Trucker Strike Paralyzes Brazil

Trucker Strike Paralyzes Brazil

2018-08-07T13:54:00+00:00May 30th, 2018|Freight Market, Shipping News|

Ports all over Brazil are at a critical stand-still as the country enters its 10th day of protests.  While a provisional, 30-day truce was reached between the government and Abcam, the Brazilian Association of Truck Drivers, independent operators refuse to return to work until they see lower fuel prices at gas stations. Protests across 24 of Brazil’s 27 states have paralyzed the country’s economy as blocked streets, burning tires, debris, and abandoned carriers sat idle in defiance of the country’s drastic increase in fuel prices.

Controlled by the state, Brazil’s oil is monitored and priced by Petrobas, a semi-public Brazilian corporation. Over the last six months, Petrobas increased diesel prices by over 40 percent, while the government successively raised fuel taxes in an effort to balance Brazil’s budget and income.  Because the cost of fuel was suppressed under the previously impeached president, Dilma Roussef, the dramatic change has made it impossible for truckers to afford fuel.

In protest, over 300,000 drivers across 18 ports have blocked major highways and state roads shutting down production of key economic crops such as sugar, soy, meat, and coffee. Just weeks ago, Brazil was preparing for a sudden surge in demand as China enforced tariffs on the United States, the world’s second highest producer of soy. As of May 29th, manufacturers stopped production after running out of storage space while vessels scheduled to export over 300,000 tons of soy haven’t been able to leave port due to insufficient cargo delivery. Sugar and meat, as well, have ceased production from lack of fuel to power factories while perishables rot at ports nationwide.  Santos, the biggest South American container port, and Paranagua, Brazil’s second largest by containers handled, have seen the most impact to operations, however, even smaller ports aren’t able to take the excess, due to draft restrctions of larger Asian vessels, as carriers decide whether to bypass Brazil altogether.

Current President, Michel Temer, ordered Brazil’s army and federal police to clear highways on May 25th, but many citizens joined to protest their resentment with the Brazilian government and recession. On May 27th, concessions were announced by Temer to reduce taxes on fuel for 60 days, and tolls for empty trucks; however, drivers have remained on strike. In support and bringing their own grievances, oil workers announced a 3-day strike starting Wednesday, which will further aggravate the situation.

There is still a small glimmer of hope that oil prices will lower in the next week, but Brazil is far from relief. The expected cost of Temer’s concession is roughly $2.7 billion which doesn’t even cover the damage and lost income from the protests. In a country where currency is gradually depreciating, Brazil is in for a struggle to recover despite efforts to grow the country as a premium international manufacturer. Meanwhile, shippers are desperate to get production moving resume exports.

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