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Quarantine takes its toll on Brazil’s public transport companies

. Apr 12, 2020
Quarantine takes its toll on Brazil's public transport companies Photo: Marcos Casiano/Shutterstock

The Covid-19 pandemic has already infected 20,727 Brazilians and killed 1,124 others. So far, state and municipal governments have decreed the closure of non-essential businesses, allowing only key commerce such as supermarkets, gas stations, and pharmacies to remain open. As such, with all non-critical movements being frowned upon, the number of people on the street has severely decreased in major cities. The effects of this are already being felt by Brazil’s transport companies.

Brazil’s rail and subway systems, for instance, usually responsible for transporting more than 12 million passengers per day, recorded losses of BRL 271 million and an average reduction of 82 percent in passenger traffic in the space of only nine days after the beginning of isolation measures.

According

to the association of railway transportation companies, the sector is expected to lose a further BRL 261 million every week that isolation measures remain in place.</p> <p>With the need for personnel of essential businesses to commute to and from work, public transport systems cannot close completely. Therefore, to compensate for these losses, companies asked the federal, state, and municipal governments for more credit to continue operations, a reduction in labor charges, and the postponement of tax payments.&nbsp;</p> <p>The situation is no different among municipal bus companies, which had warned that they would run out of money to maintain their operations by April 5. While the sector continues to function, several cities have been forced to suspend bus services completely. Companies estimate that an investment of BRL 2.8 billion per month would be necessary to maintain services in the 2,901 municipalities that have public bus networks.&nbsp;</p> <p>The annual turnover of companies is BRL 42 billion, but 60 percent is spent on fixed costs, encapsulating payroll, maintenance, and fuel. &#8220;If the situation continues until April 16, we estimate that the loss could reach BRL 4 billion if there is a total stoppage of the service,&#8221; says Otávio Cunha, president of the National Association of Urban Transport Companies (NTU).</p> <h2>Impact on transport apps&nbsp;</h2> <p>If <a href="https://brazilian.report/newsletters/brazil-daily/2020/01/17/new-freight-table-bolsonaro-hopes-appease-truckers/">traditional public transport companies</a> are suffering the effects of the pandemic, transport app companies are no different. Buser, for example, which transports passengers by bus, recorded a monthly increase of 30 percent in the number of travel requests until it decided to stop its activities on March 21.</p> <p>The decision was made because the company realized that bus travel could intensify the spread of the virus. Currently, the company has more than 2 million registered users and transports around 180 thousand passengers per month to more than 200 cities. There are still no estimates of losses.</p> <p><a href="https://brazilian.report/business/2018/01/04/uber-brazil-didi-chuxing-99-app/">Ride-hailing apps</a>, such as Uber and 99, have also yet to measure their losses. Estimates by the app drivers&#8217; union in the Federal District say that revenue from rides has dropped by 80 percent.&nbsp;</p> <p>To mitigate the possible effects of Covid-19 on their activity, both companies offered aid packages to their drivers. 99 allocated BRL 4 million in rides to support fighting the virus, mainly transporting healthcare professionals.</p> <p>The company also claims that it has provided financial assistance to its drivers who are diagnosed with Covid-19 or quarantined. Uber has created a discount program with private health entities and will fund its drivers who are diagnosed with Covid-19 during their 14 days of mandatory quarantine. This amount will be calculated according to the average earnings of the professional in the last six months.</p> <h2>Food on demand</h2> <p>If transportation apps are unsure about the size of their losses, delivery and courier apps are expected to come out of the pandemic on top. Latin American courier app Rappi recorded an increase of 30 percent in its orders, largely made up of requests to collect items from pharmacies, restaurants, and supermarkets.&nbsp;</p> <p>Restaurant delivery apps iFood and 99Food said they would not release partial results on demand, but both say they are providing support for their delivery drivers.&nbsp;</p> <p>99Food has distributed kits with <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/03/24/in-brazil-customer-protection-services-monitor-hand-sanitizer-prices/">protective masks and hand sanitizer</a>, and has stopped charging adhesion fees to restaurants, paying them weekly to help with cash flow. iFood created a BRL 1 million solidarity fund to help <a href="https://brazilian.report/newsletters/brazil-daily/2020/01/29/ifood-delivery-app-workers-slave-labor-natural-disaster-floods/">delivery drivers</a> who need to be quarantined. The amount will be paid for 14 days and calculated from the average of the amounts received by the worker in the last six months.</p> <p>As of April 2, the company will allocate BRL 50 million of its revenue to help small local establishments. &#8220;The expectation is to inject up to BRL 600 million into the Brazilian market,&#8221; explains iFood.

 
Brenno Grillo

The Brazilian Report's correspondent in Brasília, Brenno has worked as a journalist since 2012, specializing in coverage related to law and the justice system. He has worked for O Estado de S. Paulo, Portal Brasil, ConJur, and has experience in political campaigns.

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