Kwolco: Roaring commodity demand pushing shipping rates higher

In Kenya, the manufacturing sector has been experiencing a surge in sea freight costs due to a shortage of containers in the global market. This shortage has been exacerbated by increased imports by US shippers from East Asia since the second half of 2020. The shortage of containers has led to a significant increase in freight rates, with some routes seeing rates more than double in recent months. Nick Kwolek, the founder of Kwolco, recently sat down with CNBC Africa to discuss the challenges facing the shipping and commodity markets. Kwolek highlighted the impact of the COVID-19 pandemic on container rotations through ports, leading to a slowdown in the availability of empty containers for shipping goods around the world. As a result, prices of containers and bulk vessels have soared, affecting countries across the globe. The shortage of containers has raised concerns among exporters, who fear that buyers may slow down purchases in the near future. Kwolek pointed out that while certain basic commodities like rice, sugar, cooking oil, and flour have not been severely impacted, others like grains and cooking oil have seen significant price hikes. Despite these challenges, Kwolek remains optimistic about the potential for Africa to improve its agricultural productivity and achieve greater self-sufficiency. He emphasized the importance of adopting modern farming techniques and technologies to enhance yields and boost food security on the continent. Kwolek also underscored the need for improved trade relations and infrastructure development within Africa to support the growth of the commodity market. He highlighted the Pan-African Trade Agreement as a key initiative that could drive increased trade and economic growth within the continent. However, he acknowledged the challenges of achieving harmonious trade agreements among neighboring countries and emphasized the importance of collaboration and adherence to existing trade agreements. In terms of commodity market predictions, Kwolek noted the volatile nature of commodity prices over the past year, with fluctuations driven by the pandemic and global economic trends. Despite the uncertainty, he expressed optimism about the role of commodities in powering economic growth, particularly in commodity-driven markets like South Africa. Kwolek highlighted the potential for increased self-sufficiency to reduce dependency on imports and strengthen local economies. Overall, while facing headwinds in the shipping and commodity markets, Kwolek remains hopeful about Africa's potential for growth and innovation in the face of ongoing challenges.