August 22, 2014
Grain truck owners warn they may strike over cargo fees this week
Proprietors of the country’s 100,000 grain lorries urge the CATAC lobby to take action if the government doesn’t approve the freight rates they want
The owners of the 100,000 grain trucks of Argentina — the world’s third-largest soybean exporter — are warning that they may strike this week if the beleaguered administration of President Cristina Fernández de Kirchner doesn’t approve a cargo fee hike they have already agreed upon with the nation’s farm producers and silo-owners. The government last month gave the green light to a non-mandatory benchmark load fee increase which is five to seven percent lower than the 21 percent agreed by the Argentine Freight Confederation (CATAC) lobby with producers, CATAC Chairman Ramón Jatip told the Herald in an phone interview on Wednesday night.
Although that fee hike set by the nation’s Transport Secretariat is not mandatory, it is included in the bills of lading sent to the AFIP federal revenue agency and has a heavy influence on producer and silo-owner readiness to pay the higher charge agreed with CATAC, Jatip says.
This is the second year in a row that the government has issued a lower freight rate than the one set by the truck-owners lobby which is used as a reference for national and international grain trade operations. Below follows what Jatip says.
What is the current situation of truckload fees?
We are meeting on Monday (today) in La Plata (the capital of the province of Buenos Aires), with the province’s Transport Committee as a mediator. The province has never had difficulties giving its consent to the fees agreed between CATAC, farmers and silo-owners ever since the sector was deregulated in 1990, and if a final agreement is signed, we would be in a position to take that very same level to the national administration to seek its adoption.
The nation must fall in line with the fee approved by the province (which accounts for about 40 percent of the nation’s GDP and population of 40 million citizens.)
Last October CATAC assessed that costs for the sector had increased 22.2 percent as compared to October 2012 and, in negotiation with farmers and silo-owners from the whole country, agreed to a 21 percent hike, which was adopted by Buenos Aires province.
However, the national administration only approved a fee last January, i.e. almost four months later, and without at all consulting us, the country’s sole grain truck-owners national lobby, or with FADEEAC (the Argentine Federation of Freight Business). The nation set a fee which was five to seven percent lower. It had already failed to approve a higher fee since April, 2013, when the coarse harvest was already in and everything was transacted at lower fees than the ones we had agreed with the farm sector. And at the end of last year, something similar happened to the wheat and barley crops. During the almost four months the nation delayed, the prices of fuel oil and tyres, among others, climbed. In November prices rose sharply by almost five percent and they continued to grow until in January the hike reached an unexpected 5.8 percent. Hence, we, grain transporters, worked 2013 almost without any profit.
Can you provide an estimation of the losses?
For us, a five percent lower fee is tantamount to five million tonnes we transport without getting paid. If we consider that the average long-distance cargo is 200 kilometres and that the fee is 180 pesos a tonne, we are talking about 90 million pesos which the national Transport Department is depriving us from getting, although farmers and silo-owners had already accepted that fee. I don’t blame farmers or silo-owners. It is the nation that is telling them to pay a lower fee. This is the second straight year that this is happening.
The Department has a lot of bureaucratic procedures. Three years ago it issued Resolution Nos. 36 and 37 to streamline them and reduce red tape but it only resulted in more benefit for major agricultural companies.
What are the reasons you consider may be behind the national decision on the fee?
The fee we adopt has no influence on the prices on supermarket shelves because it is already included in the final price. It doesn’t fuel inflation or have any impact on the economy.
Is CATAC considering any measure in case the nation doesn’t heed its requests?
For us, CATAC leaders, it is hard to explain our members that a fee that has been agreed upon is not approved by a department whose area is just Transport, not agriculture or production. We have held a lot of conversations with the Transport Department. We want to believe that all this is not the result of ill will from the national government as a whole but rather from some officials. Otherwise, our attitude would be different. We are betting on the national administration’s consistency so that we don’t go on a strike that would be inconvenient. The country already has very serious problems. We have been hearing proposals from many chamber members who are telling us that if the nation doesn’t accept our proposal, we should be striking already next (this) week. The owners of 100,000 grain trucks are supporting this measure.
FADEEAC costs index
According to FADEEAC last index, cargo transport costs rose 4.78 percent last November to 25.9 percent in the year to that month.
The index drawn by FADEEAC measures 11 items which have a direct impact on the costs of all the freight companies in the country and is also a reference for the sector’s fees.
The cost increase was mainly the result of sharp hikes in two areas: fuel and payrolls.
Fuel oil prices climbed since the last week of November for both the wholesale and retail areas, leading to a increase of 6.78 percent in prices.
Meanwhile, a labour agreement signed last June has led to a hike in the costs of the driver sector (6.2 percent), repairs (3.76 percent) and general expenditures (3.53 percent). That agreement implies an across-the-board hike of 26 percent which must be completed in March (6 percent).