Brazil revises minimum freight rate rules again

16 Jan 2020 | Reese Ewing

Brazil’s highway transport regulator ANTT has published a new set of rules for the calculation of the country’s minimum freight rates after suspending a more complicated framework that it had tried to implement in 2019.

The previous set of rules, published in July last year, were quickly rejected by Brazil’s truckers who threatened to go on strike again.

The law implementing minimum freight rates in Brazil was passed as a bargaining chip to get truckers to end an 11-day strike in May 2018 that created food and fuel shortages.

The new set of rules governing the calculations of the minimum freight rates were simplified from the previous version, which included attempts at calculating profit margins, amortization on truck values, tolls and taxes.

The new formula focuses predominantly on the distance of the hauls, the type of truck and cargo to calculate the minimum freight rate.

This simplification has gained some support from truckers.

Wanderlei Alves, a representative for an independent truckers’ union, said on his social media account that “the new regulations are being welcomed by truckers, but the real test will be their enforcement.”

The minimum freight rates law was quickly challenged in 2018 in more than 60 separate cases by Brazilian industry groups and the farm export sector, which said the minimum freight rates law arbitrarily raises transport costs significantly, creates a cartel in the trucking industry and are unconstitutional.

The Supreme Court has had the legal challenges to the freight law under wraps since 2018, but put three of the most important cases on its 2020 docket for hearings in the second half of February.

Volatile spikes in the price of diesel in Brazil were the main catalyst for the truckers’ strike in 2018 and the government of President Jair Bolsonaro is trying to patch together some measures that would ease fuel prices in Brazil without forcing the state-run oil company to subsidize consumers' fuel costs.

One of the measures under consideration is a reduction in the interstate ICMS tax on fuels at times when fuel prices are above a certain threshold.

The plan would also involve the creation of a fund using pre-salt royalties revenues that would disburse lost tax revenue to the government during periods when taxes are reduced to cushion consumers from abrupt upswings in prices at the pump.