Freight costs for Sri Lankan coconut oil exporters surge fivefold

Sri Lankan coconut oil exporters are facing a sharp increase in transportation costs. The cost of shipping one container has risen from $2.5–3 thsd to $12.5–14 thsd, or roughly fivefold. As a result, exports are becoming nearly unprofitable despite steady demand in Europe and Latin America.

Higher logistics costs are being compounded by rising raw material prices. The price of a single coconut has increased from 100 rupees to more than 120 rupees, while desiccated coconut has risen from 150–160 to 195–200 rupees/kg. Producers are also being forced to keep export prices relatively stable to remain competitive on global markets.

As a result, coconut oil exporters’ margins have fallen from around 20% to just 2%. Some companies previously shipped 5–8 containers per month, but maintaining such volumes is becoming increasingly difficult at current freight rates.

Shifting sales to the domestic market offers little relief. Locally produced coconut oil struggles to compete on price with cheaper imported palm oil and other vegetable oils used for cooking.

Industry representatives warn that some processing plants could be forced to close if logistics conditions do not improve. Sri Lanka currently has more than 50 large and small coconut oil manufacturers, and a contraction in the sector could reduce the country’s export earnings.

Tags: export, Sri Lanka, coconut oil