War is raising freight & inflation
Conflict-driven disruption around key routes — the Strait of Hormuz, Suez and Bab el‑Mandeb — is creating a ‘twin chokepoint’ problem that forces longer, costlier voyages and higher insurance, pushing up landed grain costs. The IMF warns these energy shocks risk broader inflation, so higher rice prices today are as much an energy-and-logistics story as a crop story. (thedcn.com.au) (aljazeera.com) (x.com)
Rice can get more expensive even when rice fields are fine, because a bag of imported grain rides on diesel, bunker fuel, canal tolls, marine insurance, and a ship that has to pass a few very narrow gates. This week, those gates got riskier again as the war around Iran pushed the International Monetary Fund to warn of a new inflation shock. (imf.org) (aljazeera.com) One of those gates is the Strait of Hormuz, where about 20 million barrels of oil a day moved in 2024, equal to about 20 percent of global petroleum liquids consumption. When traffic there slows, fuel gets pricier for ships, trucks, fertilizer plants, and food processors at the same time. (eia.gov) The second gate is Bab el-Mandeb, a 29-kilometre passage between Yemen and the Horn of Africa that feeds into the Red Sea and then the Suez Canal. Al Jazeera reported on April 6 that if Bab el-Mandeb were shut alongside Hormuz, a quarter of the world’s energy and a large share of Asia-to-Europe exports would be blocked. (aljazeera.com) That route matters because it is the shortcut between Asia and Europe. Down to Earth, citing the United States Energy Information Administration, says a voyage from the Arabian Sea to the Netherlands takes about 19 days through the Red Sea but about 34 days around southern Africa. (downtoearth.org.in) When ships avoid the Red Sea and Suez, they do not just burn more fuel. The United Nations Conference on Trade and Development said the volume of traffic through the Suez Canal and Bab el-Mandeb had dropped by half by the end of March 2024, while traffic around the Cape of Good Hope doubled. (blogs.worldbank.org) (unctad.org) Insurance adds another layer. Lloyd’s List says Red Sea attacks are still reshaping shipping markets in 2026, and even limited attacks or threats can push underwriters to raise war-risk charges or pull cover, which means every cargo owner pays more before the ship even leaves port. (lloydslist.com) (downtoearth.org.in) Food feels that shock fast because modern agriculture is energy-heavy long before harvest reaches a store shelf. The International Monetary Fund said energy prices, supply chains, and financial markets are the main channels through which the Middle East war spreads into other economies, with poorer food-importing countries more exposed than richer ones. (imf.org) That is why higher rice prices are not always a simple crop story. United States Department of Agriculture data for the week of April 6 showed southern long- and medium-grain milled rice prices were mostly steady, which means retail pressure can still come from freight, fuel, and insurance even when mill prices are not spiking. (ams.usda.gov) The International Monetary Fund’s Kristalina Georgieva said on April 9 that the fund will cut its world growth forecast next week because of the war shock. If oil stays elevated and the two sea lanes stay dangerous, the next jump in your grocery bill may start with a tanker route on a map, not a drought on a farm. (aljazeera.com)
