Maritime Transportation Costs in the Grains and Oilseeds Sector

More than 80% of global trade in grains and oilseeds occurs by maritime transport. This report provides an in-depth analysis of ocean freight rates during 2007-2021, examining their evolution, volatility, determinants, and how they influence port networks. Freight rates accounted on average for 11% of the cost and freight price, but this share ranges between 2% and 43%, demonstrating the potentially large impact of freight rates on consumer prices. Freight rates for grains and oilseeds are generally more volatile than their free-on-board prices. Regression analysis shows that a 10% increase in the distance between two ports is estimated to lead to a 2.5% increase in freight rates. It also demonstrates that freight costs for grains and oilseeds do not obey the iceberg formulation, which implies that they should be modelled as additive (constant costs per unit traded) rather than as multiplicative (iceberg) costs.