July 11, 2018 / 8:56 PM / 6 days ago

Brazil's lower house approves decree setting minimum freight prices

BRASÍLIA/SAO PAULO, July 11 (Reuters) - Brazil’s lower house of Congress on Wednesday approved a decree setting minimum prices for truck freight, a measure fiercely opposed by farm and industrial lobbies which said it would raise shipping prices.

Brazilian President Michel Temer issued the decree as one of several measures proposed by the government to end an 11-day truck driver protest in May that blocked Brazil’s roads and ground shipment of goods to a halt.

Temer’s decree took effect immediately but required Congressional approval to become permanent. The proposal will be considered by the Senate next.

The truckers’ protests against higher diesel prices which that government later agreed to subsidize, highlights the shortcomings of Brazil’s logistical system, which relies mainly on trucks to move about 60 percent of the country’s cargo.

Fiesp, the São Paulo industry federation, said on Wednesday adoption of minimum freight prices could raise shipping costs by close to 20 percent this year, according to a survey of 400 companies.

“After three years of sluggish economic growth, São Paulo industries have little margin to absorb higher freight prices without passing [additional costs] onto the prices of its products,” Fiesp said.

Fiesp estimated its members will incur 3.3 billion reais ($851.15 million) in extra freight costs between June and December of this year stemming from the measure, it said in a statement.

Doubts related to rules to set freight prices have hampered grain trading and shipment of goods including soybeans and corn for weeks.

Congressional agribusiness bloc FPA on Tuesday repeated its vow to work against the passage of the decree, saying it would hurt Brazilian agricultural products competitiveness abroad and raise domestic consumer prices, according to a statement.

Deliveries of fertilizers in Brazil, the world’s largest soybean exporter and second largest corn supplier, would also be affected, according to farmers and a consultancy.

Higher fertilizer transport cost, for example, has hindered deliveries and caused accumulation of fertilizer products at port warehouses, consultancy INTL FCStone said.

At Paranaguá, where 46.1 percent of all Brazilian fertilizer imports arrived in 2018, average waiting time to unload a fertilizer ship rose to 17 days this month from eight days in July last year, INTL FCStone said. ($1 = 3.8771 reais) (Reporting by Marcela Ayres in Brasília and Ana Mano in São Paulo; editing by Grant McCool)

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