2024/25 cocoa freight rate increases by 5%
The Cocoa Marketing Company (CMC), Ghana Shippers’ Authority (GSA), and 17 shipping lines involved in Ghana’s cocoa trade have successfully concluded negotiations, agreeing to an average 5% increase in the basic freight rate for the 2024/2025 cocoa season.
However, the Bunker (Fuel) Adjustment Factor (BAF) remains the same as last year.
The new rates, based on last year’s negotiations, will come into effect on 1st October 2024.
This agreement provides stability for Ghana’s cocoa export sector, which is crucial to the nation’s economy. The shipping rates for cocoa per tonne to various global destinations for the 2024/2025 season are as follows: €56.72 to Northern Europe, €64.83 to Estonia, €63.67 to Mediterranean Europe, between US$105.46 and US$111.39 to the Far East, and US$122.05 to Brazil.
Reason for the Increase
The primary factors influencing this decision were global market conditions impacting shipping and logistics worldwide. Additionally, maintaining competitive freight rates for Ghana’s cocoa, particularly in light of increasing competition from neighboring countries, was a key consideration.
Some of the shipping lines involved in the negotiations included Arkas Line, Maersk Line, Mediterranean Shipping Company, Gold Star, ZIM Shipping Lines, Grimaldi, Messina Lines, Pacific International Line (PIL), UNICARGO, Breadbox Shipping Lines, and Orient Overseas Container Line (OOCL).
Background
The Cocoa Freight Negotiation is an essential annual event that brings together key stakeholders in Ghana’s cocoa export sector. The primary aim of these negotiations is to agree on freight rates for the upcoming cocoa season. These rates are critical as they influence the cost of transporting cocoa beans from Ghana globally.
The event is important for maintaining Ghana’s competitiveness in the global cocoa market, especially given the stiff competition from neighboring West African countries like Côte d’Ivoire.
The success of these negotiations is crucial for both Ghana’s cocoa sector and the shipping lines, as it ensures a smooth and cost-effective export process for one of the country’s most valuable commodities.
GSA CEO’s Remarks
The Chief Executive Officer of the Ghana Shippers’ Authority, Kwesi Baffour Sarpong, expressed his gratitude to the shipping lines for their ongoing partnership with Ghana. He commended them for their vital role in facilitating international trade, acting as trusted intermediaries between the Cocoa Marketing Company and global buyers.
He also highlighted that, despite the Western Region being the primary source of the nation’s cocoa, many shipping lines have been reluctant to call at the Takoradi Port to transport the commodity. However, with YilPort’s recent commencement of operations at the Takoradi Port, he is optimistic that the situation will improve.
“With YilPort’s entry, which brings advanced technology, efficient handling systems, and international expertise, the cocoa export process will become more streamlined and quicker,” he told the media. He further added, “The improved port infrastructure and services provided by YilPort are expected to reduce delays, minimize costs, and ensure that cocoa shipments reach their global destinations in optimal condition. This development will not only bolster Ghana’s cocoa trade but also reinforce the country’s reputation as a reliable exporter on the global stage.”
He also expressed gratitude to the Minister of Transport (MoT), Mr. Kwaku Ofori Asiamah, and the ministry for their guidance throughout the process.
Conditions Agreed
Several conditions of shipment have been maintained to ensure smooth operations for the 2024/2025 cocoa season. Shipping lines will continue to provide dressing materials, position empty containers at cocoa stuffing areas, and bear lift-on/lift-off costs. Meanwhile, the CMC will handle the dressing and stuffing of containers, the delivery of full containers to specified locations, and the fogging of both empty and loaded containers.
Freight payments will be made in US dollars, with exchange rates determined by Reuters on the Bill of Lading date. Shipping lines are also required to release non-negotiable Bills of Lading to the CMC within 24 hours of a vessel’s departure, in accordance with the CMC’s new financing model.
Uniformity in Service Charges
The CMC has committed to ensuring uniformity in lift-on/lift-off charges by service providers. Furthermore, the prices of desiccants and other essential materials used in shipment will remain stable throughout the 2024/2025 season, providing certainty in the input costs for shipping lines.
With these agreements in place, Ghana’s cocoa industry is well-positioned to benefit from continued competitive rates, despite challenges in the global shipping sector. The stability in freight costs is expected to facilitate the smooth export of cocoa, further solidifying Ghana’s status as a major player in the global cocoa trade.