May 30, 2018

Truck Driver Strike in Brazil had a Huge Impact on the Economy

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

The truck driver strike in Brazil had more "teeth" than anyone had imagined. It started on Monday, May 21st, and it got progressively worse. Over this past weekend, sectors of the Brazilian economy essentially shut down. Below are some of the impacts that were felt especially by the agricultural sector:

  • The two main ports in southern Brazil, Santos and Paranagua, were essentially shut down. The Port of Paranagua ran out of soybeans and the Port of Santos reduced their loading to 30% of normal. Some of the stevedores at the ports walked off the job in support of the truck drivers.
  • The transportation of soybeans by truck from the interior to the ports was halted.
  • Many soybean crushing plants suspended operations.
  • Biodiesel production was suspended.
  • Meat processing facilities all across Brazil suspended operations due to a lack of live animals and the inability to transport the meat products away from the facilities. Cold storage warehouses were full because they could not move products. Meat exports were been halted because meat products could not reach the ports.
  • Livestock producers ran out of feed for their animals.
  • Dairy farmers dumped their milk.
  • Supermarkets ran out of perishable food.
  • About half of Brazil's airports ran out of fuel resulting in canceled flights.
  • Some international flights to Brazil were suspended due to a lack of fuel.
  • Almost all the gas stations in Rio ran out of fuel. Gas stations in other major Brazilian cities ran out as well.
  • Busses stopped running in some cities because of a lack of fuel.
  • Car manufactures suspended operations due to a lack of parts.
  • Companies closed temporarily because workers cannot get to work.
  • Some cities and states declared a state of emergency. And the Brazilian military was called upon to help clear the highways. The military leaders said that they could help clear the highways, but they cannot force the drivers back to work. They said that a political solution is needed not a military solution.
  • Workers at Petrobras announced a 72-hour strike in support of the truckers to start on Monday, May 28th.
  • Many schools were closed as of Monday morning.
  • Etc., etc., etc. You get the picture.

Some of the demands of the truckers included: permanently lowering the price of diesel fuel (not just a temporary reduction), elimination of some of the taxes on diesel fuel, increase the minimum freight rates, and the eliminate toll charges for suspended axils of empty trucks (the amount of the toll depends on the number of axils and the toll is charged even if an axil is suspended due to the truck being empty). Adjusting the price of diesel on a monthly basis not a daily basis.

The Brazilian Congress approved a package of concessions on Monday including the following:

  • An immediate reduction of R$ 0.46 per liter for diesel fuel for a 60 day period.
  • Zeroing out of some of the taxes on diesel fuel.
  • No toll charge for suspended axils.
  • An increase in the minimum freight rates.
  • Monthly adjustment to diesel prices.