The beginning of the year has been marked by an increase in contract prices for all banana players, large and small. In fact, all shipping companies have raised their prices to amortize the costs related to the new regulatory constraints on the sulfur content of marine fuels, "IMO sulfur 2020" or "Low Sulfur Surcharge”.
“Important investments have been made in this area recently to improve the diesel combustion process. The sector is indeed evolving and taking responsibility with the desire to develop regulations and good practices globally. The costs generated by this tax gave rise to negotiations between distributors and importers in Europe, who agreed that this additional cost should be supported by all actors of the sector,” explains Thomas Besnard, opaque broker negotiator at ABCD de l’Exotique.
“There is some sort of crisis on the banana market in the producing countries”
The current weather conditions are not helping the situation. “Today, we are in dire need of markers: the agricultural yields in the producing countries are low due to lasting unfavorable weather conditions (clouds, rain, lack of sun…). In addition to the weather conditions, the effects of the market currently lead to an undersupplied offer. Since 2019 in Europe, the imported non-contracted volumes for the free market (spot) have been lower than in previous years.”
Thomas mentions a “situation on the market that is currently complex and paradoxical. Even if the spot price indicators suggest that the market is good, we are experiencing difficulties marketing non-contracted volumes.”
It is too early to comment on the consequences of the price increase of maritime freight contracts on consumption. We now know that the impact will not be significant. “Right now, the market completely lacks benchmarks. Some historical banana production areas are no longer so, yields are impacted by increasingly uncertain weather conditions, the economic and political situation in some countries is worrisome, the regulations sometimes drive distributors to change suppliers, and exchange rates have a non-negligible influence on the contracts defined at the beginning of the year.”
“There is a true ‘trade war’ on the banana market today”
According to Thomas, the banana market is saturated. “It is not a question of consumption but of marketing possibility. Today, we observe a market with a lower number of actors each year, increasingly high volumes to put on the market, which are difficult to sell. The seats are taken and they are expensive.”
Thomas Besnard-Schwerdlin will attend Fruit Logistica 2020 in Berlin.