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El Niño Disrupts Indonesian Palm Oil Supply Chains as Rivers Run Low

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El Niño Disrupts Indonesian Palm Oil Supply Chains as Rivers Run Low

THE WHAT? Severe drought linked to El Niño has reduced river levels in Indonesia’s West Kalimantan province, disrupting palm oil shipments and increasing transportation and storage costs.

THE DETAILS Low water levels on the Kapuas River, Indonesia’s longest river and a major transport artery, are restricting the movement of palm oil by barge. Producers are being forced to use alternative transport routes, increasing logistics costs, while shipment delays are also raising storage expenses because crude palm oil requires controlled heating to maintain quality. Reduced storage capacity has led some mills to suspend purchases of fresh fruit from growers.

THE WHY? The disruption could put additional pressure on Indonesia’s palm oil supply chain, increasing transportation and storage costs and potentially constraining production if low river levels persist, with implications for industries reliant on palm-derived ingredients, including cosmetics and personal care.



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