The Ocean Transportation of Wheat
As one of the world most critical cereals grown on the planet, wheat carries complex characteristics through the diversity of its varieties, origins, destinations, and shipping requirements. The largest producers (China, Russia, Ukraine, EU, Canada, USA, Australia, India, Pakistan and Turkey), representing 600 million tons, are also the largest consumers.
About 200 million tons of wheat are exported each year, 170 million tons of which being pure seaborne trade. Many countries import more than 1 million tons each year and only 13 countries led by China, Egypt, Indonesia, Turkey, Algeria account for more than 100 million tons of imports relying on ocean transportation.
The global wheat market presents a complex puzzle necessitating affordable, versatile, reliable, and accessible transportation solutions.
However, certain trade routes face challenges amid disruptions in various regions worldwide.
Wheat exports originating from the US Gulf and exported to West Coast Americas and Asia are impacted by the disruptions experienced in Panama, triggered by the drought affecting the water available to run the lock system at full capacity. About 6 million tons of exports are therefore subject to transit delays and higher freight. Substitute supply is available in Canada, West Coast US and Australia at a premium price. The increase in the landed price is ultimately borne by farmers upstream and/or millers downstream.
The attacks on commercial shipping since the end of 2023 have repercussions on the world commercial fleet routing across all segments. The Suez Canal and Red Sea are critical waypoints to the global wheat trade. The latest figures from USDA show that the wheat exports from Europe, Black Sea, (Romania, Russia. & Ukraine) to Asia and East Africa have drastically increased over the last 10 years, steadily rising from 10 million tons to 30 million tons, representing today 17% of the wheat global seaborne trade.
The Bulk trade shows resilience towards the maritime safety issues in the Red Sea. Year to date, more than 5 million tons of wheat have already transited the Suez Canal and Bab-al-Mandeb strait.
Should the situation deteriorate, countries in East Africa and Asia could see a critical supply of wheat potentially affected by a remote geopolitical conflict.
The continuity of the trade route relies entirely on the capacity of ship owners and crew to operate with uncertain insurability, risk profile and volatile cost.
Maritime bottlenecks historically shaped the accessibility and affordability of Ocean Freight.
The current situation emphasizes the critical role shipping actors, including but not limited to shipowners, operators, traders, PandI clubs, Cargo Underwriters, surveyors, agents, brokers, play in ensuring wheat, a basic yet critical alimentary staple, reaches consumers around the world.
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