Drivers may have been celebrating after a compromise was reached between the Brazilian Association of Truckers, Abcam, and the government, but manufacturers across the country took deep losses. The 30-day truce comes days after a crippling, nationwide strike that cost the country $9 billion in lost income and damages. While most are excited for the concessions made for drivers, there still is resentment among groups for the amount of time industries will need to recover.
Spanning a ten-day period, the strike that led to a blockade of 350,000 truckers per day, affected almost 60% of the country’s exports. Agriculture, meat, and poultry manufacturing have been the most impacted; an estimated 1 billion chickens had to be culled for lack of feed. Businesses that lacked resources to continue production hope the government will provide additional assistance, but anticipate it could take years to recover. Shippers can anticipate an 8% cost increase as the government announced cuts Reintegra, an export incentive for Brazilian suppliers.
Brazil President, Michel Temer, conceded to trucker demands to lower fuel prices for 60 days, toll exemptions for empty trucks on federal and state highways, and the establishment of minimum freight rates for government associated contracts. Following Temer’s announcement to provide relief, the administration announced they would be cutting health and education spending by $2.67 billion to cover the reduction to diesel prices. And yet another casualty of the dispute, Petrobas’ CEO, Pedro Parente, submitted his resignation after his pricing policy was put under extreme scrutiny, before and after the strike.
With 45 percent of roadways open for traffic, shippers can expect several weeks of backlog before schedules return to normal. Fuel and space are scarce across Brazilian ports, and some ocean carriers have suspended operations, or schedule vessels on a case-by-case basis, for fear of choking full terminals. As operations improve, shippers should be prepared for some delays and work closely with their freight providers to find the most appropriate routings.
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