August 9, 2012

Producers Worry Shortage of Trucks in Brazil Could get Worse

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

New regulations concerning truck drivers in Brazil have many in the agricultural community very concerned about a shortage of trucks needed to transport the country's grain production. One such organization is the Brazilian Vegetable Oil Processors Association (Abiove). As far as Abiove is concerned, there is already a shortage of trucks resulting in very high freight rates and the situation could get much worse when the 2012/13 crops are harvested.

According to a study released last December by the National Transportation Confederation, Brazil already is short 40,000 professional truck drivers and bus drivers and these new regulations will make the situation even worse by reducing the number of hours a truck driver may work.

The new regulations require drivers to rest 11 hours during each 24 hour period in addition to a half hour rest for every four hours of driving. The drivers feel these requirements are excessive and will be very difficult to achieve. They point to the fact that there are not enough secure locations with adequate sanitary facilities along the major transportation routes in Brazil to park all these trucks for such an extended period of time.

The reduced working time is resulting in a shortage of trucks in a country where over 60% of the grain is transported by truck. A partial solution to this shortage would be the training of thousands of new drivers, but there are not enough training facilities to accommodate the demand for new drivers. Additionally, even if the drivers were available, it takes an extended period of time to purchase and equip new trucks and put them on the road.

The bigger problem in Brazil is the lack of alternatives to move the country's agricultural production in more efficient ways besides trucks, which is the most expensive mode of transport. Brazil lacks adequate storage capacity, both on-farm and at the grain elevators, to store the crops allowing for a more even transport of the crops throughout the year to export facilities. The highways of the country are inadequate and in poor condition, the railroad system has been slow to expand, barging of commodities is in its infancy, and the ports of Brazil continue to have chronic congestion problems.

To aggravate the situation even more is the fact that nearly all the new agricultural production is occurring in the middle of the country far removed from the population centers and export facilities. The high cost of transporting everything by truck has many ripple effects including: lower prices paid to farmers, reduced competitiveness of Brazilian exports, increased storage costs, as well as higher prices for food and consumer goods. The development of alternative modes of transportation in Brazil is an important national priority, but progress on developing a more efficient infrastructure has not been able to keep pace with the increasing Agricultural production.