Higher freight costs set to hit profit margins for grain exporters

An improved outlook for global bulk shipping rates spells bad news for grain exporters as they go into the latest sales campaign, with increased freight costs squeezing profit margins and adding to price competition in leading markets.

US wheat exporters look to be the hardest hit as ship owners prepare to crank up rates, expecting a clamour for their vessels. The biggest hike may be to the major Middle Eastern market — giving smaller producers situated nearer the region a price edge.

“When it comes to the grain season ex US we believe this will be a strong season and we believe the same will be the case with the season ex Black Sea,” said Jens Ismar, chief executive of shipping group Western Bulk.