The current situation in the Red Sea and the delays caused by ships having to navigate around the Cape of Good Hope are creating numerous challenging scenarios. Joey Deen from Denimpex, who has been importing Chinese products into the Netherlands for decades, discusses the situation's impact.
"For most of the products we import from the Far East, particularly China, at the moment, the quality risk isn't too high. I'm somewhat concerned about the first ginger shipments, as the first products of the new season are always slightly more delicate, but I'm not at all worried about our garlic. However, I can imagine delays of other products, like grapes from India or later Chinese pomelos, pose much larger quality risks," Joey begins.
Problems supplying supermarket customers
"We're mainly having serious problems supplying our supermarket customers. We aim to maintain a 14-day "buffer stock," which we implemented during the pandemic due to uncertain arrival times and delays. But volumes around Christmas were much higher, and now this situation is causing delays. To meet our commitments, we're thus forced to find alternatives for certain small packages. That's proved quite costly, but if we make a promise, we do everything we can to keep it, even if that means losses."
"I think everything will quickly return to normal once the first delayed ships arrive in Rotterdam. The freight will have a longer transit time, but the break in the supply chain will be restored. The first ship should arrive by the end of this week, so I expect the biggest shortages will then be over. Still, there will likely be a backlog once it's safe again," says Joey.
Freight rates 4-5 times higher
"A bigger problem is the higher freight rates. Qingdao - Rotterdam used to cost about $ 1,600 per 40ft-reefer. That's now four to five times more expensive, in the $ 6,500 - $ 7,000 per 40ft-reefer range. In the short term, that leads to significant losses. Aside from that, there's little understanding in new price negotiations. Most people think importers are pocketing those increases, which unfortunately isn't the case."
"What troubles me is what will happen in the citrus market," Joey continues. "The Egyptian season is starting with the first Navel and Balady oranges. But, thanks to logistical problems, that country presently has almost no market other than Europe. That market can probably absorb those extra orange volumes."
"But if those issues persist and there are no new logistical options, I foresee Egyptian exporters sending much more to the European market. And I doubt we can absorb such a large volume of Valencia oranges. Let's hope it all gets resolved soon," Joey concludes.
For more information:
Joey Deen
Denimpex
10 Sint Antoniesbree Street
1011 HB, Amsterdam, NL
Tel.: +31 (0) 206 246 390
joey@denimpex.nl
www.denimpex.nl