June 10, 2022


Leapfrog Logistics

Digital platforms, infrastructure, and labor in Brazil and China

In Spring 2018, two significant labor disputes broke out at opposite ends of the earth. The first, in Brazil, was an 11 day mass strike of 400,000 truckers in response to successive price increases unleashed by the state oil company, Petrobras, liberalizing diesel prices. The second, in China, was a large strike which spread across the nation in response to low fees paid by digital trucking platforms, which account for a growing share of China’s road freight market. 

Neither action concluded in decisive victory. Brazilian truckers won temporary diesel price reductions and minimum transport fees, while China is belatedly witnessing regulatory and trade union organizing moves in the trucking sector. But these two incidents—amongst the largest labor actions in the logistics sector in recent years—highlight the increasing importance of labor struggles in sectors associated with commodity distribution. The disputes also call attention to two crucial features of the contemporary global economy: the reliance on logistical planning required to facilitate spatially fragmented production, and the use of digital platforms to mediate socioeconomic life. 

The growing economic significance of infrastructures and logistics, on the one hand, and digital platforms on the other, are increasingly interdependent trends. Since the logistics revolution of the 1970s, highways, ports, road networks, utility systems and advanced logistical mapping and forecasting have become central to securing the huge volumes of commodities flowing through the global economy—especially as production processes have fragmented and trade in parts and components has expanded.1 Global shipping volumes doubled from 5,984 million tons in 2000 to 11,071 million tons in 2019.2 Moreover, digital platform firms increasingly control physical logistics infrastructure, by taking ownership of cloud computing and data centers, internet cabling, telecoms networks, transport systems and satellites. 

Advances in digitalization and platformization enable technological leapfrogging in the logistics sectors of large Global South economies. The road freight industry has traditionally been dominated by owner-drivers and small-scale informal operators, which together made up 70 percent of fleets in 2009.3 These small-scale operators often drive older vehicles that carry less weight per truck than the new, larger trucks operated by transport companies. Unlike ports, waterways and railways, trucking is one of the most labor-intensive parts of the global logistics sector, employing tens of millions of workers worldwide. 

A dramatic rise in tonne-kilometres of freight moved by road during the past decade4 has precipitated the rise of digital trucking platforms across the Global South. Often nationally based firms, these trucking platforms consolidate markets, drive cost efficiencies, enhance information flows,5 discipline labor, and centralize investment capital in a sector traditionally dominated by petty capital. Given the global slowdown in productivity growth and profit rates,6 and the challenges for catch-up development in the context of global value chains,7 cutting costs in logistics is one alternative means for Global South economies to enhance competitiveness. In the long-run, this may entail a shift towards more rail- and water-based transport. In the short- to medium-term, though, digital platforms enable a coordination of older and more labor-intensive modes of logistics like trucking in a more efficient and transparent way. As a result, the penetration of digital platforms into logistics provides an approach to improving the competitive position of individual producers, economic sectors, and national economies.

Brazil and China constitute two of the world’s largest logistics markets. Both experienced booms in road-based infrastructure investment during the past two decades.8 And in their road freight sectors, digitalization has advanced far more quickly than in the Global North, as platforms have come to play an increasingly critical role in transport infrastructure. This may present economic opportunities—for instance, despite lower costs for soy production, Brazilian agribusiness currently suffers from higher costs for logistics due to expensive and inefficient road freight transport. Through rationalization, investment, and downward pressure on wages, platforms could ameliorate this situation. Similarly, in China, more efficient logistics systems may compensate in part for the rising wages of factory workers. A closer look at the digital trucking platforms operating in Brazil and China thus provides a lens through which to observe the transformations that the platformization of logistics may deliver in large economies of the Global South more broadly. These upper middle income economies have been able to leap to the technological frontier: trucking platforms are now restructuring road freight markets, and in the process, they are impacting the working lives of millions of truck drivers.

Digital freight platforms in Brazil

Traditionally, the Brazilian trucking sector consists largely of self-employed drivers. Since regulations prevent these drivers from closing freight contracts with shippers, many transport companies hire a small number of formally employed drivers in addition to self-employed truckers who are often disguised wage workers. Official statistics indicate the existence of 546,499 self-employed drivers and 344,231 formally employed drivers in Brazil.9 But media reports estimate a total number of 1.5 million truck drivers in Brazil—implying an additional 600,000 informal, unregistered drivers. 

