• Dispute around freight rates in Brazil lead to congestion at ports

    19 July 2018

    The nationwide trucker strikes that swept through Brazil during the last two weeks of May 2018 are continuing to have ripple effects throughout the country. The most recent developments in this regard have been the negotiations between the government and the truckers over minimum freight haulage rates known as the ‘tabela de frete’, or the minimum freight table. Most notable result of this persistent dispute is its effect on sea ports.

    Over the past several weeks, disputes between truckers and shippers have occurred at some of Brazil’s principal ports, such as Santos and Paranagua. This is evident in the backup of cargo at the aforementioned ports, triggered by a dispute between shippers and truckers on what the agreed freight prices are. Shippers claim that the post-strike rates are too high to make shipping affordable. Truckers, on the other hand, claim that the current rates were the best possible concession received during the course of the strike, and any contestation of the rates will lead them back to strike.

    A longer term issue lies with the government setting the definitive price schedule, which it has done so far through a provisional measure. This measure allows ANTT, a national ground transportation entity, to set the freight prices. The Brazilian Supreme Federal Tribunal, the highest court in the country, has heard the arguments posed by both the government and truckers in court on June 28, and is expected to announce its decision on August 27.

    This, however, does not alleviate the immense pressure that the industry will be under pending the decision. The continuing dispute has resulted in freight being stuck at ports, with cargo vessels and containers backed up and unable to move until freight rate disputes are resolved. No similar backlog has been reported in this context at any of the major international cargo airports in the country. The use of air freight as an alternative to circumvent the backlog at the seaports may be considered.

    Agribusiness is the most immediately affected industry due to the perishability of the products involved. Until a decision is reached at the Supreme Federal Tribunal in August 2018, customers with cargo at Brazilian seaports are advised to keep abreast of new developments and, where appropriate, explore alternatives.

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