In Ecuador 85% of the total cargo is mobilized by road, and to deliver this service, according to the statistics of the information system in 2020, the existence of active commercial vehicles: trucks, tractors truck and dump truck was 250,000 units concentrated in 5,000 transport companies approximately*, being the truck 2-axis and 3-axle truck tract the most used. From the total of these vehicles, about 70%, provides contractor service, 26% particular dedicated, 2% official and “other” percentages.
1,500 of these companies are allegedly fictitious or ‘paper companies’ which interact and may distort the country freight pricing market **.
There are two key transporters federations: the National Federation of Heavy Transport of Ecuador, FENATRAPE, a union institution, and the National Federation of Mixed and Medium Light Transportation of Ecuador (FENACOTRALI).
The business model of transport companies in Ecuador is mostly based on smallholders vehicles, means not having own fleet. This is a poor model that generates economies of scale and the level of service is affected because there is no direct reporting relationship between the carrier and driver. This model basically involves three actors; customer (shipper), the transport company and the vehicle owner. In this business, the customer hires the transport company, which, in turns, subcontracts the service to a vehicle owner. There are also some large companies which have their own fleet and have a direct reporting relationship with drivers.
The transports sector faces several problems such as: Infrastructure; limited and poor road network with low capacity, this deficiency generates high logistics costs. Modernization: old vehicles, the lack of clear policies by the national government in terms of renewal and scrapping the oldest fleet; The average age of vehicles on Ecuadorian roads is 23 years and 43% have more than twenty years.
In fact, FENATRAPE is focused among its major challenges in theirs Scrap Renewal Plan; modernization and digitization, simplification of administrative procedures for qualifying titles in government traffic entities such as the Ministerio de Transportes y Obras Públicas (MTOP), among others. Likewise the union expects that, with the reduction of tariffs, taxes and fees, as well as with strategic alliances, massive purchases of products and supplies will be generated to achieve more competitive costs. It is also waiting for the Government to modify some issues in public procurement to support heavy transport, but innovation and digital transformation will continue being the top aim of the sector. This year 2021 the companies have the great mission of modernizing their processes, training and strengthening strategic alliances with the industrial and commercial sector focused on efficiency improving.
Fleet age and Insurance
In the country there are 705, 963 vehicles (total automotive fleet) of more than 12 years, according to data from the recent Transport Statistics of 2017 of the National Institute of Statistics and Censuses (INEC). Insurance companies consider a car older than 12 years old to be old and therefore don't insure it or charge higher premiums.
Source: INEC – El Comercio / Vehicles with more than 12 years registration during 2017.
Also the heavy transport sector aspires to reach the levels of productivity and operations registered before the pandemic, so one of its main objectives in 2021 is to achieve greater efficiency in cost management. FENATRAPE considers that out of 250,000 vehicles of its fleet, today 2021, approximately 40,000 do not have a properly productive job.
For more information on transport company ranking list, please see the following link: https://ctpp.org.ec/wp-content/uploads/2019/12/Transporte-en-Cifras-1.pdf
Source: Extract of The Ranking 100 Companies Land Freight Transportation Of The Heavy Cargo Transportation Sector Of Ecuador, Pichincha Chamber of Heavy Transportation.
The Ranking is made with information from the Superintendency of Companies and considers the 5,193 active heavy cargo transport companies. The position has been defined based on the sales revenue reported in the fiscal year 2017.
(*) Felipe Vizcaíno, President of FENATRAPE
Disclaimer: Inclusion of company information in the LCA does not imply any business relationship between the supplier and WFP / Logistics Cluster, and is used solely as a determinant of services, and capacities.
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