The general characteristics of the industry, and the grievances of truckers (low freight prices and high diesel prices) have not changed much since the 1970s. But the conditions of self-employed truckers have deteriorated since 2014, when Brazil entered an economic crisis that persists to the present. From 2010 on, the Brazilian government facilitated the purchase of new trucks, and the number of truckers started to grow faster than GDP growth. When the economic crisis hit in 2014, transport volumes decreased, but the number of truckers remained constant due to a lack of alternatives on the labor market. With the excess labor in the sector, drivers are not able to obtain higher freight prices whilst the costs for vehicle repair, tires and diesel increase.

In Brazil, freight transport accounts for 65 percent of all commodity transport, against an average of 30 percent in developed countries, and 42 percent across the Global South. Rail transport carries just 15 percent of all commodities in the country, compared to an average of 40 percent in the Global North and South. The high proportion of road freight transport drives up the costs for commodity producers in Brazil, since buyers pay for the transport price from the port of shipping. Road freight transport is more expensive than other modes once it exceeds 100 kilometers of distance, and due to overcrowded and low-quality roads in Brazil, it is the cause of slower transport times. About 40 percent of road freight trucking in Brazil is for agribusiness: the largest single commodity transported in Brazilian road freight transport is fertilizer, followed by soy.

The Brazilian road freight transport market has an overall annual turnover of 160 billion real per year (numbers for 2020), of which digital platforms are intermediating a rapidly growing share. App-based trucking started in Brazil in the mid-2000s, but the Covid-19 pandemic ushered in the explosive growth of trucking apps. The CEO of a major platform, Cargo X (whose board members overlap with those of Uber), reported a 75 percent growth in turnover for 202010 while FreteBras, a competitor, reported a 62 percent growth in terms of cargo volumes in 202011. The Fretebras platform now dominates the market with 50 billion real of freight shipped over the platform in 2020, and estimates are that 2021 will see a volume of 80 billion real. Cargo X, meanwhile, claimed that in 2020 their total turnover was around 875 million real. Financial newspaper Valor Econômico estimates that Fretebras covers 80 percent of the market of trucking apps, and competitor Truckpad, one of the first such platforms which came online in 2013, controls a further 10 percent.12 This means that in 2020 all trucking apps combined mediated about half of all road freight transactions, perhaps the largest share among countries with large logistics markets, and far ahead of advanced economies like the United States and Europe.

Foreign and local players continue to enter the market. The Chinese platform Manbang Group, known internationally as Full Truck Alliance, invested an unknown amount of capital in TruckPad at the end of 2019. Among the new entrants are the large agrotrading companies which are mostly represented by non-Brazilian transnational capital. Recently, they have launched their own apps: US-based multinational Bunge launched the platform Vector in 2020 in a joint venture with the Argentinian logistics operator Target, and Chinese state-owned agrotrading company Cofco is set to join the enterprise.13 On the other hand, four more large agricultural traders, Amaggi, Louis Dreyfus, Cargill, and ADM joined to integrate their logistics data into the trucking app Carguero in 2019, which mediated 2 billion Real in freight in 2020, and is still running as a pilot project awaiting a full launch.

In November 2021, FreteBras merged with Cargo X to form the new company Frete.com. It received $220 million in investment, primarily from Japanese Softbank Latin Fund and Chinese tech giant TenCent. Brazilian investment bank BTG Pactual and former Florida Governor Jeb Bush were also counted among the contributors. The merger integrates FretBras’s unparalleled user numbers and Cargo X’s deep knowledge of digitalization services. The latter’s key advantage is its algorithmic price setting system, which was difficult to adapt for the freight market, where long unloading times delay payment. Thanks to this merger, more sophisticated Uber-style models for the trucking industry are likely to emerge.

The rapid advance of Brazil’s digital freight platforms can be explained by the possibilities for leapfrog development enabled by the informal, undercapitalized, and poorly organized nature of the sector. Self-employed truckers represent more than half of the 1.5 million strong trucking workforce, which currently resents the long waiting times and burdensome paperwork. Existing intermediaries also cut into truck driver earnings by collecting 20 to 40 percent of freight prices. Normally, they pay truckers 80 percent of the freight price in advance, and 20 percent upon completion, though this latter portion is frequently unpaid. Before the arrival of trucking platforms, obtaining a freight contract for a self-employed driver typically required waiting anywhere from several hours to several days at the office of an intermediary or a transport company to pick up an order, and then completing more than twenty official forms.

