University of São Paulo: War in Ukraine could further impact the value of freight in Brazil

The high fuel prices and unstable weather conditions impacted the value of freight, especially in the agricultural sphere, in 2021. The current market scenario, however, is already affected by one more factor: the war in Ukraine and the subsequent rise in oil prices , a commodity exported on a large scale by Russia. Fernando Pauli de Bastiani, researcher at the Research and Extension Group in Agroindustrial Logistics (Esalq Log) at USP in Piracicaba, details the behavior of the sector in the last year to Jornal da USP no Ar 1st Edition and provides forecasts for the price of freight in 2022

According to Bastiani, in 2021, most Brazilian states had their harvesting activity concentrated in a short period of time. The situation worsened after an unusual delay in soybean harvesting in the Center-West region, especially in Mato Grosso. “This made the pressure on the transport system to remove products from the farm very high,” he says. In addition, an increase in the price of commodities accelerated the flow of exports in Brazil, increasing the already intense demand for the transport of agricultural products. As a result, the value of freight has increased by 20% to 30%.

Apart from the question of supply and demand, which has an immediate impact on the value of freight, the researcher says that the high price of fuel can have long-term consequences. “At the end of the year, in the last quarter, freight usually goes into a low period. [Last year] that didn’t happen.”

War in Ukraine
Economic sanctions imposed on Russia since the start of the conflict could also impact prices. Last Tuesday (8), US President Joe Biden banned US exports of Russian oil, gas and energy, a measure that will change inflation levels and the economy of several European countries. In Brazil, it is likely that the agriculture and livestock sector will also suffer from the rise in oil prices. “In these periods of crisis, it is very difficult to make predictions, but logically there is a point of attention. If we continue in this scenario, fuel prices will probably reach very high levels”, explains Bastiani, who continues: “On the other hand, the government may announce packages to try to contain such increases. The Minister of Economy has already advanced, yesterday,

“If everything remains as it is, the trend is for prices to rise, for sure”

Brazil’s dependence on Russian export fertilizers could also bring about a critical period in the agricultural sector. “For the winter cycle, which will start now, most producers and companies in the sector have already purchased fertilizers and will not have so many problems. But domestic inventories won’t last until the next summer cycle.”

climate issue
Finally, Bastiani comments that the climate of 2022 is significantly opposite to that observed in the same period last year. “This year, we had a very large advance in the summer harvest”, which resulted in a rise in freight prices in the second half of January. In addition, agricultural sector entities predict a 30% drop in the crop in the South region, due to drought-related issues. “It is certainly the region that will be most impacted”, concludes the researcher.

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