"Some clients omit pallets to save on transport costs"

Overseas market demand recently increased because many Chinese factories will close during the Chinese Spring Festival [1 February, 2022] period. Exporters are all hurriedly shipping their products and even cargo space for a single container is hard to find. Ms. Li Xixi, spokesperson for Hebei Xionghan Agricultural Produce Co., Ltd., recently talked about current conditions in the export market for pears.

Manager Li first described the market conditions. "Overseas market demand expanded in the last few weeks. The FOB price of pears for Southeast Asia is around 10 USD per box. The FOB price for North America is around 16 USD per box. And the FOB price of pears without pesticide residue for the European market is around 17-18 USD per box. The overall production volume of Chinese pears is slightly smaller than last year, but transport costs are higher. Moreover, global inflation further stimulates rising retail prices."

When asked about market predictions for the next few weeks, manager Li replied, "the conditions in the export market depend on the shipping industry. Many shipping companies cannot guarantee precise arrival times for their cargo ships, so clients order their products in advance. We expect the orders from distant overseas markets to finish early this year. Clients in other markets may continue to order until June or July."

The domestic pear market competes with domestic oranges and import cherries. The oranges in particular were of good quality this year and their price was very reasonable. That has a considerable impact on the market conditions of domestic pears. "Our company will wait and see how the sales figures of Chinese pears develop this season. The price is not likely to grow much, especially because the outbreak of Covid-19 has weakened domestic fruit markets in Guangzhou, Shenzhen, and the northeast of China, and so the sales of domestic pears have been disappointing."

Many Chinese ports struggle to process the containers without delay, no matter whether the ships came from nearby or far away. Moreover, many cargo ships are frequently delayed. The arrival of cargo ships from Asia, Europe, or North America are all uncertain. These ships are often late by more than half a month. "Empty shipping containers pile up in ports in North America, Oceania, and South America. They cause congestion and slow down the turnaround time of shipping containers. Moreover, in preparation for the Chinese Spring Festival [1 February, 2022] period, when many Chinese factories close down, many overseas clients order their products in advance, and that is why the shipping fees have been extraordinarily high since the middle of January. However, when the factories do close, the shipping cost is likely to drop. Then again, the shipping costs may rise again once the factories reopen after the Spring Festival period is over," explained manager Li.

"Canadian importers had their orders delivered in Vancouver, Toronto, and Montreal, prior to the pandemic, but since then the shipping fees in Toronto and Montreal have significantly increased, so clients only order their products for delivery in Vancouver. Shipping companies offer delivery to Vancouver in 28-30 days, but clients realistically wait more than 50 days for their orders to arrive. In addition, many of our clients have their warehouses at a significant distance from Vancouver port, which means that the cost of refrigerated, overland transport adds to their cost price this season," said manager Li.

"Last year parts of Canada flooded. So even when our clients finally received their products, some of them had to reroute via the United States to reach their own warehouses. Only after passing customs twice did their products reach the final destination."

"Under normal circumstances we use pallets when we load our products into shipping containers. However, the shipping fees are extremely high right now and some of our clients prefer to eliminate the pallets, so that they can fit more pear boxes in the same shipping container. This requires us to publish two prices, with and without pallets. However, without pallets the products can only be offloaded by hand, not with a fork lift truck. And some countries require a space between the boxes and the container for hygienic reasons. That makes the management of containers even more complicated," said manager Li.

"Europe does not occupy a large share of the Chinese pear export market. That is mainly because Europe has very high standards for import pears. Export companies are required to provide many certifications before they receive permission to export pears to Europe. Europe has strict standards for the maximum amount of chemical residue on agricultural products and constantly lowers the maximum amount allowed. That is why most Chinese pear companies avoid the European market," explained manager Li.

Companies that export pears to Europe have to follow detailed plantation management plans based on MRL data, which is renewed every year, and meet the import standards for the European Union. In addition, companies have to provide test samples of their products and separately store the pears that meet the standards. The containers of Xionghan Agricultural Produce have never been refused entry into Europe and always meet the import standards. Xionghan continues to sell pears in Europe.

For more information:

Li Xixi

Hebei Xionghan Agricultural Produce Co., Ltd.

Shijiazhuang Xingguan Import and Export Trade Co., Ltd.

Tel.: +86 175 0320 2183 

E-mail: xixi.li@xgfreshproduce.com 

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