Apr 01, 2021

Freight Costs in Mato Grosso Increased Significantly in February

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers in Mato Grosso not only had to worry about their grain being discounted due to high moisture and poor quality caused by wet weather, the delayed harvest also resulted in a spike in freight costs as well. The soybean harvest in Mato Grosso was very concentrated this year resulting in a lack of truck transport and as a result, higher freight costs.

Conab's Supergiant of Logistics and Operations, Thome Guth, reported in their latest Logistical Bulletin that transporting grain from Mato Grosso to Brazil's major ports increased an average of 25% in February of 2021 compared to a year earlier.

The amount of increased varied depending on the mode of transport and destination. The lowest increase was from Mato Grosso to the Port of Santos at 11%. The Ferronorte Railroad is the only operational railroad in Mato Grosso and it terminates at the Port of Santos. Rail transport did not increase as much as truck transport and a significant portion of soybeans at the Port of Santos arrived by rail. Costs from Mato Grosso to the Port of Paranagua increased 19% and costs to the Northern Arc of ports increased 20%.

The increases were even more dramatic when you compare January to February. The cost of transporting a ton of grain from Sorriso, which is located in central Mato Grosso, to the Port of Miritituba on a tributary to the Amazon River was R$ 160 in January (approximately $0.80 per bushel) and it jumped to R$ 230 in February (approximately $1.16 per bushel) or an increase of 44%. The increase was the result of several factors including: a concentrated harvest that increased the demand for trucks, higher fuel prices, and logistical bottlenecks on Highway BR-163 that slowed truck traffic.

There was a large volume of soybeans to move in a short period of time which drove up the costs. Truck drivers also complained that they were forced to wait days to unload their soybeans due to congestion on Highway BR-163 and limited unloading capacity at the Port of Miritituba. As a result, truckers had to charge more because of the reduced number of trips.