A nine-day strike by some 600,000 truck drivers protesting surging diesel prices in Brazil shows no sign of ending.
Hundreds of flights have now been grounded since the start of the strike, most ports are unable to operate and Sao Paulo, the region’s lead business hub, has declared a state of emergency.
President Michel Temer appeared to resolve the dispute on Sunday night by agreeing to reduce diesel prices, but blockades remained in place on highways throughout the country yesterday, although federal police did clear a number of road blocks around Rio de Janeiro to enable 150 food trucks into the city after supermarkets ran of fresh produce.
Across the country fuel is now in desperately short supply, shop shelves are rapidly emptying, and chickens are being culled in their millions because there is no means of distributing feed.
“This is quite a serious situation we have here,” said David Ross, national manager of Brazilian port agency; Alphamar Agencia Maritima. “All of the petrol stations are out of fuel and diesel. Some of the airports are closing down because they can’t refuel the planes. And obviously there’s no cargo coming to the ports or leaving the ports.”
The Brazilian Association of Animal Protein (ABPA) said 120,000 tonnes of chicken and pork exports have been cancelled since the start of the strike, while beef packer trade group Abiec said an estimated 4,000 trucks of beef currently stranded on roadsides would soon rot.
Making matters worse, strike action over ‘non-compliance’ with workers’ rights legislation by the National Union of Fiscal Auditors is also affecting cargo clearance by Customs, and a 72-hour strike by oil worker unions is scheduled to start today.
“While the government has reached an agreement with trucking associations, there are still roadblocks in place in many states,” Antonio Dominguez, Managing Director Maersk Line East Coast South America, told Lloyd’s Loading List last night.
“Manaus port in the Amazon now has free access, but most ports in the south, including Itajai and Santos, remain blocked.
“Brazilian export volumes will be seriously impacted for the next few weeks. The situation is, of course, more challenging for refrigerated cargo exporters who rely on a smooth supply chain to ensure their cargo arrives at its destination without delay.
“Maersk Line are working with customers and vendors throughout Brazil to minimize the impact to its customers and the market, and are taking steps to ensure the continuation of operational and commercial activities under the prevailing circumstances.”
Terry Gidlow, chief executive officer of port agency business WaterFront Maritime Services, confirmed that road and rail access to most Brazilian ports was not currently possible.
“Access is being given only to medicine supplies and frozen goods,” he said. “No other trucks or trains are being allowed to move across the cities and access to the main Brazilian ports are interdicted.”
“Due to the blocking of main roads and railways, cargoes are not being delivered at port for export.”
He added that customs auditors were also currently working to rule which was affecting cargo inspections and further exacerbating supply chain delays.
“It means that all import/export cargoes that may require a physical inspection are facing delays on its procedures,” he added. “Cargoes which are usually cleared under the ‘green channel’ remain unaffected so far.”
Cathy Roberson, founder and head analyst at US-based Logistics Trends & Insights, said the implications of the outbreak of mass industrial action across Brazil would be long-lasting.
“Without the trucks, no freight is moving within the country nor out of it,” she said. “International supply chains that rely on output from Brazil are going to have to look for alternative solutions which in turn can seriously damage Brazil’s exports, not only in the short term but also the long term.
“We’re hearing that all verticals are struggling at the moment, but obviously perishables and other time sensitive cargoes are proving very difficult.
“Brazil’s automotive industry could run out of parts quite quickly given the nature of their global supply chains. The same is true of some electronics, depending on inventory levels which is hard to gauge at this stage given the extent of the logistics shutdown.
“Ports are likely to take quite a time to fully recover given reported backlogs.”
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