Brazil in crisis as truck drivers strike

A strike by Brazil’s truck drivers has brought the nation’s economy to a standstill.

Striking truckers have been blockading the country’s highways since Monday causing food and fuel shortages in cities.

The strike has caused key industries such as auto manufacturing and meat processing to shut down.

The lack of transportation has caused supplies of sugar, one of the country’s leading export items, to dry up at ports.

Airlines have had to cancel flights because some airports don’t have enough jet fuel.

Brazil’s President Michel Temer had hoped to resolve the crisis brought on by the strike by agreeing to a deal with unions representing the truck drivers, but as the truckers’ strike entered its fifth day on Friday, the deal apparently did not sit well with many truckers.

The truckers are striking because of the rising prices of diesel, which has made it difficult for them to meet expenses and have enough left over to support their families.

Temer on Thursday agreed to eliminate taxes on diesel and reduce diesel prices by 10 percent at the pump in hopes that truckers would return to work.

But the price reductions promised by Temer would last only for one month.

Because it was only a temporary reprieve, Abcam, the truckers’ largest union, rejected the deal, and instead of returning to work, strikers on Friday closed more highways. On Friday, 521 highways were blockaded by strikers up from 402 on Thursday.

When it appeared that the temporary concessions that Temer was willing to make wouldn’t get the striking truckers back to work, Temer said that he would use the armed forces to break the strike.

After Temer threatened to use the army, Abcam urged its members to return to work.

At this writing, it’s not clear whether the truckers will heed Abcam’s call to return to work.

The increase in fuel prices that caused the strike, began two years ago when Temer became acting President while the sitting President Dilma Rousseff was defending herself against impeachment proceedings.

One of Temer’s first acts was to appoint Pedro Parente as CEO of Petrobras, the national oil company in which the government owns a majority share.

Prior to Parente’s appointment, Petrobras subsidized fuel prices for truckers and other Brazilian consumers.

But Parente with the blessing of Temer and the country’s investor class ended that practice and let fuel prices rise to market levels.

Over the last two years, Brazil’s fuel prices doubled.

Increased fuel prices hurt consumers especially truck drivers whose livelihoods depend on the price they pay for fuel.

But Petrobras shareholders reaped a bounty from Parente’s and Temer’s decision. The value of Petrobras stock increased from $3 a share in 2015 to more than $12.70 a share by May 2018.

During 2018, fuel price increases have been especially steep. Bloomberg reports that diesel prices have increased by 50 percent in 2018.

Most recently, the Brazilian currency, the real, has lost value in relation to the dollar.

The currency’s devaluation plus the increases in the global price of oil caused Petrobras to recently increase diesel prices by 16 percent and then by another 17 percent.

It was the latest steep increases in the price of diesel that set off the strike.

The truckers’ strike has led Fitch’s Rating, Inc., one of the world’s big three credit rating services, to become concerned about the strike’s impact on the national economy.

“The truckers’ strike has elevated concerns about the ability of Brazilian corporates to maintain just-in-time supply chains, as well as to export products in key sectors, such as agriculture,” Fitch said.

 

 

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