If ever there was a country that encapsulates the extremes of modern society, it could be the South American country of Brazil. By far the largest of the nations on the continent, it is also the wealthiest, but also has some of the largest, most densely populated slums, located not far from enormous villas and mansions of the super-rich. Brazil is also famous for its vast, nearly impassable tropical rainforests beyond its huge cities.
Today, within this giant region of contrasts, Brazil is also emerging as a giant in e-commerce. In 2017, Brazil’s e-tail market grew by 8%, with 55 million e-consumers buying goods online. The total retail growth for 2018 is expected to be 12% and worth US$14.6 billion. The largest online e-commerce marketplace is the Argentina-based MercadoLibre, which as of 2016, had 174.2 million users in 15 Latin American countries.
As e-commerce continues to grow, consumers and businesses are demanding more last-mile delivery to homes and businesses, and the airlines have done their part to make this possible. LATAM Cargo, for instance, has operated last-mile delivery since 1996, including airport to airport and door-to-door services in about 3,000 cities in Brazil, said Diogo Nunes, vice president of LATAM Cargo’s domestic services.
“The country is a big market that is spread out and inefficient,” Nunes admitted. “We are a niche market that is widely operated by filling up our bellies. We went from one or two contracts to about 80 contracts now by coming to smaller airports around the country.” Today LATAM works with third parties that are exclusive with the carrier. “We have a bigger share of the door-to-door market,” which originally was not thought of as e-commerce; it was mostly auto parts and telecommunications. “It’s about 50% e-commerce now, with the trend for the last five years being door-to-door.”
Express companies, of course, have made last-mile a priority everywhere, said Mike Parra, CEO of DHL Express Americas. The Germany-based integrator is present today in all 57 countries in the Americas, serving more than 400,000 active customers today that are expecting express delivery within 24 to 48 hours at more than 1,000 facilities in the Americas. Last-mile service is carried out using 10,000 service point, where customers can either pickup or drop-off packages or more than 9,400 dedicated DHL vehicles.
Some in the freight forwarding sector, however, say that emphasizing technological advancement as a solution to the last-mile problem is wrong-headed. “I believe the model makes no sense,” said Gerald Blake Lee, CEO of Brazil-based 3PL Modern Logistics. “In Brazil there are no rail connections. Only 15% of roads in the country are paved. Inefficiency is built in.”
For the many countries DHL serves via last-mile, there are limits to how much can be sent via high-technology. “When you go outside of Lima, Peru, for just five or six miles, you rapidly lose wi-fi connectivity,” Parra said. “You’re driving on dirt roads.”
“Everyone is looking for last-mile technology,” Lee said, “but if you don’t have basic infrastructure, you’ll get nowhere.”