Cost increases moderate due to a 40% drop in sector activity

Cost increases moderate due to a 40% drop in sector activity

“Despite the slowdown in costs that we are experiencing, it is crucial to recognize the drop in activity in the sector, currently estimated at 40%. This recession further intensifies the crisis “which is already suffering from freight transport, a key sector that drives more than 90% of the Argentine economy,” explained Roberto Guarnieri, President of the Argentine Federation of Freight Motor Transport Business Entities (FADEEAC).

According to the most recent Transportation Cost Index (ICT), in March there was an increase of 6.41%, marking a trend of deceleration after the significant increases observed in previous months. This adjustment is added to the previous increases of 20.6% in January and 8.05% in February, after closing the previous year with the accumulated highest in three decades.

This recent increase reflects a cumulative increase of 38.7% in the first quarter of 2024, which according to businessmen in the sector underlines the context of declining activity.

On the other hand, the annual analysis highlights that the FADEEAC Index has experienced a cumulative increase of 302% in the last twelve months.

According to the survey, in March seven items showed increases (Personnel, General Expenses, Fuels, Repairs, Tolls, Lubricants and Insurance), two did not suffer changes compared to February (Lubricants, Patents and fees, and Tolls), three registered decreases ( Rolling stock due to the strong monthly decrease in alternative dollars-, and Financial cost -linked to the decrease in interest rates and Tires). Patents and Fees had no variations with respect to the previous month.

The two items that gravitate with greater incidence in the operating costs of the sector are Personnel and Fuelsand both continue with an upward trend. In the case of the Personal category (Driving 26.73%), it is a reflection of the Joint Agreement with the Federation of Truck Drivers, which has not yet been approved by the Ministry of Labor of the Nation at the time of the closing of the ICT.

For its part, a new increase in Fuels (7.31%) stands out, both in the retail and wholesale segments of diesel, after the significant and successive increases in December (63.3%) and January (22.6%). . The accumulated increase in diesel fuel reaches almost 40% in the first quarter of 2024.

The impact of rising transportation costs moves to the entire production chain. For example, a recent report by the consulting firm Data Miazzo calculated that to pay for a 300-kilometer freight, a farmer needed 145.9 kilos of wheat, 10% more than last year. And to buy a liter of diesel, 5.3 kilos, 35% increase versus the previous campaign. “The international price of wheat fell 29%,” the report explained one of the reasons for this situation.

Logistics: increases in a key service

The figures on the increase in costs in cargo transportation coincide with the measurement carried out by the Business Chamber of Logistics Operators (CEDOL), since registered an increase of 6.55% in March.

This survey highlighted that the first tranche of the February 2024 joint wages (25% on February salaries) had an impact on that month, as well as an increase of two percentage points in the additional of the logistics branch.

There were also increases in telecommunications (24.71%), building security (29.59%), pallets (9.61%) and rentals (2.86%), which affected warehousing operations.

In the case of the index with transportation, in addition to labor, the increases in fuel (7.31%), lubricants (3.50%), repairs (5.96%), insurance (1.06%) had an impact. , general expenses (18.06%) and tolls (5.27%), while the following decreased: financial cost (-18.61%), tires (-3.21%) and rolling stock (-1.62%) , which strongly moderated the impact of the increases in the general index.

On the other hand, the increase in fuel in the first days of April, of the order of 4%, as well as the salary increase scheduled for this month (20% over February values), motivated the preparation of an impact projection for the current month by the CEDOL Technical Department. In this way, the projected values ​​for the month of March 2024 were 4.96% for the index with transportation costs and 11.33% without transportation costs.

Source: Ambito

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