© Izak Heijboer | FreshPlaza.com
"What I see happening now is a market that is hitting the brakes in panic," Marc van Haaren of digital forwarder Shypple says about the impact of the Middle East conflict on logistics. "For shipping companies, this situation primarily represents a huge risk, but we also have to be realistic: they see immediate commercial opportunities here as well. With the acute tightness that is now emerging, prices and emergency surcharges are shooting up. For the fruit and vegetable exporter, the direct impact is severe: sales to the Middle East have become almost impossible."
"Since fresh produce has a very limited shelf life, as a trader, you are forced to look for alternatives immediately. Flights to the region have also largely stopped, further limiting the options. Yet I also see the power of entrepreneurship in this chaos; we have customers who are seeing opportunities right now and are quickly setting up alternative routes to still be able to deliver," Marc continues.
The drama of the Floating Reefers
"For me, the biggest pain point at the moment is the cargo already on the water, the so-called floating reefers. The reality is harsh: several shipping companies have now announced that they will simply unload reefer containers currently en route at the next available port. For them, that closes the case. The solution, as well as the substantial bill for storage or further transport, will fall entirely on the cargo stakeholder. That creates huge logistical challenges and a lot of extra, unplanned costs for the fruit and vegetable trader."
"This blockade not only affects European exports but will impact the entire region. There are definitely going to be shortages of fresh produce in the Middle East in the short term. All major cargo flows are effectively coming to a halt for a while as everyone reverses their supply chains. That creates a vacuum in the market. I expect routes from other parts of the world to start offering new opportunities to fill this gap, for instance via land corridors from Russia or China."
© Izak Heijboer | FreshPlaza.com
Is a global reefer shortage looming?
"A question I get asked a lot now is whether we are going to see a shortage of empty reefer containers on other trade routes due to congestion at ports around the Persian Gulf and India. I do not foresee an acute, global shortage of equipment (empty reefers) immediately today or tomorrow. But if this situation drags on a little longer and containers remain stuck in ports where they do not belong, that risk certainly exists. Those 'plugs' will then simply not return in time for the next crop seasons in, say, South America or South Africa."
Despite the dark clouds over the supply chain, the core of logistics remains intact. Ultimately, the principle is simple: if you, as a customer, are willing to pay the extreme risk surcharges and accept longer transit times, the goods will reach their destination through alternative routes. The main question for the fruit and vegetable sector now is whether fresh produce trade margins can still absorb these exceptional logistics costs," Marc concludes.
For more information:
Marc van Haaren
Shypple
[email protected]
www.shypple.com/perishables