Apps address some of these issues by displaying demand for jobs in real time. However, there are limits to the platform-based rationalization of Brazil’s freight industry. Most of the country’s freight platforms, including Fretebras, do not set prices, and instead function as bidding marketplaces. Those most often bidding are rarely shippers—instead, they remain the same intermediary transport companies which dominate the non-platform trucking sector. This is because most shippers demand a service package not yet offered by platforms, including functions like insurance, tracking, and planning of routes. As intermediary transport companies increasingly rely on platforms to hire self-employed truckers, they also reduce their formally employed workforce. Fretebras openly advertises that it is 23 percent cheaper to hire self-employed truckers via their platform than to directly employ them. Rising platform usage thus seems likely to lead to a further reduction in the share of formally employed truckers, undermining any progression towards formal employment relations.

Should this trend hold, it will carry signifiant consequences for the broader labor market. Unlike other platform-based work, trucking is the primary occupation and long-term profession for most self-employed Brazilian truckers. While platforms reduce some pecuniary and time costs for truckers, they also place different segments of the labor market into direct competition with one another. For instance, many truckers operate in specific regions or on specific routes, since they do not want to spend too much time away from home. But enhanced access to information platforms motivates some truckers to alter their routes or expand their field of operations, thus altering the supply of labor in different regions. Freight transport prices in Brazil remained more or less flat during 2021 while diesel prices rose 40 percent, with the effect of an enormous drop in real earnings of self-employed truckers. As in earlier years, self-employed truckers lack the power to demand higher prices from transport companies, and therefore any inflation in inputs cuts into their earnings. Until now, platforms have failed to limit truckers’ vulnerability to the increasing cost of inputs like tires, car parts, and fuel.

Brazil has seen little in the way of institutional responses to the digitalization of road freight. A simplified electronic transport document, DT-e, was approved by the government in September 2021 and is awaiting implementation. Once fully implemented, DT-e has the potential to eliminate functions currently conducted by transport companies (which act as intermediaries) as well as reduce the relevance of platforms. This is because DT-e would allow truckers’ associations and trade unions to assume intermediary functions and legal responsibility for transport. Whether this poses a major challenge to platform business models remains to be seen. One result of the truckers’ strike in 2018 was the establishment of legally defined minimum freight prices. Despite patchy implementation, employers’ organizations successfully mobilized the Supreme Court to rule on the minimum prices; fees in violation of those prices have been suspended since 2020. The Supreme Court is dragging its feet on the issue since it is neither motivated to confront truckers nor employers. 

The growth of online truck-hailing in China

China is the world’s largest employer of truckers by some margin, with around 15 million road freight trucks and about 30 million truck drivers.14 Most truck drivers are self-employed and work on a freelance basis. Most of them also own their own vehicles, often financed with heavy debts. To take more orders and pay off debts, drivers are constantly on the road, living, eating and sleeping in their trucks. Like in Brazil, significant rigidities and bureaucratization have made working life difficult for truckers. The traditional way for them to secure jobs is to physically attend information stations in local logistics parks, where they pay an information service fee, obtain order information, and bargain over prices. 

The rapid development of internet technology and huge flows of capital into the sector in the mid-2010s initiated the platformization of road freight operations in China. In 2017, a watershed moment in this process took place: the merger of the two largest players in the online truck-hailing sector, Yunmanman and Truck Alliance founded the largest truck-hailing platform in China, the Manbang Group. Amongst Manbang’s biggest backers are global private equity and funds like Softbank and Sequoia Capital, alongside Chinese funds like Tencent Holdings and Yunfeng Capital. Manbang platforms match truck drivers with shippers directly to improve freight efficiency and reduce empty loads. In 2020, the firm listed on the New York Stock Exchange and was valued at US$21 billion. It claims to have gained RMB 173.8 billion (US$26.6 billion) in gross transaction value, accounting for 64 percent of market share of the GTV of the Chinese digital freight platforms, and fulfilled over 2.8 million truck shipping orders over the previous 12 months.15

New business models have also emerged with the growth of platforms. The platform For-U Smart Freight, established in 2015, provides end-to-end fully digitalized services, including pricing and order placing, dispatching, and transportation. It focuses on the full truckload (FTL) market, instead of the less-than-truckload (LTL) market. Its main shippers are large enterprise shippers, such as Deppon logistics, JD logistics, and SF Express. Some other platform companies, such as LaHuoBao and Kuaicheng, are targeted at particular goods classifications, such as hazardous chemicals and coal.

