In mid-2025, palm olein buyers were hit with more than rising commodity prices — freight rates on key Southeast Asia routes surged, tightening margins and complicating trade decisions. While global freight averages showed signs of easing, the routes linking Indonesia and Malaysia to South Asia and the Middle East remained costly and volatile.

 

As of July 28, 2025, the Containerized Freight Index stood at 1,592.59 points, a 14.45% drop from the previous month. But this global figure didn’t reflect the regional strain. Rates for 18,000–20,000 tonnes shipments to India’s west coast and Pakistan held firm at $37 per tonne, while costs to India’s east coast edged up to $31 per tonne. Freight to Chittagong (Bangladesh) stayed at $31.50 per tonne. Meanwhile, shipments to China increased to $35–45 per tonne, up from $32–42 a week earlier.

 

Vessel Shortages and Geopolitical Risks Drive Up Costs

Behind the rising rates is a persistent shortage of vessels and high cargo competition, especially during peak shipping months. Indian buyers, for example, increased bookings for late June through Q3, tightening availability and raising rates.

 

Adding to the cost pressure is the Red Sea conflict, which has forced many ships to reroute around the Cape of Good Hope, extending voyages by 10 to 14 days. This not only delays shipments but raises fuel costs, insurance, and operating expenses. According to Indonesian industry sources, this detour has caused freight rates to jump 56–63%compared to earlier 2025, significantly impacting shipments to the Middle East.

 

Landed Costs Climb with Freight and Export Charges

Rising freight rates directly inflate landed costs — the total cost a buyer pays including the product price, freight, insurance, and export duties. In July 2025, Indonesia’s export duty for RBD Palm Olein was set at $12 per metric ton, with a levy of $65.84, bringing the total to $77.84 per metric ton (excluding freight). At the same time, the benchmark crude palm oil (CPO) export price rose to $877.89 per metric ton, up $21.51 from June.

 

With freight costs ranging between $31–$37 per tonne, buyers — particularly in South Asia and the Middle East — are seeing sharply higher landed prices. These rising costs are squeezing downstream processors, who must either absorb the added burden or pass it on to consumers. Either choice adds fuel to edible oil price inflation, while also increasing volatility in spot market pricing.

 

 

Looking ahead, while global shipping rates may show signs of normalization post-pandemic, the routes critical to palm olein trade remain under pressure. Persistent vessel tightness, strong demand, and conflict-driven rerouting continue to define the landscape for 2025.

 

For palm olein buyers and traders, the message is clear: keeping a close eye on freight trends, export duties, and benchmark price shifts is no longer optional — it’s essential for staying competitive in an increasingly dynamic supply chain.