For the past month, shipping rice has been a challenge for Indian exporters who sell their harvest in West Africa. According to S&P Global Commodity, the surge in maritime freight costs is increasing the price of the most consumed cereal in the sub-region. In one year, the price of a TEU container (20-foot equivalent) has increased by $500!
The price for transporting a 20-foot equivalent container of rice (TEU) from the Indian port of Vizag to Cotonou and Lomé increased to $2,400, compared to $1,900 last October, or $500 more in one year. . According to traders interviewed by the branch of the S&P agency specializing in raw materials, this surge in the cost of maritime freight can be explained by the massive influx of cargoes since mid-November. Indeed, import demand for rice from West African markets is in high season during the months of November and December due to the end-of-year holidays. Traders and importers place large orders to meet market needs and build up large stocks.
The tension on freight costs could last until January 2025
In a context of falling capacity among shipowners, the surge in demand has intensified pressure to store rice in containers on board ships which are generally small or of intermediate size. According to commodity market analysts, the tension on freight costs could last until January 2025.
Faced with freight inflation, Indian exporters are considering opting for conventional bulk, which consists of transporting rice in bags or in unpackaged bulk in the holds of ships. This option will allow them to reduce the cost per tonne and import larger quantities of rice, but requires more time and more equipment for unloading at the destination port. But exporting rice in bags could disrupt the entire rice distribution chain. Indeed, in several West African countries, the local distribution of imported rice relies on a large network of SMEs which obtain their supplies from importers, and work with 25 kg and 50 kg bags.
The sub-region is also accustomed to regular flows of ships bringing back medium-sized cargoes, which ensures a regular supply and allows better control of the distribution chain. In such a context, the use of conventional bulk, if it is implemented, constitutes a crash test not only for exporters, but also for importer-distributors.
Par AJ.SEditorial Committee
Swiss
