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Brazil shippers concerned about higher post-strike truck rates

Brazil shippers concerned about higher post-strike truck rates

Slowly, Brazil is recovering from the truckers strike and will likely continue to a gradual recovery, given the damage the 10-day strike inflicted on shippers, ports, and businesses — damage that brought the country’s trade transport to a standstill, basically.

Although several experts have forecast that container operations could return to normal “within another 10 to 15 days,” neither Brazil nor the Port of Santos are out of the woods just yet, as an ardent trucker wing may strike/block roads again — something that would complicate the recovery.

In addition, the lateral job action news for shippers was mixed. The good news: the main stevedore unions in Santos Thursday agreed to consider a new offer, averting a strike for more wages and better working conditions. Also, the deepsea services of Hamburg Süd did not have to, in the end, skip Santos during the strike, but ships did depart with far fewer containers than envisoned. And exactly one week after the suspension of Brazilian cabotage and Mercosur coastal service, Hamburg has now resumed a fixed day schedule. However, union leaders from the Receita Federal (customs office) will continue “for the time being” their three-days-per-week “go slows” in Santos and at other major ports. That continues to slow container movement at the busy Santos and Paranagua ports.

The deal that ended the strike
President Michel Temer achieved an end to the truckers strike/blockade by capitulating to just about every demand from the main Brazilian truckers union, Abicam, which represents about 700,000 of the 1 million autonomous truckers in Brazil. However, in so doing he angered shippers, who will have to subsidize the agreed-to concessions: a diesel tax cut of 0.46 reais per litre (45 cents per gallon), expected to cost Brazil $10 billion to $15 billion in lost revenue for the rest of 2018, and new minimum freight rates for truckers, some three times the old rates.

Needless to say, shippers aren’t happy and the bulk of the shipper backlash is coming from the powerful agriculture lobby. Brazil’s Agriculture Minister Blairo Borges Maggi, himself the world’s largest soybean producer, told Temer that the minimum freight rate tables, in their current form, are “unworkable and uneconomical” for many agriculture producers, as some freight rate increases for truckers are as large as 150 percent.

Moreover, other shipper groups, the vast majority from the farm sector, soon voiced concern about the Temer administration’s deal with truckers. They have lobbied Maggi and other ministers to persuade the administration to reconsider the terms agreed to. Initial meetings in Brasilia suggest a 20 percent freight rate reduction will be implemented, but this could trigger another wave of trucker strikes.

Agri-business lobbyists, along with Centronave — which represents foreign flag container vessel owners in Brazil — and other shipper groups are united, back Maggi, and argue that the National Land Transport Agency, which regulates trucker minimum freight rates, had “exaggerated” its calculations concerning the rate truckers need to make a decent living.

Contract issue