BOGOTA -(Dow Jones)- More than 100,000 Colombian truckers began a strike Thursday morning that may affect exports and has become President Juan Manuel Santos’s biggest confrontational showdown since he took office six months ago.
Officials from the Association of Colombian Truckers, or ACC, said about two-thirds of their 180,000 members are participating in the work stoppage, which threatens to sharply reduce coffee exports and has sparked concerns crude oil deliveries could also be affected.
Local reports from Caracol radio said that despite the strike announcement, there doesn’t appear to be a sharp drop in the number of big rigs circulating on roads and highways as dawn breaks in Colombia.
The truckers association decided to strike after the Santos administration last month decreed the elimination of a years-long policy of setting minimum freight rates that truckers receive for each delivery. The government says getting rid of the “table of shipping costs” is long overdue and will create a competitive environment in the trucking industry and bring down overall costs.
Truck drivers say the move, which goes into effect later this month, will spell disaster for the trucking industry and especially small trucking firms and independent drivers. The ACC says truckers are faced with soaring fuel costs and rising inflation, making this the worst time for the government to end price regulation. Speaking Wednesday afternoon before the strike began, a tough-talking President Santos said he would not withdraw the decree under any circumstances and criticized the truckers for threatening a strike.
“The government will not respond to these types of threats,” Santos said, adding the government is nonetheless willing to talk to the truckers.
Analysts say they applaud Santos’ firm stance with the truckers and say the removal of the antiquated freight rates list will be a long-term positive for the country’s economy.
However, they say if the strike endures for a couple weeks or more it will cause a short-term supply shock that would push up prices on food and other items that could strain an already slowing economy.
Colombian inflation was 3.17% last year, which was above expectations. Torrential rains in late 2010 damaged food crops, leading to a 1.65% spike in food prices in December alone.
“If the strike persists we could encounter problems in supplies to several channels of which we must mention the retail channel pushing prices up and impacting [consumer price inflation] directly,” Andres Jimenez, an analyst at Colombia’s InterBolsa brokerage, said Thursday. “As this is the first trial for the Santos administration they cannot fold or they will be put against the ropes from every sector during the rest of this administration.”
The nation’s coffee export association Asoexport said this week that a strike would be “very damaging” to its industry because it relies almost exclusively on truckers to haul coffee beans to shipping ports for export to the U.S., Europe and elsewhere.
A truckers strike a couple years ago caused a sharp drop in coffee exports.
Shares in two of the biggest oil companies in Colombia, state-run Ecopetrol (EC, ECOPETROL.BO) and Canada-based Pacific Rubiales( PEGFF, PRE.T), fell Wednesday on the local exchange amid concerns the strike could impact crude oil deliveries.
Oil firms are becoming increasingly reliant on truckers as Colombia doesn’t have enough pipelines the demands of the booming oil industry. However, many oil companies in Colombia set up special contracts with their truckers that seek to ensure they won’t participate in a general truckers’ strike.