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July 22, 2019

Brazil's Truck Drivers not Happy with New Freight Rates

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

The Brazilian National Land Transportation Agency (ANTT) published new minimum freight rates late last week and the independent truck drivers of Brazil are not happy. The new rates take into account 11 different types of cargos, the number of axils, the distance traveled, and the tolls that must be paid.

The new rates were established using a number of fixed costs such as: depreciation of the vehicle, capital costs, wages, taxes, and insurance. A number of variable costs were also used including: the cost of fuel, tires, lubricants, maintenance, etc. The freight rates in Brazil are adjusted twice a year and the next rate adjustment will happen in January of 2020. Fines for not paying the minimum freight rate range from R$ 500 to R$ 10,500 (approximately $135 to $2,840).

Independent truck drivers are not happy about the new rates and they contend that they would basically be "working for free" under the new rates. Dozens of groups representing independent drivers started a social media campaign in an effort to organize a nationwide strike as soon as the new rates were announced last Friday. The National Confederation of Independent Transporters (CNTA) is said to represent 140 syndicates with a combined membership of 900,000 independent truck drivers.

The Brazilian Minister of Infrastructure is scheduled to meet with stake holders this week to explain their method of calculating the freight rate in an effort to prevent a strike. Brazil's President, Jair Bolsonaro, stated that they are doing everything possible to accommodate the truck drivers and that another nationwide strike would have a lot of negative consequences for the Brazilian economy.