Economists predict increased construction activity in Venezuela in 2001. That's good news for cement producers and the trucking companies that serve them, but they've heard it all before.

This country of 23.2 million people has struggled to fulfill its economic potential despite a wealth of petroleum reserves and other natural resources. In recent years, numerous public projects, ranging from massive home construction efforts to nationwide infrastructure improvements, have been announced with big fanfare and then canceled abruptly.

The Venezuelan economy is beginning to crawl out of its worst recession in decades. The government has forecast economic growth of 2.2% — a modest amount but a major improvement over the 7% shrinkage of the economy that was recorded in 1999.

Like other industries, trucking took a beating during the recession. “We believe that as much as 25% of Venezuela's total truck fleet shut down over the past three to four years,” said Carlos Fernández Pérez, president of the Consejo Nacional del Transporte (National Transport Council). “However, the economy is growing again, and that should help trucking. It will be a key component of any economic growth in Venezuela.”

Spending program

In an effort to speed recovery from the recession, the administration of President Hugo Chávez has embarked on a massive spending program. The government says it intends to spend 28% of the country's gross domestic product without increasing the budget deficit more than 1.5% to 2%.

The money is going to infrastructure projects, public schooling, and a 20% wage hike for government workers. New housing projects also are on the list. The infrastructure and government-funded housing plans are of particular interest to the cement industry.

Infrastructure projects include repairs to roads and other systems that were devastated by severe storms slightly over a year ago. A new subway is being constructed in Valencia, Venezuela's third largest city and its manufacturing capital.

Cement demand

Demand for more government-financed housing is intensifying. Only about 15,000 homes were built under government programs in 2000, and government statistics suggest that there is a nationwide need for several hundred thousand houses. The shortage is growing more acute, especially in urban areas.

These projects will need cement, which processors hope will push demand above the 4.1 million mt produced in 2000. Total production was down by almost half from the 8.8 million mt turned out in 1998.

The three most active cement producers in Venezuela are Cementos Caribe (a Holderbank subsidiary), Lafarge, and Vencemos (a Cemex subsidiary). Vencemos, which stands for Venezolana de Cementos, dominates the market with five plants. Cementos Caribe is next with three plants.

All of the cement producers rely on trucks for domestic transportation and distribution. With less than 400 miles of tracks, rail service is virtually nonexistent.

Industrywide, bulk shipments now account for about 35% of the cement transport activity and are growing. Cementos Caribe provides a good example of the shift to bulk. “We're at 20% now, and our objective is further increases in bulk sales,” said Luis Navarro, manager of the Cementos Caribe terminal in Puerto Cabello. “We're seeing small annual increases.”

To help encourage the shift to bulk, Cementos Caribe provides customers with portable silos. Constructed of carbon steel, these vertical silos have a 33-mt capacity.

Cementos Caribe markets four types of cement in Venezuela — two varieties for oil well applications, a finishing cement for construction, and a product called Super Sand/Cement that contains iron filler and is used as a floor topping and in other related applications.

Shipments of the oil well cements average 800 km (497 miles). Construction cement is shipped nationwide, but most of the Super Sand/Cement product goes to customers within a 500-km (310-mile) radius of the plants.

The products are distributed — both in bulk and bag form — by contract carriers. Cementos Caribe works with seven carriers that handle 80% of the shipments. Customer trucks also transport some of the loads but are limited to 20% of the total volume.

“We just started to limit the volume of customer-supplied transport,” Navarro said. “We feel it's important to support our own carriers. We need a strong distribution system, which makes it vital that our carriers survive. We're seeing some resistance from customers, but we haven't lost any business.”

Caribe trailers

Under the Cementos Caribe program, the cement company provides the dry bulk and platform trailers, and the carriers are responsible for the tractors. Carriers also handle routine maintenance and service for the trailers.

With the push to boost the volume of bulk shipments, Cementos Caribe has been steadily expanding and modernizing its trailer fleet. The cement company bought 24 new dry bulkers in 2000 and plans to add another 24 this year. “We'll probably purchase only dry bulk trailers in 2001,” Navarro said.

Dry bulk equipment in the fleet is extremely varied. Older trailers are of the three-cylinder design and are typical of dry bulk cement units that are still widely used throughout Venezuela today. Constructed of carbon steel by local manufacturers, these trailers have an average capacity of 24 cu meters (847 cu ft).

