Argentine Export Logistics Costs Rise by 300%

Published 2021년 8월 18일

According to the Rosario Grain Exchange (BCR), Argentine export logistics prices have risen by 300% due to historically low water levels of the Parana River. The increased costs will likely hamper Argentina’s grain supply and diminish the price competitiveness of the country’s agricultural exports in international markets. According to the National Water Institute of Argentina (INA), the level of the Parana River at Rosario, a key grains export hub, was 20 cm below sea level compared to the historical average of 2.92m on the 4th of August, 2021. More than 80% of the country’s agricultural exports are shipped from Rosario.

Water levels lowest in 80 years

The Paraná River, one of the vital commercial waterways in South America, is at its lowest level in about 80 years due to a prolonged drought in Brazil. According to the INA, the dropping water level of the Paraná River, which runs through Brazil, Paraguay, and Argentina, is at its worst since 1944. The water level has been affected by a record drought in Brazil, where the river begins. Grain ships have reduced tonnage by about 20% to continue moving, and transport costs have increased. According to the INA, water levels in Rosario will remain low in August.

The reduction in water levels has affected navigation, leading to around a 25% reduction in loads that vessels can carry from Rosario. As a result, Argentine exporters have opted to complete their cargoes in other Argentinian ports such as the southern provinces, leading to a surge in logistics costs. According to BCR, corn exports from the Buenos Aires, Bahía Blanca, and Necochea ports increased by 150K mt during the first week of August.

According to BCR, the shallowness of the Parana River could result in traders paying approximately USD 315 million in additional costs from March to August, primarily due to reduced cargoes. According to BCR, in Rosario, where many soybean crushing plants are based, shipping costs have arisen due to the slowdown in exports. The increased costs have led to various inconveniences, stockpiling saturation, and soybean crushing delays.

The Rosario-Victoria Bridge crosses the Parana River near Rosario, Argentina, amid a drought. (Source: AP Photo)

Strikes impede grain shipments

Recently, Argentine labor unions have held multiple strikes that hindered grain exports. In July, a group of independent truckers restricted entry into the Bahia Blanca port of Buenos Aires, as a protest for better pay. According to the Chamber of grain exporters and processors (CIARA-CEC), this led to a delay for about 40 ships waiting to load 1.2 million metric tons of wheat, corn, and soybean meal. On the 4th of August, the group lifted blockades for 72 hours to negotiate with the government.