Jul 28, 2022

Brazil Grain Haulers Suspend Operations Due to Low Freight Rates

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

Transportation companies and independent drivers in Mato Grosso, Brazil are demanding higher freight rates to transport soybeans and corn from northern Mato Grosso to ports on the Amazon River. To emphasize their plight, starting last Monday, they suspended grain hauling operations indefinitely from Mato Grosso to northern ports. The drivers have not tried to block the highways to achieve their demands, at least not yet.

Drivers contend that they are losing money at the current freight rates. The rate to carry grain from the city of Sinop in northern Mato Grosso to the Port of Miritituba in northern Brazil is R$ 280 per ton (approximately $1.50 per bushel). From the city of Sorriso, it is R$ 320 per ton (approximately $1.70 per bushel) and from the city of Lucas do Rio Verde, it is R$ 350 per ton (approximately $1.86 per bushel). It is higher from the last two cities because of toll charges. Regardless of the location, the drivers contend that these rates do not cover their costs.

Independent drivers indicate that they need R$ 400 per ton to stay in business (approximately $2.10 per bushel) and transportation companies contend they need an absolute minimum of R$ 310 per ton to stay in business (approximately $1.65 per bushel).

Their complaints are not limited to just high fuel prices and low freight rates. Drivers also complain about the poor condition of the highway infrastructure with few safe locations to rest overnight and a lack of passing lanes that result in numerous fatal accidents.

Trucks are the only alternative to move grain from northern Mato Grosso to northern ports. Many independent drivers migrate to Mato Grosso at this time of the year due to the need to move millions of tons of grain to export facilities, but if the freight rates are not increased, they contend they will move to other regions of Brazil where the freight rates allow them to stay in business.