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April 26, 2019

Threatened Truck Driver Strike Adverted in Brazil

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

A threatened truck driver strike in Brazil has been adverted after the National Land Transportation Agency (ANTT) announced on Wednesday an increase of 4.1% in the mandatory minimum freight rate. The agency has the authority to adjust the minimum freight rates every six months if the price of diesel fuel varies by 10% or more during the period. The price of diesel fuel did increase more than 10% since January which triggered the freight rate adjustment. Prior to the announcement of higher freight rates, the independent truckers in Brazil had threatened a nationwide strike on Monday, April 29th, but it looks like a strike on Monday will not happen.

The higher freight rates were announced after a meeting last Monday between the Brazilian Minister of Infrastructure and representatives of the independent truck drivers of Brazil. In addition to the freight rate hike, the Minister also agreed to intensify their efforts to enforce the minimum freight rate.

Ever since the new higher freight rates went into effect last August, truckers have complained that not everyone was paying the new rates and that there was not a robust mechanism in place to enforce the rates.

In response to those complaints, ANTT indicated that they will intensify their efforts to enforce the freight rates at weigh stations throughout Brazil. Companies or individuals not adhering to the minimum rate are subject to fines that can vary from R$ 550 to R$ 10,500 (approximately $130 to $2,750) depending on the distance traveled, the type of truck, and other criteria. The mandatory rates have been in effect since last August and up to this point, ANTT has levied 3,000 fines.

Another measures recently announced by the Bolsonaro administration included a R$ 30,000 line of credit per driver from the National Development Bank (BNDES) for drivers to purchase tires and conduct maintenance on their vehicles. Additionally, the government has directed R$ 2 billion toward the maintenance and upgrades of some of the principal highways in Brazil including BR-163 that connects the grain producing areas of Mato Grosso with ports on the Amazon River.

Truckers also met with the Minister of Agriculture and the Minister of Infrastructure last week and they were pleased when the ministers announced the construction of rest areas along highway BR-050 in the state of Goias, which is a major highway connecting Sao Paulo and Parana with the center-west region of Brazil. The Ministers indicated that other rest areas will be constructed as soon as contracts can be completed. The truck drivers have long demanded the construction of more secure rest areas.