Brazil trucking logistics remain snarled after the government approved legislation setting minimum freight prices last week. Doubts about the rules have hampered grain trading and shipping goods including consumer products, corn, beef and now fertilizer. Economic activity in Brazil slumped 3.3% in May from April because the 11-day truckers' strike cost the economy $4.1 billion, the central bank said Tuesday.
Brazil federal police sought to arrest 64 people today to gain control of its increasingly insecure highways. Officiala estimate the theft scheme losses already surpassed $2.22 million. Drivers fake attacks, give co-conspirators time to deactivate trucks' security devices and then lodge false theft reports with police.
The legislation authorized the National Land Transportation Agency to issue new minimum freight rates every six months on January 20th and July 20th depending on fuel prices, toll charges and other costs. The agency indicated that the new rate on Friday will likely be lower than what had been agreed to in May to end the strike. In response, the truck driver unions have threatened a new nationwide strike if the rate is lowered from what they had previously negotiated.
The new rates will increase freight costs by 30% to more than 40% depending on location, type of cargo, and when the freight is purchased, according to Pro Farmer consultant Dr. Michael Cordonnier.
"Even if the truck driver unions accept the new rate, whatever it may be, I still don’t think that will be the end of the story because there are still legal challenges to the concept of the government arbitrarily setting minimum freight rates,'' Cordonnier said. "The legal challenges are predicated on the fact that the purchaser of the freight has been denied his or her right to bargain in the marketplace.''
Beef and corn exports have been hit the hardest from the truckers strike and fertilizer demand may fall 3.7% this year, according to INTL FCStone, Reuters reporter Tuesday. The minimum freight prices may limit growth in soybean planted acreage later this year, FCStone analyst Ana Luiza Lodi said at an event in Sao Paulo. She declined to provide new estimate after the firm earlier this year forecast a 5% jump in plantings.