Last year, Brazilian truck drivers, disgruntled by rising diesel prices, staged a ten-day strike, blocking roads all across Brazil. As two-thirds of cargo transportation in Brazil is done on roadways, it took only four days for the protest to create food and fuel shortages in several urban centers. Animal breeders, who depend on deliveries of feed, saw many of their animals die of starvation and cannibalism. Meanwhile, vegetable and fruit producers were forced to throw out a big chunk of their production—which couldn’t make it to food distribution centers.
To solve the crisis, the federal government resorted to quick fixes: subsidies on diesel and a minimum freight pricing table (which hasn’t really worked). No long term solution was found. One year later, Brazil is confronted, once again, with the worrying prospect of a second truckers’ strike. Autonomous cargo transporters are planning a stoppage on Saturday, March 30, via social media. But the government seems unfazed.</span></p>
<p><span style="font-weight: 400;">Chief security officers have said that truckers are not as united this year as they were in 2018—thus they do not pose the same risk. Meanwhile, President Jair Bolsonaro seems to be stuck in 1964. He ordered Army barracks to celebrate the upcoming 55th anniversary of the military coup—which he and his administration call a “democratic revolution.”</span></p>
<p><span style="font-weight: 400;">But while the government is sending a message of calm, Brazil’s state-controlled oil company Petrobras decided to change how it sets its prices. Since the beginning of the year, when the subsidies on diesel were ended, Petrobras (which monopolizes fuel distribution in Brazil) decided to change fuel prices according to international rates. In March alone, there were five price changes (four hikes and two decreases).</span></p>
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<p><img class="size-large wp-image-15151 aligncenter" src="https://brazilian.report/wp-content/uploads/2019/03/export-88YAa-1024x683.png" alt="Is Brazil heading for another truckers' strike?" width="1024" height="683" srcset="https://brazilian.report/wp-content/uploads/2019/03/export-88YAa-1024x683.png 1024w, https://brazilian.report/wp-content/uploads/2019/03/export-88YAa-300x200.png 300w, https://brazilian.report/wp-content/uploads/2019/03/export-88YAa-768x512.png 768w, https://brazilian.report/wp-content/uploads/2019/03/export-88YAa-610x407.png 610w, https://brazilian.report/wp-content/uploads/2019/03/export-88YAa.png 1200w" sizes="(max-width: 1024px) 100vw, 1024px" /></p>
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<p><span style="font-weight: 400;">The company announced that <a href="https://www.valor.com.br/brasil/6180439/em-meio-rumor-de-greve-preco-do-diesel-atinge-recorde-no-ano">new prices</a> will be calculated every 15 days, meeting truckers in the middle after they demanded it took place monthly. BR Distribuidora, a Petrobras subsidiary, will also implement a card allowing truckers to purchase fuel in advance at fixed prices—giving them more predictability. According to the National Petrol Agency, average diesel prices from Petrobras to refineries has gone up by 18 percent this year—but consumers have only felt part of that at the pumps: 2.6 percent. Which means that fuels could get much more expensive in the near-future.</span></p>
<p><span style="font-weight: 400;">A report from UBS bank considers that the move—which panders to truck drivers with the specter of a new strike looming—could motivate legal challenges by independent importers.</span></p>
<h2>“Not enough”</h2>
<p><span style="font-weight: 400;">According to Wallace Costa da Silva, one of the leaders among autonomous truckers, the changes in diesel pricing policies is a positive sign from the administration, “but doesn’t solve all the problems.” Per Mr. Silva, who met with the President’s Chief of Staff Onyx Lorenzoni on March 14 and 22, the sector’s main concern is about minimum freight prices, “which haven’t been respected since they were implemented.”</span></p>
<p><span style="font-weight: 400;">According to the rules created by the government last year, transportation fees—such as fuels and toll fares—should be reviewed whenever variations in diesel prices pass 10 percent. However, employers’ unions have challenged the rules in courts to avoid paying more for cargo transportation. That is the case of the Federation of Industries of São Paulo (FIESP), which was granted an injunction in its favor to release its associates from the obligation.</span></p>
<p><span style="font-weight: 400;">As rumors of a new truckers’ strike began spreading, President Jair Bolsonaro took to Twitter and promised to address the issue. After originally condemning the May 2018 strike, Mr. Bolsonaro changed tack and came out in favor of the stoppages, successfully managing to turn the demonstrations into a show of political support for his presidential candidacy.</span></p>
<h2>Possible damage of a new truckers’ strike</h2>
<p><span style="font-weight: 400;">Over 60 percent of all cargo in Brazil is transported by trucks. If we exclude crude oil and iron ore—which are not transported by road—that rate spikes to 90 percent. In an ideal system, trucks shouldn’t account for more than one-third of cargo transport. That’s why, after just four days of last year’s strikes, many urban centers were already experiencing fuel and food shortages. </span></p>
<p><span style="font-weight: 400;">After the strike was broken, a total of ten days, the services sector shrank 3.8 percent, industrial output fell 10.9 percent, and retail sales were down 0.6 percent. Meanwhile, the country’s inflation rate jumped from 0.4 percent in May 2018 to 1.26 percent the following month. “Besides significative losses, the recovery from such an event takes at least three to four months,” said to the Brazilian Association of Logistics.</span></p>
<p><span style="font-weight: 400;">This year, the results would be even more catastrophic, according to consultancy Austin Rating. It would come at a time when the government seems to be on the ropes, <a href="https://brazilian.report/power/2019/03/27/bolsonaro-worst-enemy-pension-reform/">taking jabs from Congress</a> and unnerving investors—who finally seem to be opening their eyes after <a href="https://brazilian.report/power/2018/10/31/business-elites-jair-bolsonaro/">blindly trusting</a> in the Bolsonaro administration.</span></p>
<p><span style="font-weight: 400;">President Bolsonaro is already failing—at a spectacular level of incompetence—to operate a political coalition. Coupling that with the economic chaos a truckers’ strike would generate would risk creating a perfect storm against the administration. And we haven’t even reached the 100-day mark of Jair Bolsonaro’s presidency.
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