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February 7, 2014

Freight Rates in Brazil Surge as Soy Harvesting Gets under Way

Over the last few weeks, freight rates in Brazil have been climbing as the soybean harvest gets underway and trucks needed to transport the crop are in short supply. Brazil is poised to harvest approximately 90 million tons of soybeans or nearly 10% more than last year. At the same time, the new law that limits the number of hours a driver may stay behind the wheel effectively reduces the availability of trucks even more.

In Mato Grosso freight rates from Rondonopolis, which is located in the southeastern part of the state, to the Port of Santos have risen 27% over the past month. From Sorriso in central Mato Grosso to the Port of Santos the rate is already R$ 288 per ton (US$ 3.25 a bushel) and it is predicted to rise as high as R$ 320 per ton (US$ 3.60 per bushel) at the peak of the harvest.

From Cascavel in western Parana to the Port of Paranagua, rates have jumped 53% over the past month. Mato Grosso and Parana are the two largest soybean producing states in Brazil and the soybean crop in both states is approximately 10% harvested.

The Port of Santos has instituted a new scheduling system for how trucks are to arrive at the port. A truck will only be called to the port when there is capacity in the warehouses for the soybeans and vessels are available to load the soybeans. If a truck arrived at the port without being called, the truck will not be unloaded. The system is designed to avoid long lines of trucks clogging the nearby streets while they wait to enter the port. A similar system was instituted at the Port of Paranagua several years ago and it has eliminated the long lines of trucks that captured national and international attention.