial 5G network. We explained in our July 3 Daily Briefing how the telecom giant managed to do this, despite the country delaying its auction of 5G frequencies. Read now.
  • Election. Despite being a “softer version” of the original proposal, the Fake News bill approved by the Senate is set to have more profound impacts on politics. Brazil gets ready for the most digital election of its history — and the bill still raises controversy among privacy rights advocates. Check our July 1 Daily Briefing and or June 22 story to understand the changes in the law.
  • Data protection. A study by media company CDN and cloud security provider Akamai Technologies found that 24 percent of companies interviewed still don’t know what Brazil’s General Data Protection Law (LGDP) is, less than three months before its enforcement. Also, 64 percent said their companies are not yet fully compliant with the law, though 80 percent claim customers and employees’ data are safe.
  • Cybersecurity. Planemaker Embraer increased its stake in cybersecurity company Tempest, a leader in services for retail and financial industries in Brazil. The investment will allow them to tackle the cybersecurity market for aerospatial defense and give Tempest a foothold for international expansion.
  • Payments. One less hurdle for WhatsApp Pay in Brazil: antitrust authority Cade has lifted its decision that suspended the partnership between Facebook and payment company Cielo to process payments on the messaging app, as companies provided information that helped assuage competition concerns. However, the service remains blocked by the Central Bank, as chairman, Roberto Campos asked companies to prove they allow competition and security.
  • Regulation. The Brazilian Securities Commission (CVM) suspended seven offers registered on equity crowdfunding platform Cluster21, which provides seed capital for startups through crowdfunding with investors. According to CVM, the offers do not provide essential information for investors. Also, there are individual entrepreneurs listed on the platform, which is forbidden according to the legislation. Cluster21 must interrupt all offers immediately, for 30 days, as well as publishing the necessary info and giving investors the opportunity to revoke their capital contributions, per CVM rules.
  • M&A. Brazilian company WEG Industries acquired the control of industrial analytics startup BirminD, for an undisclosed amount. The company provides control loops services and analysis of returns before they are in place, using machine learning and AI.

 

Article published in The Brazilian Report. Read it here.

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