In its drive to modernize, Cementos Caribe has turned to foreign trailer builders. The newest dry bulk trailers in the fleet were built by Brazil-based Recrusul S/A and were purchased through T&T Trailers de Venezuela CA. T&T Trailers also sells Drum blowers.

Recrusul builds the 26-cu-meter (918-cu-ft) dry bulkers under license from Spitzer-Silo Fahrzeugwerke, a German manufacturer. They are constructed of carbon steel and have 450-mm (17.7-in.) dome lids, aeration pads for unloading, a discharge rate of one ton per minute, and a two-bar (29-psi) pressure capability. Tare weight is around 5,800 kg (12,780 lb).

Also part of the Cementos Caribe fleet are eight aluminum Heil Super Jet bulkers that were purchased through Pneumatic Exports Inc. in 1999 and 2000. Pneumatic Exports is based in Miami, Fla., and is part of the Southeastern Pneumatic Inc. group.

The 1,040-cu-ft bulkers have 20-in. cast aluminum domelids, Sure Seal butterfly valves and aeration, and Knappco check valves. Running gear includes a Reyco 21B nine-leaf spring suspension, Meritor axles, and Meritor WABCO antilock braking.

Government obstacles

Companies such as Cementos Caribe have an easier time modernizing their fleets than do the for-hire trucking companies that serve them, according to the trucking association's Fernández. “Although trucks handle virtually all of the cargo transportation in Venezuela, the government gives little or no support to the trucking sector,” he said. “The sector is punished with high taxes and high interest rates.”

The tax rate for commercial trucking companies is 35%, but small independent operators with one or two trucks are exempt. Interest rates in 2000 were 35% to 38%, and that was a significant improvement over the previous year when rates as high as 60% were recorded.

“Company owners can't afford new equipment, and the fleets are getting older and older,” Fernández said. “The average age of trucks and trailers in Venezuela is 25 years. Bureau Veritas did a survey that showed 95% of the trucks in Venezuela did not meet minimum international standards.

“The government doesn't realize how important truck transport is in Venezuela. The economy as a whole will be hurt if trucking doesn't modernize. We have huge opportunities for the government to promote a massive fleet modernization effort.

“The economy is down right now, but it is getting better. Fleets are already having trouble meeting demand. If the economy grows by even 3% in 2001, we will see an acute shortage in transport capacity.”

New rules needed

Fernández's association (known by the acronym Consetransporte) wants the Venezuelan government to adopt and enforce a number of new rules to promote higher quality in trucking. Most importantly, the association wants the rules to apply to all operators of commercial vehicles.

Independent operators are a big problem, according to Fernández. They account for perhaps 40% of the commercial vehicles in the market. The government apparently has no idea how many independent operators are in business and makes no effort to regulate them.

Stiffer requirements on vehicle and driver safety are needed for the whole industry. New weight limits have been adopted, but there is no enforcement. “Police checkpoints don't have truck scales,” Fernández said.

Under the new laws adopted last year, six-axle tractor-semi-trailer rigs can carry a maximum gross combination weight (GCW) of 48 mt (105,820 lb). Five-axle rigs are allowed a maximum GCW of 46 mt (101,400 lb).

Used trailer ban

Going hand-in-hand with enforcement of the weight rules would be a ban on imports of used trailers of all types. “Consetransporte is writing a proposed rule for the government that would stop used equipment imports from the United States,” Fernández said. “We don't have any problem with imports of new trailers. We just want to stop imports of the very old units that cause safety hazards on our highways.”

Safety isn't the only reason driving fleet modernization. Venezuelan truck fleets operate in a market that is open to foreign competition from Brazil and Colombia. “We have open borders that are bringing in rigs that are more modern than ours,” Fernández said. “This affects trucking as a whole, but not cement hauling.”

Traffic and road conditions do affect cement haulers, though. Traffic congestion has reached the point that Caracas, for example, limits truck access at certain times of the day. Transportation activity and productivity is slowed significantly.

Ring roads don't exist, and the nation's road network feeds directly into the city centers. The result is that fleets often can't avoid the cities where time-of-day controls are in place. Main highways are well maintained, but secondary routes need attention. Fernández points out that it can take 12 hours to travel just 500 km (310 miles) in some parts of the country.

“Infrastructure is not keeping pace with our population growth,” he said. “As the government takes action to address this problem, cement haulers will be among the big winners. Not only will they get better roads, they will haul the cement that goes into those roads.”

Charles E. Wilson is the editor of Modern Bulk Transporter, an INTERTEC/PRIMEDIA Production. This article originally appeared in MBT's January 2001 issue.

