- Indian rice exporters are facing container shortages and rising freight costs as carriers prioritize Asia-US trade ahead of the August tariff deadline.
- Capacity has been redeployed from India-East Africa routes to more profitable China-US lanes, tightening supply in African markets.
- While India-West Africa freight rates have remained stable, increases are anticipated as equipment shortages persist.
Indian rice suppliers are reporting increasing challenges due to a growing shortage of containers, which has pushed up freight rates and constrained shipment capacity. This is largely due to global shipping lines prioritizing trans-Pacific routes to maximize profitability ahead of the expiry of the 90-day China-US tariff reduction period on August 12, according to S&P Global.
Shift in Capacity Hits Africa
Carriers have begun redeploying vessels from Indian and African trade lanes to the China-US corridor to take advantage of higher returns. This has led to a notable reduction in container availability for Indian exporters, especially for shipments to East and West Africa.
One Burkina Faso-based trader confirmed that “freight costs are on the rise,” while another exporter noted that exporters may eventually shift to bulk shipments if container freight continues to rise, especially with bulk demand currently subdued and destination markets oversupplied.
East Africa Sees 15–20% Hike in Freight
Freight to East Africa has seen an increase of $100/mt month over month, with shipping to Mombasa currently assessed at $750/TEU for June shipments. Container shortages are exacerbated by the slow turnaround of imported boxes, which require cleaning and conversion into food-grade containers—further adding to the delay and cost.
Stable India–West Africa Rates but Increases Loom
So far, container rates on the India–West Africa route have remained stable, though sources predict a hike is imminent. Platts assessed India Parboiled 5% rice at $379/mt FOB on June 11, up $13/mt on the month. Meanwhile, West African Parboiled 5% CFR Cotonou rose to $430/mt, up $12/mt month over month.
Capacity Realignment Continues
In response to weak demand from the Middle East and higher profitability in transpacific lanes, some carriers have begun downsizing vessels on Middle East–West Africa routes, replacing 8,000 TEU ships with 6,000 TEU ships, and redirecting larger capacity toward China–US and China–West Africa trades.
Spot Rates in East Africa to Rise Despite Low Demand
In the East Coast Africa market, spot rates are expected to rise due to blank sailings and capacity cuts, even though overall demand, particularly for sugar, remains weak. MSC had a blank sailing in early June, and Sea Lead has reduced frequency to fortnightly departures.
As one carrier summed up: “It’s not just West Africa—equipment shortages are impacting all lanes due to the renewed focus on exports out of China.”
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Source: S&P Global
