Jan 19, 2017
Brazilian Truck Drivers Protesting Low Freight Rates
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Truck drivers in Brazil continue to block key highways in Mato Grosso as well as two other states in Brazil in protest of low freight rates. They contend that their costs have increased, inflation has increased, yet their freight rates have not kept pace. They also had a bad year in 2016 when hot and dry weather resulted in lower soybean and corn production. The lower production forced truckers to compete for loads by lowering their rates. They are now demanding higher rates so they can become profitable again.
We are currently in the city of Rondonopolis, Mato Gross and this is the site of the main blockade in Mato Grosso. Using the word blockade is not the correct term. Passenger cars, buses, perishable goods, food, and local truck traffic can pass through without any problems. The protestors are prohibiting the passage of long-haul grain trucks. The protest started last Friday and it is undetermined when it might end. As of Wednesday morning, there were more than 6,000 trucks stopped in and around the city.
Thus far, this protest is not as widespread or as effective as previous job actions. The protests are occurring in six locations in Mato Grosso as well as in the states of Bahia and Minas Gerais. In previous job actions, the truck drivers closed the highways to all traffic including passenger cars. The backlash from the general public was swift and severe and the protest ended with the confiscation of trucks and very heavy daily fines. The truck driver organizations learned their lesson and this protest is specifically directed at long-haul grain trucks.
The protestors chose Mato Grosso because the early soybean harvest is underway and processors and exporters are anxious to get their hands on new supplies of soybeans.
They chose Rondonopolis because this is a chock-point for grain leaving Mato Grosso. The two major highways of central Brazil meet in Rondonopolis - BR-163 that runs north and south in central Brazil and BR-364 that runs east and west. Anyone who wants to travel from eastern or southern Brazil to the Amazon Region must pass through Rondonopolis.
Yesterday, we drove through a group of about 500 truck drivers who were milling about along the side of the highway at the intersection of the two highways. We had no problem at all getting through, but the long-haul grain trucks were not getting through. No one is happy and the situation is very tense. In fact, there was a scuffle yesterday morning with only minor injuries. We drove through the protest right behind a military truck full of soldiers, maybe that is why we did not have any problems! As a result, there are thousands of trucks parked along the highways, they are parked at the truck stops, they are parked any place there is space to pull over.
They started the protest last Friday and it is undetermined when it might end. I do not think this strike will cause any long term significant problems for the soybean harvest or the movement of grain to export facilities. In order to impact soybean exports, the protest would need to be much more widespread and last for several weeks.