Transporte 21 succeeds as Cementos Caribe's core carrier

Over the past 10 years, Transporte 21 has become one of the key contract carriers serving Cementos Caribe. The trucking company is dedicated to cement and serves all of the Cementos Caribe plants.

Based near Puerto Cabello, the largest port in Venezuela, Transporte 21 runs 45 tractors. All of the dry bulk trailers are supplied by Cementos Caribe. Even with the economic slowdown in Venezuela, the trucking company is running at about 80% capacity.

“The future looks good for us,” said Freddie Vergodery, Transporte 21 owner. “We have just about all of the business we can handle. It would be difficult to get much bigger anytime soon, because we just can't find enough new drivers.

“We've been successful in our relationship with Cementos Caribe because we are careful to meet their expectations. We run well-maintained equipment that is relatively new, and we make sure our drivers are customer-focused.”

Metaphysical perspective

Vergodery learned about the importance of customer service from his father, who was a partner in one of the largest chemical haulers in Venezuela. After growing up, Vergodery pursued his own opportunities in trucking.

Transporte 21 started up 14 years ago with three trucks. The company name came from a book on metaphysics that described a concept relating to multiples of seven. Vergodery has another company that he has named Seven.

Vergodery was attracted to cement hauling because construction is a year-round activity in this mostly tropical country. The Transporte 21 tractors run 75,000 to 90,000 miles a year, and that's with just one load a day in most cases. Drivers are behind the wheel eight to 11 hours a day.

One of the biggest challenges the company faces is finding enough drivers. Despite a 15% unemployment rate in Venezuela, skilled truck drivers are in short supply.

“Drivers are our most important asset, and good ones are hard to find,” Vergodery said. “Most of our recruiting is word of mouth. Drivers hear that we pay well and provide a good work environment.”

Drivers are paid weekly at Transporte 21. Industrywide, the top wage is around 160,000 Bolivars (US$230) a week. Social security, health insurance, and pension contributions add another 30% to the total.

Vergodery stresses that Transporte 21 has not lowered its driver qualifications despite the tight market. “We're still focusing on people with a good work history and sound references,” he said. “We want drivers who are professionals and take pride in what they do.”

Tractor fleet

The company provides its drivers with well-maintained tractors, many of them late-model. Transporte 21 has standardized on Mack and International models. On the Mack side, the company runs CM and CH conventionals. The 8100 is the International choice.

“We like both Mack and International,” Vergodery said. “With Mack, we get a tractor that is very reliable and has nationwide parts sales. International's 8100 offers the benefit of lower tare weight. It is at least 1,700 kg (3,747 lb) lighter than comparable models.”

The carrier runs only daycab units. Mack and International engines are rated at 350 to 400 hp. Twelve- and 18-speed transmissions are from Mack and Fuller.

Spring suspensions are the norm in many Venezuelan truck fleets, but Transporte 21 has begun to specify air suspensions. “Our new tractors will have air suspensions,” Vergodery says. “We're impressed with the results, which include a softer ride and greater durability.”

Inhouse Maintenance

Tractor maintenance is provided inhouse by a maintenance team that also looks after the Cementos Caribe trailers. On the tractors, engine oil and filter are changed every 10,000 km (6,200 miles). The mechanics follow manufacturer recommendations for service intervals for other components.

Engines, transmissions, and differentials in older tractors are overhauled inhouse. However, drivetrain components in the newer tractors are sent to the dealers for repair and rebuild.

Regardless of where maintenance work is performed, every effort is made to ensure that vehicles are in top condition. It's all part of Transporte 21's commitment to providing the best in service to its primary customer, Cementos Caribe.

Transporte Fercon helps parent build successful distribution operation

Based in the major industrial city of Valencia, Grupo Empresarial Fernández has become one of the largest cement distributors in the central region of Venezuela. The corporation and its subsidiaries are well known to the construction companies that operate in the region.

Three subsidiaries distribute cement — Referca CA, Ferpego CA, and Calferca CA. Transporte Fercon, a fourth business unit, hauls bulk and bagged cement to the three sister subsidiaries, as well as other customers, with a fleet that includes 20 dry bulk trailers.

“We've become a primary supplier of cement in the region because we can deliver the high levels of service that our customers need,” said Carlos Fernández, president of Grupo Empresarial Fernández and president National Transport Council.

“When our customers are developing construction projects, we help them find solutions to problems. Most importantly, we make sure that they have the cement they need when they need it. Transportation always plays an important role.”

