Trucker Strike Threat Stokes Brazil Shipper Fears

April 25: Shippers in Brazil are becoming increasingly nervous as truckers in the South American country contemplate another strike over a lack of enforcement of a state-mandated pricing table designed to ensure fair compensation for transportation providers.

At issue is the enforcement of the Minimum Freight Rate Table (MFRT), which under Brazilian law establishes minimum freight rates for independent truckers. According to truck driver groups and freight forwarders, shippers have been bypassing the law, itself a product of an 11-day driver strike that strangled Brazilian supply chains last May, by contracting freelance truckers at sub-MFRT rates.

Driver groups have reportedly gone back and forth in recent weeks on whether or not to strike — and when — but ultimately shelved those plans after Infrastructure and Transport Minister Tarcisio Freitas agreed to more vigorous enforcement of the MFRT. Freitas also agreed to amend the MFRT to account for recent increases in the price of diesel fuel.

Concessions and Contingencies

Despite the concessions, risk management consultancy Resolution 360 is advising shippers to prepare contingency plans for their supply chains in the event of another blockade. “Future demonstrations are still possible,” the firm said, noting that the areas that would likely be most affected are “critical to the unimpeded movement of cargo. Rio Grande do Sul contains several border crossings with Uruguay and Argentina; Parana contains several border crossings with Argentina and Paraguay, as well as the port of Paranagua.”

Logistics service providers such as ocean carrier Maersk Line and Brado, Brazil’s leading railroad operator, have been investing in dedicated trucking fleets and inland intermodal infrastructure in an effort to mitigate rising costs resulting from the MFRT and reduce their reliance on the still-volatile trucking market.

Leandro Carelli Barreto, a director for consulting firm Solve Shipping, said neither the MFRT nor the recent concessions will have the desired effect because they fail to address fundamental issues in the Brazilian truck market.

“Truckers are indeed in a bad situation, and freight rates on some routes have been really low, but none of these initiatives will solve the problem, which is directly related to overcapacity,” he said. The only way to address the problem, Barreto added, would be by “increasing the demand — and obviously the government is not able to do it that rapidly — or taking trucking capacity out of the market.”

“[Brazilian President Jair] Bolsonaro and his government are caught between a sword and a cross, and it is difficult to know what will happen next, but another blockade is a strong possibility,” a São Paulo-based freight forwarder told JOC.com. There is no policy “that will keep everybody happy, but hopefully a damaging strike can be averted. In the meantime, we — like many other transport buyers — are making contingency plans and looking at rail and cabotage options. We recommend importers and exporters seek alternative transport arrangements.”

“The problem for truckers is that the more they threaten to strike, the more the shippers are diversifying their transport modes, strongly boosting the cabotage and the railroad, which is good for Brazil at the end of the day, but even worse for the truck drivers themselves,” said Barreto.

Source: JOC / Rob Ward

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