APAC Ocean Freight Faces Persistent Congestion

The current freight market volatility is compounded by a strengthening Thai baht, which has appreciated around 9% against the dollar over the past year, making Thai rice exports $20 to $30 per ton more expensive than competitors like Vietnam and India. This has led to a 17.5% drop in export volume in January 2026 compared to the previous year, with the Thai Rice Exporters Association forecasting a potential five-year low for 2026 exports. India, the world's largest rice exporter, has significantly impacted the global market by lifting export restrictions in late 2024 and early 2025, a move that increased global supply. In contrast, Vietnam is strategically reducing its export volume from 8 million tons to approximately 7 million tons in 2026, aiming to focus on higher-quality, higher-value rice and target premium markets. This includes dedicating about 75% of exports to high-quality and fragrant varieties. In Europe, demand for premium and specialty rice, such as jasmine and basmati, is growing, driven by consumer interest in international cuisine. The aromatic rice segment in Europe is projected to be the fastest-growing, with a CAGR of 8.9% from 2025 to 2033. To capitalize on this, Thai exporters are navigating increasingly stringent EU import regulations, including a potential new safeguard mechanism effective January 2027 that could curb Asian rice imports exceeding historical levels. The European Union is intensifying its focus on food safety and traceability, with plans in 2026 to increase audits on non-EU exporters by 50% over two years. Products must comply with strict rules on maximum residue levels (MRLs) for pesticides, and exporters to the EU and other specific European countries need a Certificate of Inspection. For premium branding, sustainability certifications like the Sustainable Rice Platform (SRP)-Verified label are gaining recognition, being named a top quality label in the Netherlands. While the Red Sea disruptions that caused freight rates to spike have stabilized, the market remains fragile. A full return of carriers to the Suez Canal could release excess vessel capacity, putting downward pressure on rates but also potentially causing initial congestion at European ports. This overcapacity is a key concern for 2026, with global container ship capacity expected to significantly outpace demand. The Regional Comprehensive Economic Partnership (RCEP) is expected to boost agricultural trade among member nations by reducing tariffs and non-tariff barriers, fostering a more integrated food value chain in the Asia-Pacific. This agreement particularly benefits the trade of perishable agricultural products by improving trade facilitation and customs clearance times.