Disastrous strike in Brazil: What is happening?
The truck drivers’ strike that began in Brazil earlier this month has brought the nation’s government to its knees.
The truck drivers’ strike that was initiated in Brazil on May 21 has turned the country upside down. As the government worked to end the impasse, filling stations ran out of gas, supermarkets ran out of goods, and hospitals were forced to cancel surgeries.
To understand what is going on in Brazil, it’s important to understand that although Brazil is a country of continental dimensions, the transport and distribution of goods is mainly done through roads, different from the model used in the U.S in which most goods are transported by train.
In Brazil in the 1950s, during the administration of President Juscelino Kubitschek, plans of fast economic development were evident in his motto “50 years in 5.” This plan involved investing in roads rather than railways. Expanding the Brazilian road system also roused the interest of automakers in opening factories in the country, contributing further to the economic boom witnessed in the 50s.
As a result, today Brazil is a country that depends on a transportation system that is more expensive and polluting, and less practical than its ferry counterpart.
The country is dependent on trucks and truck drivers to distribute cargo to industries, food to supermarkets, medicine and equipment to pharmacies and hospitals, and gasoline or ethanol to filling stations.
According to the Brazilian National Confederation of Transport, 61 percent of cargo transportation in Brazil is made via the road system, 20.7 percent by railways, and 13.6 percent by water.
The transport of goods mainly by truck raises several logistical complications. The poor condition of roads and highways impacts the speed of transportation, while the price is affected by the cost of diesel (including taxes), tolls, and vehicle maintenance, which is frequent due to the precarious state of Brazil’s roadways.
On May 16, the National Confederation of Freelance Conveyors presented a letter to the federal government asking for the diesel price to be frozen, and open a line of communication for negotiation on this matter. With no answer from the federal government, a strike was initiated on Monday, May 21.
On that day, truck drivers united themselves in a strike, parking their trucks along main federal roads in Southeast Brazil (São Paulo, Rio de Janeiro, Minas Gerais were all impacted). Though the movement started with freelance conveyors, it went on to receive support from transportation companies and their drivers as well.
Within a few days, federal roads were blocked in 25 of Brazil’s 27 states, forcing President Michel Temer to call an urgent session for Congress and the Senate to address the issue and try to reduce the taxation of diesel as a quick fix to please the drivers and stop the strike.
But the strike continued.
A mere 72 hours into the strike, the effects began to take shape. Gas stations along the shores of São Paulo and in the countryside began announcing they had run out of fuel. The same was seen in cities in the north of the county, as reported by BBC Brasil.
Empty fuel tanks became problematic not only for vehicle owners but also for public transportation as companies were forced to reduce their fleets due to the fuel shortages. Beyond simple transportation, Hospital das Clinicas in São Paulo, the largest hospital in Latin America, had to postpone scheduled surgeries to prioritize emergencies due to a lack of medicine and healthcare supplies. Universities canceled classes, some government institutions were closed, and the City of São Paulo suspended its garbage pickup. Eventually, only emergency vehicles had access to fuel.
In the supermarkets, the effects were also being felt. Major chains such as Carrefour limited sales to 5 units per customer and Ceagesp, the largest fresh food distributors in Latin America, announced that a bag of potatoes once sold for R$70 (about $20) would now be priced at R$200 (about $57).
While the truck drivers’ main demand was lower prices for diesel, they also called to be exempt of toll payment for elevated axles (when trucks are empty) as well as the creation of a minimum freight price.
In response, the government announced on Sunday a reduction in the price of diesel by R$0.46 (about $0.13) per liter, due to the elimination of the taxes linked to the diesel, and 30 percent of the of the Conab (National Supply Company in literal translation) goods transportation will be reserved to the freelance conveyors. There will also be a minimum price for the freight.
Because of the revoked taxation of diesel, the federal government will face a reduction of $8 billion in tax income.
Despite the fact that negotiations have come to an end, it’s predicted that regularization of the transportation services will take days. Although all of the demands from the truck drivers have been met, most of Brazil’s states still face road blockages.
As reported by Folha de São Paulo on Tuesday, Chief of Staff Minister Eliseu Padilha affirmed that the negotiation with the leadership movement has been exhausting, adding that President Temer has taken all measures necessary to solve the impasse. According to Padilha, about 700 blockage points had been opened while drivers still had trucks stopped along federal roads at more than 500 locations.
As of Tuesday, 10 airports remained out of fuel with kerosene for airplanes slowly being delivered to airports under heavy army protection. In São Paulo, military police officers have been escorting fuel trucks to gas stations.
Despite police protection, Folha de São Paulo reported that some gas station owners are choosing not to receive fuel, fearing threats of vandalism.
The gas stations that are selling gas have been experiencing long lines of customers, with some Brazilians, lacking the fuel to start their vehicles, purchasing gas using plastic containers. On Tuesday morning, a gas station in São Bernardo do Campo, a city in the São Paulo metropolitan area, received 5,000 liters of gasoline, creating a line of customers of more than a mile.
Tons of food and other goods have perished along the road during the strike, with livestock and milk producers also reporting losses. According to the Brazilian Association of Animal Protein, since the beginning of the strike, almost 70 million chickens have died, with another 1 billion chickens and 20 million pigs in life-threatening situations due to a lack of feeding rations. Producers have been forced to discard eggs and dairy products due to the lack of transportation.
Despite the impact this strike is causing in all the sectors of the Brazilian economy, it’s not difficult to find supporters of the movement among those who are being affected by the consequences, such as Lilian Fagundes, a business owner from São Paulo.
Fagundes had meetings canceled this past week due to the fuel shortage, directly impacting her company’s revenue. Despite her losses, she supports the truck drivers’ decision to strike and the strategy they used to force the Brazilian government to listen.
“I think they are right in asking for a better price for the fuel,” Fagundes said. “The price of it is absurd, even though it’s produced in Brazil.”
Although Brazil is almost independent of foreign petroleum, it still follows international prices to set its own fuel prices. Petrobras is the country’s biggest petroleum explorer—and also a company owned by the government. Under the previous administration, the company sold gas to consumers below the international average. With the new administration, the company has been allowed to price its products according to international prices, leaving many consumers dissatisfied.