Tell us about Ecofrotas.
We are a marriage of the economic and ecological approaches in the vehicle fleet fuel and maintenance management market in Brazil. We have been operating for the last thirteen years and we manage more than 520,000 vehicles for more than 9,000 customers in our country.
We have monthly meetings with our customers where we make recommendations regarding their fuel and maintenance processes related to economic and ecological approaches. We are focused on reducing our customers’ environmental impact as well as improving operational efficiency.
I know Ecofrotas has some unique approaches to the way you manage your fuel cards. What are some of the other things with respect to the types of fuel that a driver can use?
In Brazil, we have a very solid sugarcane ethanol market so we have been producing that for decades. Gasoline, ethanol, CNG are the primary fuels used in Brazil, so our system allows the fleet manager to define which fuel is the primary fuel and which fuel is the secondary fuel. We can set parameters in our system so that the operation has to follow those rules. If the company is very environmentally concerned they can use 95 percent ethanol and 5 percent gasoline, for instance, and we can set those parameters in our system so that the drivers need to follow those instructions, those rules.
Tell us about some of the fleets that you have worked with.
Our core business is providing fuel and maintenance management service in Brazil. The companies that have the biggest fleets in our country are the companies that provide services to the utilities segment. Energy distribution companies, telecom service providers have thousands of vehicles. These companies are very concerned about fraud prevention. The drivers sometimes carry more money in their fuel card balance than what they make as a monthly wage and they may see the fuel card as a way to solve some financial problems. I am not suggesting that everyone there is a thief, but we are all human beings and we never know what we can do. So, these companies are very concerned about fraud prevention and our system, our service is related to that as well.
Do most of the fleets own their vehicles or tend to lease their vehicles?
The operational leasing is not very developed in our country so we are used to renting vehicles with maintenance and all of the asset management include in the contract. Many companies, pharmaceutical companies, for example, own their vehicles. This is something very specific to our market which is a bit different than what we see in the U.S. and in Europe; that is very common characteristic of our market.
Ecofrotas has something that is I see as unique and that is your carbon credits. Please talk about that.
Ecofrotas has some unique constraints within our services and one of them is definitely ecological. We are the first company in our market to merge economic and ecological approaches. When we bring our fuel matrix into this arena it is a very good for us because sugarcane ethanol, as I said, is very well developed. It is considered a 100% carbon free type of fuel by the GHG Protocol. More than 85 percent of the vehicles sold in Brazil are already flex technology vehicles. As I said, we are very well developed in terms of sugarcane ethanol production in Brazil, so no matter where you go in our country you can use ethanol to refuel your car. The price sometimes can be 50 or 60 percent of the gasoline price. Thus, it would be economically and ecologically feasible, I would say.
But sometimes during the year, and also due to some market issues like sugar price in the stock exchange market, the ethanol price is not that interesting. The cost per kilometer is not that feasible. Some companies are very resistant to using ethanol because of that. The drivers are also resistant so the companies prefer to use gasoline or to let the driver choose what they want to use when refueling the vehicle.
So, to compensate for this loss due to fluctuations in the price of ethanol throughout the year, Ecofrotas – in partnership with key associates – developed a project regarding carbon credits. Our project was approved by the VCS (Verified Carbon Standards) a couple of months ago. In summary, if a company uses not less than 95 percent ethanol in their fleet operation, this company can get carbon credits at the end of the year. Ecofrotas is the unique company in the world who can intermediate that operation.
Can you talk about some companies that have used this program?
Just recently, Biolab Pharmaceuticals joined the Ecofrotas Carbon Credit Project. Since that, we were able to reduce their monthly emissions from 170 ton to 1 ton of CO2, considering their operation with one thousand vehicles. Before the project, gasoline accounted for 75% of the fuel consumption of the company.
Do you have plans for expansion throughout South America?
We have been studying this market for the last couple of years and we decided that Argentina would be the best country to consider due to the route from Brazil to Chile, which has a huge volume of transportation of goods from our country to Chile and vice versa passing through Argentina. That route would be something interesting for us to start, but that is only a plan. We still don’t have any defined date to start that operation so we are only planning – there is really nothing concrete in that regard so far.
Luiz Renato Lemos started in Ecofrotas in 2009 as Customer Relationship Manager and has also served as Business Development Manager. A professional with 13 years’ experience, he has education in Information Technology and a postgraduate degree in Business Administration.