In contrast to the For-U Smart Freight company, Manbang’s platforms are more popular among gig drivers and small to medium enterprises. Among 2055 drivers surveyed in 201916, more than 90 percent claimed that they have used the platforms alongside apps like Yunmanman and Truck Alliance. About 38 percent of drivers used these platforms to get more than one-third of their orders. The platformization of road freight relieves information asymmetry and breaks down some geographical constraints on information: drivers are able to access the order information more easily in broader areas or even across provinces, and there is no longer a need to physically attend local information stations for hours or days at a time to pick up jobs. Truckers can also avoid carrying empty loads on return trips. 

But due to the predominance of Manbang in the truck-hailing sector, platforms also have established growing rule-setting power. At the early stage, platforms provided a free matching service and allowed drivers and shippers to negotiate prices. Eventually, however, platforms introduced fee schemes for both drivers and shippers. In June 2018, they initiated a policy that prevents truck drivers and shippers from contacting each other to ensure transactions and prices rates were set exclusively via the apps. Platforms also restricted price negotiations through automated pricing. The resulting squeezed profits, combined with rising fuel costs and arbitrary fines, instigated the strike wave of 2018.17.

Through referral schemes, bonuses, and zero-down payment truck loans, platforms incentivize market expansion. But while they offer benefits, these incentives also burden new drivers with heavy debts. In order to pay off the monthly mortgage, drivers often need to take more orders at extremely low prices and work longer hours. As a result, drivers bid against each other, lowering prices in a vicious race to the bottom. Interviewed drivers claimed that the prices have been reduced by as much as 30 to 50 percent in the last five years. One driver warned, “for those who just entered this sector and need to pay the monthly mortgage to get a truck, I would strongly recommend they go back to factories and make screws. There is no space to survive in this sector now.”

Social and policy responses to the platformization of critical logistics infrastructure are more evident in the Chinese case. Informal networks of workers are growing. WeChat channels are widely used among drivers to share information on pricing and pay and publicize negative experiences such as arbitrary decommissioning, often with powerful effects. And the state has increasingly played a larger role, scrutinizing labor conditions in the gig economy. In January of 2022, Manbang and three other road freight platforms (Huolala, Didi Freight, Kaigou) were interviewed by the Ministry of Transport regarding concerns over the arbitrary power over pricing system, increased membership fees, low-price spiral, and illegal transportation of oversized and overloaded vehicles.18. The All-China Federation of Trade Unions (ACFTU) has also attempted new ways of organizing such workers. Since October 2021, truck drivers in Anhui Province can join the trade union by registering on an app which provides a range of services for truck drivers (such as communication, insurances etc.) 19 Whether these measures will  have any material effect on drivers’ conditions and wages remains to be seen. Finally, as part of the broader crackdown on the tech sector in the summer of 2021, the Chinese Cybersecurity Review Office launched an investigation into the data security of Manbang. During the investigation, the apps were taken offline and limited to existing users.

Infrastructure platformization and the global economy 

While China is now at the technological forefront of platform logistics, even Brazil’s less technologically advanced bidding apps outstrip technologies deployed in Europe and North America. While the logistics revolution of the 1970s primarily shaped the Global North, trucking apps allow us to study the contemporary leapfrogging of digital logistics in the Global South. Plagued by underinvestment and fragmentation, dominated by intermediaries, and largely shielded from the competitive pressures of the global economy, the trucking industry of the late-twentieth and early twenty-first century promoted business practices that largely harmed workers through long waiting times, dense bureaucracies, and high fees. But despite the efficiency gains they offer, digital trucking platforms intensify labor discipline for drivers who are increasingly working in “sweatshops on wheels.”20 

Unlike the already flexible logistics labor markets of the Global North,21 rigidities and inefficiencies in Global South logistics present outsized productivity and profitability rewards for platforms able to engage in leapfrog development, using technology to consolidate the market, integrate services, and eliminate barriers to circulation. This mirrors other forms of digital Taylorism sweeping service sectors in the Global South, as work in sectors like parcel and food delivery, ridehailing, and even white collar internet work is subjected to intense datafication, performance management, and control-by-algorithm.22 What is more, these productivity gains—even where platforms demonstrate aspects of rentierism—are likely to accrue to firms across the economy, improving national competitiveness through lowering logistics costs. 

As on-location platform services increasingly absorb the tasks of critical transport infrastructure, governments will be incentivized to control and regulate these in new ways to guarantee regularity and universality of supply.23 China demonstrates the possibilities for governments to exercise substantial sovereign and territorial control over digital platforms.24 But the emergence of Brazilian firms at the technological frontier further demonstrate the possibilities for national varieties of digital platforms to emerge in the Global South. These firms can flourish even in an economy like Brazil’s, historically controlled by a comprador bourgeoisie. These new digital national champions signify a deepening techno-economic multipolarity, generalizing the gains, contradictions, and agonies of rapid capitalist development across the continental-scale economies of the Global South.

