Rising crude oil prices due to the ongoing conflict in Ukraine are driving up ocean freight rates and US barge prices, according to data by the US Department of Agriculture (USDA) reported by World Grain on 18 March.
At the time of the USDA’s 17 March Grain Transportation Report, ocean freight rates for shipping bulk grains had risen for five consecutive weeks and, as of 10 March, the rate for shipping a tonne of grain from the US Gulf to Japan was US$79, a 12% increase from the start of this year, 37% more than a year ago, and 70% higher than the four-year average.
The rate from the Pacific Northwest to Japan was US$44.25/tonne, a 14% increase from the start of the year, 36% more than last year and 72% more than the four-year average, according to the report. The US to Europe rate was US$29.50, up 12% from the start of the year, 39% more than a year ago and 75% higher than the four-year average.
The rate hike was driven by rising crude oil prices caused by the conflict in Ukraine following Russia’s invasion of the country on 24 February, according to the Transportation and Export Report by O’Neil Commodity Consulting.
Although US barged grain volumes had not significantly risen since Russia’s invasion of Ukraine, there were signs that global consumers were turning to US grain and other products to substitute for imports from the Black Sea, the USDA said.
US barge freight rates have surged, according to the report, as both immediate (spot) demand and April freight demand had increased.
An already limited supply of empty barges had grown even tighter, the USDA said, with sharply rising fuel prices likely to pressure barge operators into transferring some costs to customers by raising rates.