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Diverted shipping routes are changing trade flows

The chief economist for the National Grain and Feed Association says he’s watching how global agricultural trade routes are shifting because of political unrest.

Max Fisher tells Brownfield shipping through the Suez Canal is diverting to safer regions to avoid the Middle East.

“It’s adding time, adding costs and it’s changing flows,” he says.  “Like in the case of grain, you now have more grain going out of the Pacific Northwest, which is a straight shot over to Asia rather than out of the Gulf.”

Unfortunately, he says the Pacific Northwest only has so much export capacity.

“Freight out of the Gulf is more expensive now, so if you are in a situation where you have to go through the Gulf, it’s going to cost you more,” he says.  “Supply and demand would dictate if all of a sudden we’re putting more pressure on the PNW, costs are also going to go up.”

Lower water levels in the Panama Canal have also increased costs and changed shipping patterns.

Fisher says a bright spot for 2024 is the decline in the price of diesel which has reduced the cost of transporting grain over the road.

Brownfield interviewed Fisher about transportation challenges during the recent Great Lakes Crop Summit.