The escalation of the conflict in the Middle East is now directly affecting Ecuador's banana exports. This is mainly due to port blockages in the region, which force fruit to be rerouted to different markets. According to Cristian Salmon, a business developer at Ecuadorian exporter Dusal, this has led to canceled orders, shipping issues, and a significant price decline.
"Obviously, all orders for these destinations, including Qatar and other regional countries, have been canceled," Salmon stated. While Dusal's export volume to the Middle East was small this year, the company previously had a strong presence there, with approximately 40% of its exports last year going to the region.
© Dusal
The immediate primary impact of the conflict has been the closure or blockage of routes to multiple Middle Eastern ports, forcing exporters to reroute fruit to alternative markets. This results in an oversupply, driving prices down. "When these destinations are unavailable, everyone must find new markets for their fruit. That's when market prices tend to drop," Salmon said.
Prices have decreased quickly. "The banana box had already dropped to $6.50 due to factors like shipping delays to Russia and changes in large companies' buying habits. However, after recent tensions in the Middle East, the market saw a significant drop. The price began Monday at $5.50 and declined further throughout the week," he added.
© DusalThe issue extends beyond cancelled shipments, as logistical congestion is also impacting available shipping slots to other destinations. Salmon notes that with fewer slots, some exporters are seeing reduced bookings, even on routes to Europe. "I had nine containers for Rotterdam and was only allocated five. I need to find places for the remaining four," he stated.
Additionally, there is uncertainty regarding the cargoes already in transit. Some shipping lines have not yet established contingency plans, raising concerns about potential delays that could affect product quality due to the lengthy transit times.
The sector also notes that similar situations have occurred before with the conflict in Russia, when prices also dropped sharply. "We have already experienced this with the geopolitical situation in Russia; the box went as low as 2 dollars," Salmon said.
If the conflict in the Middle East continues for a long time, it could disrupt the entire supply chain. The executive warns that both exporters and producers might face a complicated situation. "If it lasts long, banana prices could stay low, as they are now," he stated.
Meanwhile, the sector closely monitors the conflict's development, understanding that the stability of the banana trade largely relies on ongoing international markets.
© Dusal For more information:
Cristian Salmon
Dusal
Ecuador
Tel: +593 98 038 8252
Email: [email protected]
www.dusal.com.ec
