Mar 11, 2019
Trucks moving again on Highway BR-163 in Northern Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
After nearly two weeks of blocked traffic on highway BR-163 in northern Brazil, authorities reopened the highway last Thursday. Heavy rains had made an unpaved section of the highway in a hilly area impassable for trucks loaded with grain heading north to ports on the Amazon River.
After spending a week of trying to assist trucks up the hills one-by-one, while at the same time they were trying to repair the roadbed, the National Department of Infrastructure and Transportation (DNIT) decided to close the road completely earlier last week so they could concentrate on bringing in crushed rock to stabilize the roadbed.
In the meantime, at least 2,500 trucks had been stopped for a week or more in a very sparsely populated area without basic necessities such as food, water, and other services. Local authorities and volunteer residents tried to meet the needs of the stranded truck drivers, but it has woefully inadequate. The losses for the truck drivers and their companies are going to be very high. The trucks are covered by tarpaulins and some truckers have even indicated that the wet weather may have caused some of their soybeans to deteriorate.
There were actually more than 2,500 stranded trucks because authorities closed north bound traffic at the border between Mato Grosso and Para so that the traffic jam would not get longer. So there were probably thousands of additional trucks waiting in Mato Grosso to head north. At this time of the year, there are approximately 1,000 grain trucks per day heading north on BR-163 to ports on the Amazon River.
There were reports late last week that some of the grain terminals on the Amazon River would run out of soybeans as of last Friday. Fortunately for them, the highway was reopened last Thursday and the truck traffic heading north has returned to its normal flow. Port officials indicated that it will probably take 1-2 weeks before everything returns to normal. They estimate that approximately 35,000 tons of soybeans arrive per day at the port of Miritituba.
As a result of the highway blockage, some vessels were redirected to other ports in Brazil instead of waiting for new supplies of soybeans to arrive. The Brazilian Association of Vegetable Oil Industries (Abiove) estimates that 10-20% of the anticipated volume of exports at the Port of Barcarena for example, which is located at the mouth of the Amazon River, was redirected to the Port of Santos in southeastern Brazil. It takes three days to sail to Santos from the Port of Barcarena, but that was cheaper than waiting 10-15 days for new soybean supplies to arrive. Abiove estimates that sending a vessel to Santos would cost an additional R$ 35 to R$ 40 per ton (approximately $9.45 to $ 10.80 per ton).
In the big picture, what happened on highway BR-163 will have little impact on Brazilian grain exports. This entire episode was more of an embarrassment for the Brazilian government who can't seem to get their act together to finish paving what is probably the most important highway in Brazil as far as grain exports are concerned.
Highway BR-163 is the main connection between the grain belt of central Brazil and the Northern Arc of ports on the Amazon River. The Northern Arc of ports were responsible for 28% of Brazil's soybean and corn exports in 2018 according to the National Agency for Water Transport (Antaq). The northern ports exported 29.6 million tons of grain in 2018 compared to 6.1 million in 2010. Exporting grain north out of Brazil instead of the more traditional ports in southeastern Brazil saves time and money due to the closer proximity to the Panama Canal and customers in Europe and North America.