Freight adds 20% to grain import bills

 The importance of international freight charges to the total cost of importing grains can be seen from the average share of freight in the total per unit import cost. Of the 15 developing countries included in this study, most paid between 10 to 19 per cent of their total grain import bill in freight. Among them, four countries paid over 20 per cent in freight.

 Developing countries paid the highest per unit freight during the past decade. South Asian importers, for instance, paid $25-30 per tonne for both wheat and coarse grains. Among African countries, Sudan paid the highest freight for wheat during the previous decade, an average of $31 a tonne.

 The major reason for the high cost for some developing countries is partly geographical but largely it is due to the wrong choice of vessels. They generally use smaller vessels due to limited port capacity and lack of efficient port storage and handling facilities, and end up incurring higher demurrage costs.

 On the other hand, the grain importing countries of Latin America generally paid relatively lower freight due to better port facilities and geographic proximity to three of the major grain exporters -- Argentina, Canada and the US. Thus, Mexico paid only around $9-10 per tonne, on average, for delivery of wheat and coarse cereals while South American importers incurred a freight cost of around $14 to $19 a tonne.

 Among the five low-income, food deficit countries included in the review, relative freight costs were among the highest of all the countries reviewed. In Bangladesh and Sudan, for instance, the share of their wheat import bill attributed to freight were as much as 25 per cent and 19 per cent, respectively.

 In contrast, the average freight cost of importing wheat into the European Commission was only 6 per cent of the total cost.