The garlic market has been stable since the new harvest entered. The garlic price has not shown any major fluctuations yet. However, some exporters are in trouble because shipping costs are rising. Mr. Zhang Shuhan of Jining Greenstream Fruits and Vegetables Co., Ltd. recently talked about current conditions in the Chinese garlic market.
According to manager Zhang, "the overall export volume of Chinese garlic expanded this year. The price has been stable in the last few weeks. The FOB price of Chinese garlic (#5.0 and #5.5) destined for Europe is around 1,000 yuan [151 USD] per ton. The new planting season already started one month ago. The overall surface area devoted to garlic plantation declined, but the predictions for the production volume will depend on weather conditions in the next two months. If frost reduces the garlic production volume, then the price will probably rise. But in the next two months the price is likely to remain stable."
As for garlic export, there has been a problem with uneven distribution of shipping containers in the last few months. This problem has become quite serious in Asian markets. Furthermore, shipping has been delayed, which further intensified the shipping container shortage in port cities such as Shanghai, Ningbo, Qingdao, and Lianyungang. The reason that some ships have left Asian ports not fully loaded is not because there are not enough products, but because there are not enough refrigerated shipping containers. The standard 40ft refrigerated shipping container is in high demand and there is not enough supply.
"The shortage has caused a cascade of other problems. Some exporters took great trouble to book the hold space for their products, but were then unable to secure shipping containers or suddenly faced exorbitantly high prices. Thus, when the ship was ready to leave, the products were still stuck in transit. Overseas importers in turn had no way to receive their products on time. In addition, the rising shipping cost has simply become too high for some exporters. Three months ago a shipment from Qingdao to Klang in Malaysia would take 10 days and cost 600 USD per container. That price recently reached 3,200 USD and the shipping duration is now almost 40 days. The situation in other popular Asian ports is more or less the same," explained manager Zhang. "The price of shipping to Europe is also rising, but the increase is more reasonable. The average price increase is around 20%."
"People in the industry agree that the shipping container shortage in China is the result of a stable export volume and a decline in import volume. The refrigerated shipping containers that leave the country do not return in the same numbers. Larger shipping companies are still alright, but smaller shipping companies suffer. We have temporarily discontinued our contracts with smaller companies, but continue to work with Maersk," said manager Zhang.
The rising shipping cost has no little impact on garlic export, but does raise the cost price for importers. "We used to pay Cost, Insurance, and Freight (CIF) for most of our export trades in Southeast Asia, but many large companies are now unwilling to include shipping in their price, so they switch to Freight On Board (FoB). The volume of orders we received shows that overseas market demand remains unchanged. But people in the industry say that the second wave of Covid-19 will have a greater impact. The shortage of shipping containers may grow even more severe in the next few months. However, I think the price is already so high that there is not much room for the price to rise even further."
Jining Greenstream Fruits and Vegetables is an export company specialized in agricultural products. In addition to garlic, the company also sells ginger, honey pomelo, and apples. The company annually exports around 2,000 shipping containers.
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Jining Greenstream Fruits and Vegetables Co., Ltd.