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How will the privatization of Correios affect logistics in Brazil?

As the privatization of Correios has been moving forward in recent weeks, the market is already beginning to see the possibility as a near reality. But how will the logistics sector be affected in Brazil if the sale takes place? “It is the only company in the sector with a presence in all municipalities in the country, with an important role in distribution capillarity,” says Fernando Moulin, partner at Sponsorb, a boutique business performance consultancy specializing in e-commerce.

According to Moulin, it is precisely what the main risk is: a regulatory framework is needed that guarantees the existence of less profitable or even deficit agencies in smaller cities - at the risk of reducing or preventing access to a significant portion of the territory national. After all, for some Brazilians, Correios is the only option for logistics. Currently, private companies serve 400 municipalities representing 92% of the volume, but few exceed 600.

For now, the valuation of Correios has not been defined and should only be disclosed by the National Bank for Economic and Social Development (BNDES) next month. After all, the company is profitable and, in 2020, closed with a profit of more than 1 billion reais – in services rendered to third-parties alone; it generated 1.2 billion in revenue last year. Even so, the assets of the state-owned company (which include more than 2,500 properties in valued regions of Brazil) may outweigh the importance of the good result.

“In terms of logistics, they are extremely noble and expensive places where these companies will have, all of a sudden, a warehouse with a structure already assembled, ready to operate. And the company that takes over operations will have the good positioning of Correios and be able to carry out updates that increase efficiency. These aspects created a gold rush”, says Daniel de Oliveira, a professor at the Vanzolini Foundation and the Polytechnic School of the University of São Paulo (Poli-USP).

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