February 19, 2013

Lack of Qualified Labor Impacting Brazilian Freight Companies

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

Freight companies in Brazil are scrambling to meet the requirements of the new truck driver law in Brazil. The law reduces the number of hours a driver may work before he is required to rest and the companies are trying to adhere to these new requirements in two different ways.

The first way is to stay with one driver per truck, but to set up a schedule where he will stop for the mandatory rest periods. That is easier said than done because there are few safe and secure rest areas in Brazil with the proper amenities for truck drivers such as fuel, convenience store, adequate rest room facilities, and facilities for meal preparation, etc. These rest periods must be programed ahead of time because there are not enough facilities in Brazil for a driver to just pull off the road when needed in order to not break the new rules. The companies feel that the new rules will reduce each driver's productivity by at least 30%. Therefore, if a company wants to move the same amount of freight as in the past, they need more trucks and more drivers.

The other way to keep the truck moving is to put a second driver in the cab, but that increases costs and requires more qualified drivers, which are hard to find in Brazil. The Brazilian Association of Vegetable Oil Industries (Abiove) estimates that the country needs 50,000 more drivers to meet these new regulations, but many potential younger drivers would rather find employment in other fields which are much less difficult than over-the-road long haul driving in Brazil.

The labor shortage is also a problem for the expanding railroads in Brazil as well. The National Transportation Federation (CNT) estimates that at least 400 new train engineers will be needed per year to meet the increasing demand, but training a new engineer is a lengthy process. America Latina Logistica, which operates the rail line between Mato Grosso and the Port of Santos, has stated that their company alone will need at least 400 new machinist and maintenance personnel per year to meet the demand for more rail service. Training for these jobs can take several years, so nothing can be done in the short term to relieve the labor shortage for the super-harvest that is underway.

All of these labor issues add to the inefficiencies in the Brazilian transportation system. The federal government is trying to address some of these infrastructure problems by privatizing much of the transportation network, but the process to do so is slow and cumbersome.