GHANA - The Cocoa Marketing Company (CMC), in collaboration with the Ghana Shippers' Authority (GSA) and 17 international shipping lines, has agreed to a 5% increase in basic freight rates for the upcoming 2024/2025 cocoa season. 

The new rates will take effect on October 1, 2024,  in response to global market challenges while ensuring Ghana's continued competitiveness in the global cocoa trade.

According to the agreement, the new shipping rates per tonne will vary depending on the destination. 

Cocoa shipments to Northern Europe will see a freight charge of €56.72 (approximately US$63.33), Estonia will be charged €64.83 (US$72.38), and Mediterranean Europe will incur a rate of €63.67 (US$71.09). 

For shipments to the Far East, the cost will range between US$105.46 and US$111.39, while the rate for Brazil is set at US$122.05 per tonne.

Stable input costs amid global challenges

One notable aspect of the agreement is the stability of input costs for shipping lines. Prices for desiccants and other essential materials used in the shipment of cocoa will remain steady throughout the 2024/2025 season, providing some level of predictability for shipping companies. 

Moreover, the Bunker Adjustment Factor (BAF), which signifies fluctuations in fuel prices, will remain unchanged from the previous season, maintaining consistency in fuel-related expenses.

The payment for freight will be made in US dollars, with the exchange rates determined by Reuters on the Bill of Lading date. 

Shipping lines are also expected to release non-negotiable Bills of Lading to the CMC within 24 hours of a vessel’s departure as part of CMC's newly adopted financing model. This ensures greater efficiency in the financial processes surrounding cocoa exports.

Addressing competition in the cocoa market

The decision to raise freight rates came amid growing competition from neighboring countries. Maintaining competitive shipping costs for Ghana's cocoa exports was a crucial factor in the negotiations, according to sources familiar with the discussions. 

Mr. Kwesi Baffour Sarpong, the Chief Executive Officer of the Ghana Shippers’ Authority, expressed his appreciation to the shipping lines for their continued partnership with Ghana, emphasizing their vital role as intermediaries between the Cocoa Marketing Company and international buyers.

During a media interaction in Accra, Mr. Sarpong highlighted the importance of this partnership in facilitating global trade and ensuring that Ghana's cocoa exports remain accessible to global markets.

Modernization at Takoradi Port

Despite the Western Region being a significant source of Ghana's cocoa, there has been a noted underutilization of the Takoradi Port for cocoa exports in recent years. 

Mr. Sarpong addressed this issue, pointing out that many shipping lines have been reluctant to call at the port. However, with the recent entry of YilPort at Takoradi, the outlook for the port is set to improve. 

According to him, YilPort, an international logistics company, brings advanced technology and efficient handling systems to the Takoradi Port, which is expected to streamline the export process.

Mr. Sarpong stated that these developments would reduce delays, minimize costs, and ensure that Ghana’s cocoa reaches its global destinations in optimal condition. 

“The improved port infrastructure and services provided by YilPort will reinforce Ghana’s reputation as a reliable exporter on the global stage,” he added.

Challenges and opportunities in the global shipping sector

The increase in freight rates also reflects ongoing challenges in the global shipping industry, including rising fuel costs, labor shortages, and disruptions to global supply chains. 

Despite these hurdles, the Ghana Shippers' Authority has worked to ensure that the rate increment remains modest, balancing the need to maintain profitability for shipping companies with the importance of keeping Ghana’s cocoa exports competitive.

The negotiations were attended by major international shipping lines, including 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).

Cocoa export season and national economy

The cocoa export season is a vital event for Ghana, a country whose economy is heavily reliant on cocoa. The annual negotiations between CMC, GSA, and international shipping lines play a crucial role in determining the cost of transporting cocoa beans to global markets. 

As one of the world's largest cocoa producers, Ghana depends on efficient shipping agreements to sustain its market position and ensure steady revenue from the export of its prized crop.

In a statement released to the media, the CMC noted that the 2024/2025 freight rate agreement provides stability for the cocoa export sector, which is crucial to the nation’s economy. 

By keeping the Bunker Adjustment Factor steady and maintaining predictability in other input costs, the agreement is designed to mitigate some of the volatility present in global shipping markets.