The problem of Brazil’s truck drivers is still bubbling away in the background. Reports emerging from Brazil on Monday describe unofficial action by truck drivers blocking the BR-116 highway between Rio de Janeiro and Sao Paulo, with fears that it could spread in the near future.
The background is negotiations between the government and large agri-businesses over a minimum tariff for truck rates. The agricultural commodity producers have lobbied the new government of president-elect Jair Bolsonaro to get rid of the minimum rate and return to an unregulated market. They have also taken legal action to block the enforcement of the minimum tariff. This risks the ire of the truck drivers.
The concept of a minimum tariff was introduced by the previous administration of Michel Temer as a means of ending the truck drivers strikes.
The new government finds itself stuck between the two sides, with both the truck drivers and the agri-business important constituencies for President Jair Bolsonaro. So, in response, the government is proposing a middle way of retaining minimum prices but at a lower-rate. The news agency Reuters quoted Tarcisio Freitas, who the new government has nominated as the future infrastructure minister, as commenting that: “At first, we are going to deal with the minimum freight table with care. We plan to revise the prices, but we are going to encourage the market to use it”. Unconvinced, some truck drivers are threatening renewed action.
The strikes earlier in May brought Brazil to a halt, not only damaging the economy but asking questions of the country’s political stability. The issue of prices for trucking services was complemented by anger over increases in price due to the withdrawal of subsidies to the State oil producer Petrobras. The subsidies were restored but the question of how to pay for them has not gone away.
The problem illustrates the difficulty of both economic reform and the necessity of the improvement of infrastructure in Brazil. The two are connected as different interest groups traditionally have used political pressure to defend their economic interests, as is the case with both the truck drivers and the agri-businesses. This is particularly the case in the logistics market, where the development of new ports, airports and railways has been resisted by incumbent providers.
Source: Transport Intelligence, December 13, 2018
Author: Thomas Cullen