  1. See Danyluk, Martin. “Capital’s Logistical Fix: Accumulation, Globalization, and the Survival of Capitalism.” Environment and Planning D: Society and Space 36, no. 4 (August 2018): 630–47; and Cowen, Deborah (2014): The Deadly Life of Logistics. Minnesota University Press.

  2. UNCTAD, “Review of Maritime Transport.” 2021.

  3. DFID, “Freight Transport for Development Toolkit.” 2009.

  4. International Transport Forum, “Statistics Brief.” 2020.

  5. Sergey Evgenievich Barykin & Irina Vasilievna Kapustina & Elena Viktorovna Korchagina & Sergey Mikhailovich Sergeev & Vladimir Konstantinovich Yadykin & Almakul Abdimomynova & Diana Stepanova, 2021. “Digital Logistics Platforms in the BRICS Countries: Comparative Analysis and Development Prospects,” Sustainability, MDPI, vol. 13(20), pages 1-19, October.

  6. Mark Schwartz, Herman. “Manufacturing Stagnation.” Phenomenal World, 2021.

  7. Jostein Hauge (2021): “Manufacturing-led development in the digital age: how power trumps technology,” Third World Quarter.

  8. da Rocha, F.V. and Saes, M.S.M. (2018), “Private investment in transportation infrastructure in Brazil: the effects of state action,” Revista de Gestão, Vol. 25 No. 2, pp. 228-239.; Zhigang Li, Mingqin Wu, Bin R. Chen, “Is road infrastructure investment in China excessive? Evidence from productivity of firms,” Regional Science and Urban Economics, Volume 65, 2017, Pages 116-126.

  9. Confederacao Nacional do Transporte, “Conjuntura do Transporte.” 2019.

  10. Verotti, Angelo. “Um pé no acelerador, outro no crescimento,” Istoe Dinheiro, 2021.

  11. Ramos, Andreas: “Volume de carga transportada pela FreteBras cresceu 62% em 2020.” Estradao, 2021.

  12. Presinott, Fernanda: “Grandes Tradings Criam Empresa de Frete.” Economico Valor, 2021.

  13. Lopes, Fernando: “Aplicativo de Fretes da Bunge Cresce e se torna Uma Empresa.” Economico Valor, 2021.

  14. Research Center at Chuanhua. “Research report on Chinese truck drivers (No.1): Group characteristics and labor process of truck drivers.” 2018.

  15. Full Truck Alliance, “Company Profile.”

  16. Research center at Chuanhua. “Research report on Chinese truck drivers (No.3): logistics enterprises, freight handlers and female truck drivers,” 2019.

  17. Jiangying, Tan. “Truckers on Strike and the Structural Contradictions of China’s Logistics Industry.” China Change, 2018.

  18. Hongyang, Li. “Cargo service platforms urged to protect drivers,” China Daily. January 2022.

  19. CNR News. “Coordinating trade union with platform: truck drivers in Anhui province joined trade union via online platform,” October 2021.

  20. Michael Belzer, Sweatshops on Wheels: Winners and Losers in Trucking Deregulation. (Oxford University Press, 2000.)

  21. Viscelli, S. (2016). The Big Rig: Trucking and the Decline of the American Dream. (University of California Press, 2016.)

  22. Huang, Hui. “Algorithmic management in food-delivery platform economy in China,” New Technology, Work, and Employment, January 2022; Abilio, Ludmila Costhek, Rafael Grohmann, and Henrique Chevrand Weiss. “Struggles of Delivery Workers in Brazil: Working Conditions and Collective Organization during the Pandemic,” Journal of Labor and Society 24, 4 (2021): 598-616; Henrique Amorim and Felipe Moda. “Work by app: algorithmic management and working conditions of Uber drivers in Brazil,” Work Organisation, Labour & Globalisation Vol. 14(1):101-118; Liu, Hong Yu. “Digital Taylorism in China’s e-Commerce Industry: A Case Study of Internet Professionals,” Economic and Industrial Democracy, February 2022

  23. Busch, Christoph, “Regulation of Digital Platforms as infrastructures for services of general interest,” September 2021.

  24. Barry Naughton, “What’s behind China’s Regulatory Storm?”Wall Street Journal, December 2021.

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