CRF optimistic despite jump in cost of shipping
THE Cambodian Rice Federation (CRF) expressed optimism that the country’s rice exports will continue to grow this year, despite a staggering 500% increase in shipping costs, one of the highest ever, with costs rising from $1,000 to $5,000 per 20-foot equivalent unit (TEU) container.
CRF president Chan Sokheang acknowledged on February 7 that the steep rise in shipping costs has presented challenges for rice exporters; however, he confirmed that exports are proceeding as usual, albeit potentially in smaller quantities.
“In the past, shipping one [TEU] to Europe cost between $1,000 and $1,200, but now it has soared to between $5,000 and $6,000, varying according to port. During the Covid-19 period, it had increased to between $7,000 and $10,000. So, the current price is 70% of what it was during that time,” he explained.
He expressed uncertainty about whether exports will increase or decrease in 2024. Nonetheless, he remains optimistic about growth prospects, citing the implementation of a robust harvest policy, which has resulted in higher stocks than last year.
According to the Sokheang, the significant increase in shipping costs is primarily affecting exports to Europe, while shipments to Asia have seen only a slight rise. He attributed the minor change to sellers in Asia increasingly turning to Asian buyers.
“We hope to resolve the issues related to the war … as soon as possible, as the economic impact extends beyond companies and exporting countries, affecting the food security of importing nations. I believe that leaders in the region will develop a solution to the problem,” he said.
Sin Chanthy, president of the Cambodia Logistics Association (CLA), noted that shipping prices have been rising since January 20, partly due to the Houthi Red Sea attack, which necessitated detours for some ships.
“The detour has lengthened the distance by 6,000km, adding an extra eight to 10 days to the journey. The hike in prices is impacting the export and import of products from Asia, including Cambodia, to the US, EU and Canada,” he said.
According to Chanthy, shipping companies justify the increased freight rates due to the detour, which not only prolongs the journey but also incurs additional costs, thereby doubling the cost of shipping between Asia and the West.
The federation reported that the country exported 656,323 tonnes of rice in 2023, valued at approximately $466 million, through 63 exporters to 61 destinations.
This included 212,756 tonnes worth $138 million to China and its Hong Kong Autonomous Region; 264,683 tonnes valued at $191 million to 26 EU members; 93,376 tonnes at $62 million to seven ASEAN countries; and 85,508 tonnes at $76 million to 26 countries in Africa and the Middle East.
Rice exports for 2023 showed a 3% increase in value and 13% in volume compared to 2022, as per the CRF.