January 24, 2013

Enforcement of Truck Driver "Resting Law" to Start in Brazil

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

Soybean farmers in Brazil are expected to harvest a record large soybean crop in 2012/13 and they will also be paying record high prices to transport the grain to end users and export facilities. More than 60% of Brazil grain production is transport by truck over very long distances and the already high cost of moving the grain is expected to go even higher when new regulations concerning Brazilian truck drivers goes into effect.

The new regulations, commonly known as the "Resting Law", were passed the Brazilian Congress last July and they require truck drivers to rest for 30 minutes after four hours of driving. Additionally, a driver may be behind the wheel for only eight hours before he must rest for eleven hours. The goal of the new regulations is to reduce the number of accidents due to driver fatigue. While that is a laudable goal, it is also going to reduce the number of hours any given truck is on the road thus reducing the number of trucks available to transport the grain.

As soon as the new regulations were passed, trucking companies and independent drivers complained that there are not enough rest stops along Brazilian highways to accommodate the hundreds of thousands of trucks in Brazil that need to safely pull off the road for the mandatory rest periods. They rightly pointed out that there are very few rest areas with lavatory facilities, convenience stores, and accommodations for preparing meals.

A Brazilian judge ordered that enforcement of the law be suspended for six months to allow time to review the driver's complaints. The suspension will expire in February and the Federal Highway Police will then start to enforce the new regulations. If a driver is found violating the rules, he will lose five points on his driver's license and be fined R$ 127.69 (approximately US$ 62.50). Repeated violations can result in the loss of his commercial driver license.

As far as the farmers are concerned, the resulting higher transportation costs are another expense they must bear for Brazil's lack of sufficient transportation systems to move the ever larger grain production. While commodity prices remain high, the farmers in central Brazil can afford to pay these high transportation costs, but if commodity prices decline significantly in the future, soybean production may become unprofitable in central Brazil.