Rice exporters face new challenges with rising shipping costs and congestions
Seaports worldwide continue to be congested as they clear backlogs of shipping containers stuck on harbors.
Shipping prices have begun increasing again due to another wave of COVID-19, a sudden rise in crude oil prices, and an immense bottleneck at several ports in China, the United States, and Europe. Industry sources estimate a 15% to 20% increase in sea freight costs for outbound cargo from Asia to the North American or European countries due to unforeseen delays in cargo clearance at various ports. In Asia, trans-shipping ports in Singapore and Hong Kong are immensely congested with many vessels waiting to take dock for their re-route. With this rise, the average export cargo price for a 40-foot container from Mumbai, India is estimated at USD $4,900 and that from Mundra and Chennai at USD $5000 and USD $5200 respectively. International shipping rates had reached a record high in November 2021 but were reduced later due to a decreasing number of new COVID-19 Cases.
Partial closure of ports in China due to an increase in COVID-19 cases is anticipated to affect the shortage of supplies worldwide in the next few weeks, with Africa likely to be most impacted. China is one of Africa’s leading exporters of goods, with statistics indicating that the China-Africa trade touched USD $185.2 Bn between January to September 2021, up 38.2% Y-O-Y. Several shipping companies have halted operations in at least 3 China ports, including Shanghai and Shenzhen, which remain partially closed. The shipping lines said they are re-evaluating the situation before recommencing operations. With the Chinese Lunar New Year festival and Winter Olympic coming, cargo fees are expected to stay firm for the next couple of weeks. The unexpected surge in freight charges also got support from increasing crude oil prices. India has begun using diplomatic networks to urge producing nations to increase crude oil production with the purpose to cool down prices. While China has started releasing stock from its strategic resources to set up pressure on key producing countries.
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