Grain Shipping Rates Up Sharply in Q2

Ocean freight rates for shipping bulk commodities, including grain, continued to rise in the second quarter, ballooning to an average of nearly $66 per metric ton from the U.S. Gulf to Japan — an increase of 26% from the first quarter and 82% above the second quarter of 2020. That’s according to USDA's latest Grain Transportation Report.

“The rise was fueled by sustained global optimism from the ongoing reopening of major economies and successful COVID-19 vaccine deployments,” the report says, also citing “expansionary monetary policies” from the U.S. and China as a factor.

The cost of shipping from the Pacific Northwest to Japan averaged $38.34 per metric ton, which was up 28% from the first quarter and more than double the average for the second quarter of 2020.

EDITOR’S TAKE:

Troubling news! A spike in grain transportation costs is not good for grain merchants, nor farmers. In the end, it will put pressure on farmer margins and eventually lead to lower net profits. This increase in shipping costs is in part due to an explosion in demand for ships and cargo containers. Until there is some pressure from the federal government, shipping companies will continue to migrate towards faster turn-around and higher priced cargo shipments. The agriculture industry needs to address this situation to ensure it does not become a permanent method of operation.