Rising fuel prices and a new regulation are turning Brazil’s truck drivers against the government. This comes at a bad time for President Lula. Impacts on Germany are also conceivable.
São Paulo – Nothing works in Brazil without trucks: The huge country, which with its 26 states is more like a continent, is dependent on its caminhoneiros, the truck drivers. The Brazilian rail network is underdeveloped and trucks are the logistical backbone of the nation: around 80 percent of freight traffic runs on the roads. Without the truck drivers, the economy would come to a standstill and it would hardly be possible to supply food to the cities, some of which are far from each other.
The announcement by the leading truck driver unions Abrava and CNTTL of a nationwide strike is causing unrest in the country. At the end of the week, semi-trailers were already clattering through narrow residential streets in Brazil’s metropolis of São Paulo – perhaps in preparation for protests like those that took place in 2018: Back then, the Caminhoneiros blocked important traffic axes with their trucks and caused chaos on the streets. The strike lasted ten days.
Fuel prices are exploding due to the Middle East conflict: truck strike in Brazil is imminent
The background to the current strike threats is the skyrocketing fuel prices worldwide as a result of the Middle East conflict, especially for diesel. The state oil company Petrobras recently increased the price of a liter of diesel by 0.38 reals; currently the fuel often costs over seven reals per liter (around 1.15 euros) – a ridiculous price by Brazilian standards.
The strike announcements are putting massive pressure on Brazil’s government. The minority government of President Luiz Inácio Lula da Silva is currently suffering from a crisis of confidence after various scandals surrounding the now liquidated Banco Master and corruption allegations against the state pension fund INSS. The timing is bad; presidential elections are coming up in October. The consequences of the development of fuel prices are now all the more serious, said Deputy German Consul General Holger Rapior on the sidelines of a press conference in São Paulo: “A strike by truck drivers would be extremely inconvenient for the government. That is why it is in the process of taking urgent measures to ensure that fuel prices do not rise any further.”
The Lula government had, among other things, decided on tax breaks and subsidies that were intended to reduce the price by up to 0.64 reals. In addition, controls on the so-called minimum freight rates are to be significantly tightened and violations are to be punished with fines worth millions. The minimum freight rates for truck transport, which are set by the national transport agency ANTT (Agência Nacional de Transportes Terrestres), regulate legally set lower limits for the payment of truck transport and are intended to secure the economic existence of the caminhoneiros. But the truck drivers complain that due to the simultaneous price increase at Petrobras, the measures remained effectively ineffective.
In fact, the price tables at gas stations currently change several times a day. The extreme price volatility makes it almost impossible, especially for smaller logistics companies and self-employed Caminhoneiros, to calculate costs and income. When loading up in the morning, many drivers often don’t know whether the price of diesel at the next gas station might eat up their entire profit, say industry circles. “The rising diesel prices are worsening the mood,” said Gloria Rose, director of the German economic development agency GTAI in Brazil, in an interview with the Frankfurter Rundschau by Ippen.Media. “The price of diesel rose by over 20 percent in March. The possibility of a strike cannot be ignored because of the drastic consequences for the economy.”
The strike also has an indirect impact on Germany’s economy. Thousands of German companies are based in Brazil, especially in the mechanical engineering and electrical sectors, which are important from a German perspective. The federal government wants to significantly expand the economic partnership with the Latin American country. This year, Brazil is also a partner of the world’s largest industrial trade fair, the Hannover Messe, in April. Interrupted supply chains in Brazil due to the truck strikes could affect the business of German companies there, observers believe. (Peter Sieben reports from São Paulo)