Bulk focus

Bagged cement was the focus when Grupo Empresarial Fernández was established in 1981 by Eduardo Fernández, Carlos' father. The first bulk trailers were added a year later. Today, the transport unit handles only a small amount of bagged cement.

In a typical month, Transporte Fercon moves the equivalent of 350,000 bags of cement, with more than 70% of it going to the other Grupo Empresarial Fernández operations. Shipments originate at cement plants belonging to Vencemos and Cementos Vega. Vencemos is a Cemex subsidiary, and La Vega is part of the Lafarge group.

Transporte Fercon hauls general construction cement out of plants in Maracaibo, Charallave, Perdigalete, Barquisimeto, and Ocumare. Most trips are under 300 km (186 miles), with the longest hauls in the 600-km (370-mile) range.

Drivers are paid by the trip, and fleet managers maintain a table of rates for each tractor. Drivers work Monday through Friday.

Driver selection

Transporte Fercon is very selective in the drivers its hires. That can be a challenging task, according to Fernando Fernández, director of trucking operations at Grupo Empresarial Fernández.

Despite high unemployment in Venezuela, the pool of outstanding experienced truck drivers is relatively small. “These are the people we want,” Fernando Fernández said. “It's not easy to find these people. There are a lot of people who can drive a truck but just a few who are truly outstanding. We look for motivated drivers who show an ability and willingness to handle the workload, avoid accidents, and take care of the equipment.”

His brother, Carlos Fernández, added that the Cámara del Transporte del Centro is trying to make it easier to find good truck drivers. The association is building a database on qualified and disqualified truck drivers. Association members will be able to check the database when interviewing driver candidates.

To be considered at Transporte Fercon, a driver applicant must have at least five years of truck driving experience and must be between 30 and about 55 years old. “Younger candidates don't have enough driving experience,” Fernando Fernández said. “In addition, they are too likely to take risks.”

Along with providing three verifiable job references, applicants must be able to show that they have no criminal record. Transporte Fercon managers check with police and review each driver candidate's identity documents.

Drug tests are not required under Venezuelan law, and Transporte Fercon has no testing program. Supervisors do monitor driver behavior, and they conduct surprise inspections on the job.

Well-maintained vehicles

Currently, 19 drivers work for the trucking company. The vehicles they operate are well maintained, and the company is in the process of upgrading both the tractors and the trailers. Additionally, the company has plans to expand the fleet by three to four tractors.

The preferred tractor has been the GMC Brigadier, which is assembled in Colombia. They are powered by Cummins engines, and the horsepower ranges from 350 to 500. Fifteen-speed Fuller transmissions are the fleet standard. The daycab tractors are built for rugged use and have 44,000-lb-capacity spring suspensions with tandem-drive axles.

“We've had good success with the Brigadiers, but our next purchase will be for 12 Mack CHs,” Fernando Fernández said. “They will have 350-hp Mack engines and 10-speed Mack transmissions.”

Newer tractors have air-ride seats and air-conditioning for driver comfort. Michelin and Bridgestone supply the steel-belted radial tires, which Transporte Fercon still runs with inner tubes. “We feel we need the extra tire protection because our rigs operate around construction sites,” Fernando Fernández said.

Product blowers

Transporte Fercon uses a couple of makes of blowers for offloading cement, and they differ radically from each other in design. The truck fleet recently began a retrofit project with Drum E490 blowers. These are PTO-driven and are being mounted on the tractors. The Drum blowers are replacing diesel-motor-powered Batico compressors that are on the dry bulk trailers.

“We have four of the Drum blowers now, and they provide a number of advantages, including lower maintenance and less weight,” Fernando Fernández said. “The Batico blowers weigh almost a [metric] ton.

"We spend approximately $3,000 a year to keep the Batico blowers running. Belts are a problem, and diesel motor vibration contributes to oil leaks in the blowers that poses a risk of contamination in the air system.”

A big benefit with the Drum blowers is faster unloading times. With the Batico blower, it takes 30 to 45 minutes to unload a trailer. The Drum blowers cut unloading time by 10 to 15 minutes.

At this time, all of the dry bulk trailers in the fleet are of the three-pot design. They are constructed of carbon steel by local manufacturers and have a 24-cu-meter (847-cu-ft) capacity. Maximum payload is 34 mt (74,956 lb).

“Our goal is to add lighter dry bulk trailers of a more modern design in the future,” Fernando Fernández said. “How fast we do that depends on the economy. We are hopeful that we will see an economic rebound in 2001.”